Malaysia has announced a delay in the implementation of its planned expansion of the sales and service tax (SST), which was originally scheduled to take effect on May 1. The decision comes as manufacturers express concern over rising cost pressures, including the potential impact of increased U.S. tariffs on Malaysian exports.
A spokesperson from the Ministry of Finance confirmed the delay in a statement to local media, noting that the updated implementation timeline will be communicated after further refinements to the guidelines and scope of the expanded tax measures.
The Federation of Malaysian Manufacturers had earlier called on the government to postpone any new tax burdens this year, citing cost challenges faced by the manufacturing sector. Industry leaders are closely monitoring trade developments after the United States announced a 10 percent tariff on Malaysian goods, with the possibility of an increase to 24 percent. Negotiations are ongoing during a 90-day review period initiated by the U.S.
Malaysia’s manufacturing sector, a key contributor to national tax revenue and export earnings, plays a central role in the country’s semiconductor value chain, where regional interdependence supports production continuity.
The government is currently reviewing its GDP growth forecast of 4.5 to 5.5 percent for 2025, as external trade uncertainties weigh on investor sentiment. According to officials, the Ministry of Finance has completed consultations with stakeholders and is finalizing details for the SST expansion, which is now expected to be gazetted on June 1.
The expanded tax scope, first announced in the national budget by Prime Minister Anwar Ibrahim in October 2024, is expected to apply to non-essential and premium imported goods such as salmon and avocados, as well as a broader range of commercial services.
The Royal Malaysian Customs Department will oversee the implementation and enforcement of the revised SST policy.
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