KUALA LUMPUR, July 24 — The government expects to collect an additional RM5 billion in revenue during the second half of 2025 following the expansion of the Sales and Service Tax (SST) that came into effect this month.
In a written parliamentary reply to Bagan MP Lim Guan Eng, the Ministry of Finance projected that SST revenue would double to RM10 billion in 2026, the first full year after the expanded tax framework is implemented.
Lim had inquired if it would be feasible to delay the expansion of the SST, considering the global economic uncertainty caused by US President Donald Trump’s tariffs, and requested a breakdown of collections by citizens and foreigners.
The ministry acknowledged public concerns over rising costs but stated the government was obliged to ensure sufficient revenue to fund public programs and national development.
“The proposal to postpone the SST scope expansion will cause the revenue target not to be met, and subsequently, will affect the fiscal position and the government’s ability to fulfill its responsibilities towards the people,” the ministry said.
However, the ministry informed that it could not provide a breakdown of tax contributions between citizens and non-citizens due to limitations in the current revenue collection system.
It explained that the tax database does not classify collections based on citizenship, noting that the inclusion of foreigners under the SST only started in July for private education and healthcare services.
To address concerns from small businesses, the ministry stated that micro, small, and medium enterprises (MSMEs) with annual sales below RM1 million would be exempted from the service tax on rental services.
Construction service providers will also benefit from a higher threshold of RM1.5 million in annual revenue before the tax applies, up from the previous RM500,000 limit.
A similar exemption threshold will apply to small healthcare providers such as private clinics to minimize compliance burdens and operating costs.
The ministry stated that the additional SST revenue would help support growing government expenditure in 2025, including RM13 billion for cash aid schemes, RM64 billion for education, and RM45 billion for healthcare.