FMM wants further delay to SST expansion

The Federation of Malaysian Manufacturers (FMM) has urged the government to defer the implementation of the expanded sales and service tax (SST).

The tax expansion, initially set to take effect on May 1, was postponed by the Customs Department to June 1 to allow for further engagement.

The FMM called for a delay beyond the new date, raising concerns about its potential impact on businesses and consumers.

In a statement today, FMM president Soh Thian Lai said discussions between the Finance Ministry, Customs Department, and industry players highlight the need for a comprehensive study before implementing the SST expansion.

“The current environment is not conducive to such an expansion, given the significant external pressures manufacturers are already facing, including the imposition of United States reciprocal tariffs and the upcoming review of electricity base tariffs in July 2025.

“Expanding SST coverage without appropriate safeguards will amplify the cost of doing business, weaken Malaysia’s industrial competitiveness, and increase the financial burden on consumers through higher retail prices,” he said.

Delivering the Budget 2025 speech in Parliament last October, Prime Minister and Finance Minister Anwar Ibrahim said the government is looking to boost its revenue through an expanded SST beginning May 1, 2025.

He promised the new SST will be more progressive and will not burden ordinary people.

“Sales taxes will be imposed on items that are not basic necessities, such as premium imported goods like salmon and avocado - that many of the MPs on this side and on that side have been eating. Its price will be more expensive when we implement it,” he said.

Call for assessment, review

Meanwhile, Soh stressed that the SST expansion should not proceed unless key issues are addressed, including a comprehensive impact assessment on inflation, business competitiveness, and consumer purchasing power.

He also called for a review of taxes on essential goods and industrial raw materials, simplification of input exemptions for manufacturers, a 12-month grace period with education support for newly taxable businesses, and exemption of taxable services to licensed manufacturers to avoid double taxation.

“If these concerns are not satisfactorily addressed, FMM urges that the SST expansion be deferred beyond June 1, 2025, until a thorough review is completed to avoid harming the manufacturing sector, eroding consumer purchasing power, and undermining Malaysia’s economic recovery,” he added.

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