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Six business groups urge govt to delay SST expansion, warn of inflation and job losses

Six business groups urge govt to delay SST expansion, warn of inflation and job losses

They specifically highlighted the proposed 8% tax on commercial rental and leasing services, deeming its timing “gravely misguided”.

KUALA LUMPUR (June 17): Six business associations are calling on the government to postpone the upcoming expansion of the sales and service tax (SST).

In a joint statement, the SME Association of Malaysia, Malaysia Retail Chain Association (MRCA), Malaysia Retailers Association (MRA), Bumiputra Retailers Organization Malaysia (BRO), Malaysia Shopping Malls Association (PPKM), and the Federation of Malaysian Business Associations (FMBA) expressed strong opposition to the broadened scope of the SST.

They specifically highlighted the proposed 8% tax on commercial rental and leasing services, deeming its timing “gravely misguided”.

“Implementing such a broad-based tax hike amid a fragile recovery will exacerbate inflation, cripple SMEs (small and medium enterprises), discourage investment, and erode consumer confidence,” the business groups said in the statement dated June 15.

They noted that businesses are already grappling with mounting cost pressures, and that the proposed tax on rental and leasing would only add to the burden — particularly for SMEs and retailers — inevitably passing on the costs to consumers, fuelling inflation and further eroding purchasing power.

Such developments, they warned, could make retail operations financially unsustainable, forcing businesses to downsize or shut down entirely, leading to widespread job losses and further weakening Malaysia’s domestic economy.

The groups also criticised the inefficiency of the current SST framework, pointing out that unlike the goods and services tax (GST), the SST does not provide input tax credits — resulting in cascading costs across the supply chain.

While stating that they are not opposed to the government’s prerogative to retain the SST, the groups urged policymakers to seriously consider the genuine hardships currently faced by businesses, and called for a more consultative approach.

The business associations therefore urged the government to defer the SST expansion until the economy stabilises.

They also proposed reducing the proposed 8% tax rate on rentals and leasing, introducing exemptions for micro and small businesses, providing targeted relief for key sectors such as retail and logistics, and conducting proper consultations with industry players before rolling out new tax measures.

The expanded SST, scheduled to take effect on July 1, will impose a 5% to 10% sales tax on selected non-essential goods and broaden the service tax to include services such as rental or leasing, construction, finance, private healthcare, education, and beauty.

Calls to defer the new tax measures have been growing, with several industry groups joining the chorus. These include the Federation of Malaysian Manufacturers (FMM), the Malaysian Rubber Glove Manufacturers Association (Margma), the Malaysian Iron and Steel Industry Federation (MISIF), the Real Estate and Housing Developers’ Association (Rehda), the Association of Private Hospitals of Malaysia, and the Master Builders Association Malaysia (MBAM).

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Source: EdgeProp.my

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