KUALA LUMPUR: The government has no plans to further widen the scope of the Sales and Services Tax (SST) beyond what took effect on July 1, says Deputy Finance Minister Lim Hui Ying.
Lim said the expanded SST framework had already been designed with targeted, progressive and industry-tested mitigation measures following months of stakeholder engagement.
“At this stage, the government is maintaining the implementation of the expanded SST.
“Its structure was designed with mitigation steps to ensure it does not burden consumers, especially those in the lower-income groups,” she told the Dewan Rakyat on Monday (Nov 24).
She was replying to a question from Onn Abu Bakar (PH–Batu Pahat), who had asked whether Putrajaya intended to review the widened SST in light of concerns that additional costs could push up prices of goods and services.
Lim said several safeguards had been incorporated to protect small and medium enterprises (SMEs), including high registration thresholds for newly taxed services — RM1mil annually for fee-based financial and leasing services, and RM1.5mil for construction and private healthcare.
Small-scale rental and leasing operators earning below RM1mil annually remain exempt, she added.
Lim also said that after consultations with industry players, the ministry decided to drop plans to tax beauty services, which were initially included under the proposed expanded service tax scope.
“These measures ensure the SST expansion is implemented prudently and does not burden users or SMEs, while supporting the government’s efforts to strengthen fiscal sustainability,” she said.
On the now-scrapped High Value Goods Tax (HVGT), Lim explained that while it was not implemented, its underlying objective had been retained and integrated into the revised SST structure.
Under the approach that took effect on July 1, luxury and non-essential items – including premium apparel, watches and other discretionary goods typically associated with high-income consumers – are now taxed at 5% or 10% under the sales tax.
“This aligns with HVGT’s original aim, ensuring those with greater purchasing power contribute fairly to national revenue,” she said, adding that taxing “non-essential items” provides a clearer and more consistent basis for determining taxable goods without relying on rigid definitions of “luxury”.
Lim stressed that the government must balance fiscal consolidation with public welfare.
“The government remains committed to strengthening the country’s fiscal position while safeguarding the well-being of the rakyat.
“Any revenue measures will be introduced cautiously, with engagement, and without burdening present or future generations,” she said.
Earlier, Wan Hassan Mohd Ramli (PN–Dungun) questioned the fairness of Malaysia’s tax regime, claiming that laws often appeared “sharper towards the bottom” while the wealthy faced fewer consequences.
He also asked why the HVGT, aimed at taxing high-priced goods, was not implemented while the Low Value Goods Tax (LVGT) — affecting items below RM500 — remained in force.
In response, Lim said the LVGT was introduced primarily to ensure fairness and parity in the e-commerce sector, where many purchases fall below the RM500 threshold.
“LVGT ensures all goods, especially those bought online, are treated equitably under the tax system.
“Its implementation will continue to be reviewed to maintain fairness,” she said.
Lim said the government would continue reviewing the effectiveness of the revised tax structure to ensure Malaysia’s system remains progressive, sustainable and aligned with national fiscal needs, without impeding economic growth.
