SHAH ALAM - As July 1 approaches, Malaysians are set to face several changes, including an expanded Sales and Services Tax (SST), a revamped electricity tariff structure and other key policy updates aimed at enhancing fiscal sustainability and energy efficiency.
These adjustments, while designed to strengthen the nation’s economy and governance are likely to have an impact on households, businesses and consumers.
SST Expansion & New Service Tax
- Sales tax (five to 10 per cent) broadened
- Tax exemption
Essential goods remain exempt from sales tax to ensure affordability for the public. This includes unprocessed foods such as chicken, beef, seafood like tilapia and prawns and staples such as rice, oats and wheat. Other exempt items include books, school supplies, cooking oil, medicines, construction materials, fertilisers and basic food products like flour and noodles.
- Five per cent sales tax
Luxury and semi-premium goods such as abalone, lobster, quinoa, cheese and smartphones are taxed at five per cent. Some goods, including king crab, salmon and industrial machinery, will see an increase in rates to five per cent.
- 10 per cent sales tax
The highest tax rate applies to luxury goods such as caviar, shark fin, alcoholic beverages, cigarettes, cigars and premium leather items. Additionally, tungsten scrap, racing bicycles and handmade artwork now fall under the 10 per cent tax bracket.
- Service tax scope widened
New taxable services include:
- Rental/leasing (commercial property, equipment)
- Construction (non-residential)
- Financial services (commissions, brokerage, fee‑based services)
- Private healthcare for non-Malaysians
- Private education/higher ed (non‑Malaysians)
Businesses have until Dec 31, 2025 to comply with no penalties during transition.
Overhaul of Electricity Tariff Structure
The previous tiered pricing system for domestic users is being replaced by a structure with five key components: Energy, Automatic Fuel Adjustment (AFA), Capacity, Network and Retail.
Energy Charge: Domestic users will pay 27.03 sen/kWh for monthly usage up to 1500kWh, and 37.03 sen/kWh for usage above 1500kWh.
- Capacity Charge: A fixed charge of 4.55 sen per kWh.
- Network Charge: A fixed charge of 12.85 sen per kWh.
- Retail Charge: A fixed monthly charge of RM10.
What you can do
Shopping: Budget for small price hikes on premium imported items like salmon and cheese.
Electricity Bills: Monitor your July bill closely. Consider switching to Time-of-Use (ToU) scheme to better manage your consumption.
Business Compliance: Companies affected by new service taxes should register, revise their invoicing systems and update tax compliance mechanisms promptly.
Stay Informed: Watch for monthly AFA announcements from Tenaga Nasional Berhad and the Energy Commission to understand any fuel-based billing changes.