KUALA LUMPUR (Reuters) -Energy majors are pouring money into gas exploration and production in Malaysia and Indonesia to meet rising power demand from growing populations and a proliferation of data centres in the region.
The implementation of expanded SST has to consider the transitional rules, which allow for exemptions on contracts that straddle the implementation date.
It is projected to yield RM5 billion in tax revenue this year, or an annualised RM10 billion for a full year, to help offset lower oil revenue. The current global geopolitical landscape, US trade policies, and recent escalation of conflicts in the Middle-East present significant downside risks to the global economy, potentially causing spillover effects in domestic economy.
Careful planning is essential to ensure the measures effectively address economic challenges without creating unintended consequences. With businesses already reeling from rising operating costs, implementing the expanded SST could further burden businesses with increased costs and squeezing their profit margins.
Ultimately, increased business costs, if not absorbed, would be passed onto consumers, potentially dampen discretionary consumer spending due to higher prices of non-essential goods and a wider range of taxed services. This is followed by “Machinery, Transport Equipment, and Electronics”, which increased by 835 items to 3,280 items , and “Consumer Goods” increased by 222 items to 1,692 items .
Cost of living remains a key issue due to slow wage growth of 7% in nominal wages per worker from 2019 to 2024. A revision of items subject to a higher sale tax is planned to align with the postponement of the High-Value Goods Tax. On the service tax, the scope of service tax will be expanded to cover additional services such as wellness centres, financial, and healthcare, and three new services , bringing the total to 13 taxable service groups.
These include “group relief” and “exemption for SMEs with annual sales of RM500,000”, as well as “beauty services” as a taxable category.
Sstexpansion Taxreform Businesscosts Consumerimpact Fiscalpolicy Costofliving Servicetax
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