SAMENTA Applauds Revised SST Threshold, Offers Relief to SMEs

KUALA LUMPUR, June 27, 2025 – The Small and Medium Enterprises Association of Malaysia (SAMENTA) has welcomed the Ministry of Finance’s recent revision to the expanded Sales and Service Tax (SST) framework, set to take effect on July 1, 2025. The revision includes a significant increase in the annual sales threshold for service tax on rental and financial services, from RM500,000 to RM1 million, providing substantial relief to smaller enterprises.

In a statement, SAMENTA National President William Ng expressed gratitude to Prime Minister Datuk Seri Anwar Ibrahim and the Ministry of Finance for addressing the association’s concerns about the potential burden of the SST expansion on small and medium enterprises (SMEs). When the SST expansion was initially announced, SAMENTA was quick to highlight its potential impact, advocating for a higher threshold to protect smaller businesses while maintaining a fair tax base.

Revised SST

“This revision, which exempts approximately 75% of SMEs from the additional 8% tax on rental and financial services, is a welcome and meaningful relief,” Ng said. He noted that the adjustment aligns with the association’s call for a more SME-friendly approach, ensuring that smaller businesses are not disproportionately affected by the tax changes.

The expanded SST framework, first outlined in Budget 2025, aims to broaden Malaysia’s tax base and generate an estimated RM5 billion in additional revenue for the second half of 2025. While the expansion includes new taxes on non-essential goods and services, such as imported fruits and premium services, essential goods like rice, chicken, and local fish remain exempt to mitigate the impact on the cost of living.

Ng emphasized that SAMENTA considers the matter resolved and will not seek further concessions on the SST expansion. However, he urged affected SMEs to promptly prepare for compliance, including updating invoicing systems and registering with the Royal Malaysian Customs Service if their annual turnover exceeds the new RM1 million threshold. “We encourage SMEs to act swiftly and seek assistance from Customs if needed to ensure a smooth transition,” he added.

Manicures and haircuts

The revision follows public and industry feedback, with the Ministry of Finance also announcing exemptions for beauty services, such as manicures and haircuts, from the SST scope. This decision, alongside the raised threshold, reflects the government’s efforts to balance fiscal consolidation with protecting SMEs and consumers.

SAMENTA’s proactive engagement with the government underscores its commitment to advocating for policies that support Malaysia’s SME sector, a critical driver of the nation’s economy. Ng reiterated the association’s dedication to working with stakeholders to ensure future tax reforms remain equitable and supportive of small businesses.

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