PETALING JAYA: Agricultural produce grown in Malaysia are not subject to the sales tax, says the Finance Ministry.
“Under the expanded Sales and Services Tax (SST) that will take effect on July 1, 2025, the sales tax is levied on goods manufactured locally and on imported goods.
“Agricultural produce grown in Malaysia are not manufactured. Hence, (they) are not subject to Sales tax,” it said in a statement yesterday.
As such, the Finance Ministry said that fruits locally grown in Malaysia are exempted from the sales tax.
However, if the fruits are imported, then they will be subject to sales tax.
“This includes tropical fruits such as bananas, pineapples and rambutan,” it added.
The statement was issued in response to news reports touching on the application of sales tax on local fruits.
It also addressed concerns of companies lamenting that there is insufficient time to implement the service tax by July 1.
“For companies not currently registered under SST but provide one of the newly taxable services such as rental, in July, they would need to first establish whether they have reached the revenue threshold of RM500,000 for rental within 12 months,” it said.
“If they have reached the revenue threshold in July, then the company will need to register by August and only begin to charge service tax on their services beginning Sept 1, 2025, which is more than two months from now.”
Appreciating the need to give affected companies time to understand how the SST revisions may apply to them, the statement said the government will provide a grace period until December 2025 and not impose penalties on companies that have genuinely made the effort to comply with the newly revised SST.
Separately, the ministry assured that inflation will remain under control as the sales tax will not be levied on daily necessities.
It added that this was to ensure that there is no direct impact on the cost of living on the majority of the people.
The ministry said only selected and premium items would be imposed a sales tax of 5%-10%. This includes items such as truffle, racing bikes and king crab.
Imported fruits will be subject to the 5% sales tax, while locally grown fruits are exempted from any sales tax.
In addition, selected foods that are imported like rice, wheat, sugar, salt and meat are exempted as they are considered basic essentials.
Locally manufactured and imported palm oil for cooking oil are also exempted.
A 5% tax rate will apply to raw sugar, while a zero tax rate applies to refined sugar.
