KUALA LUMPUR: Six major business associations have strongly urged the government to defer the expansion of the Sales and Service Tax (SST), particularly the 8% levy on commercial rental and leasing services set to take effect on Tuesday (July 1).
In a joint statement, the SME Association of Malaysia, Malaysia Retail Chain Association, Malaysia Retailers Association, Federation of Malaysia Business Associations, Bumiputra Retailers Organization Malaysia, and Malaysia Shopping Malls Association warned that the tax could severely cripple businesses already facing escalating costs.
They described the timing and scale of the new tax as "gravely misguided" and warned it would trigger inflation, shrink consumer spending, discourage investment, and threaten the survival of many small and medium enterprises (SMEs).
The associations added in a statement on Tuesday (June 17) that businesses are already under pressure from higher minimum wages, diesel and electricity prices, reduced subsidies, mandatory e-invoicing, foreign worker EPF costs, and a weakening ringgit.
"SST is a regressive tax without input credits, unlike the former GST system, and it is inefficient, anti-business, and harmful to growth and investment."
They proposed the government consider reinstating GST with reforms instead of expanding the current SST.
Among their five key considerations for the government are to firstly postpone the SST expansion until economic recovery is stronger.
They then added that the proposed 8% SST rate on rentals is reduced and micro and small enterprises be exempted along with targeted relief being offered to critical sectors.
“Engage in consultation before implementing tax reforms,” they added.
The associations said they were not opposed to tax reforms, but stressed the need for fair, inclusive policies that do not endanger business sustainability or economic recovery.
"The business community stands ready to support national fiscal goals, but such goals must be achieved through fair, practical, and inclusive policymaking.
"We call on the government to act decisively, responsibly, and in the national interest before irreversible damage is done to the economic ecosystem that supports jobs, innovation, and long-term growth," added the associations.
