The Federation of Malaysian Manufacturers (FMM) has urged the government to defer the implementation of the expanded sales and service tax (SST) beyond the revised date of June 1, warning of its potential impact on businesses and consumers.
Originally slated for May 1, the expansion was recently postponed by the customs department to allow for further stakeholder engagement.
In a statement today, FMM president Soh Thian Lai said discussions with the finance ministry, customs, and industry players highlighted the need for a comprehensive study before rolling out the SST expansion.
“The current environment is not conducive to such an expansion, given the significant external pressures manufacturers are already facing, including the imposition of US reciprocal tariffs and the upcoming review of electricity base tariffs in July 2025.
“Expanding SST coverage without appropriate safeguards will amplify the cost of doing business, weaken Malaysia’s industrial competitiveness, and increase the financial burden on consumers through higher retail prices,” he said.
Soh stressed that the SST expansion should not proceed unless key issues are addressed, including a comprehensive impact assessment on inflation, business competitiveness, and consumer purchasing power.
He also called for a review of taxes on essential goods and industrial raw materials, simplification of input exemptions for manufacturers, a 12-month grace period with education support for newly taxable businesses, and exemption of taxable services to licensed manufacturers to avoid double taxation.
“If these concerns are not satisfactorily addressed, FMM urges that the SST expansion be deferred beyond June 1, until a thorough review is completed to avoid harming the manufacturing sector, eroding consumer purchasing power, and undermining Malaysia’s economic recovery,” he added.
