PETALING JAYA: A phased approach to the expanded Sales and Service Tax (SST) scope could help businesses transition more smoothly, say trade groups.
SME Association of Malaysia president Chin Chee Seong proposed starting the rate at 2% for affected sectors.
“If possible, we hope the government reconsiders the implementation, but if it proceeds, it should be progressive.
“A direct 6% or 8% is too high and could lead to cash flow issues, forcing businesses to take bank loans,” he said in an interview yesterday.
Chin called on businesses nearing the threshold to register for SST early.
“You can project your revenues. If you hit the mark, you pay; if not, you’re still prepared.”
He also suggested making authorities more accessible, possibly through an AI chatbot, to assist with queries.
Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong also recommended a gradual service tax implementation, starting at 4% instead of jumping to 8%.
“A progressive approach offers a cushion for businesses to adjust,” he said.
On the grace periods, Koong said it can be challenging especially for the construction sector.
While non-reviewable contracts are given a 12-month grace period, he said most drafted contracts are reviewable.
He called for a 36-month grace period for both reviewable and non-reviewable contracts in the construction sector due to the duration of projects and contract complexities.
Federation of Malaysian Business Associations vice-chairman Nivas Ragavan said the grace period provides breathing space but compliance requirements must be made clear to avoid confusion or complacency.
“A phased implementation is more SME-friendly and allows for data-driven adjustments if inflation or consumer impact is severe,” he said.
Nivas also cautioned that retrospective SST payments could force SMEs to absorb uncollected taxes, suggesting a dedicated helpline or portal to address these concerns.
Putrajaya Hawkers and Small Traders Association president Juhaidi Yean Abdullah expressed concerns about consumer impacts.
“While most members haven’t met the SST threshold, there is worry over price increases.
“Members would prefer not to raise prices, but the tax expansion might necessitate passing costs to consumers,” he said.
