Local fruits not subject to sales tax, nor impacted by gazette order

Summary

• Local fruits listed in the sales tax gazette order are only those that are imported.

• Locally grown fruits don't meet criteria for the Sales Tax Act and hence not affected by the gazette order.

(Editor’s note: This article has been updated after receiving clarification from the Finance Ministry.)

The Finance Ministry has cleared up confusion over perceived discrepancies regarding the implementation of the sales and services tax (SST) on fruits, be they locally grown or imported.

The gazetted sales tax order published on Monday showed that many fruits grown locally were listed to be taxed five percent, while the tax-exempt list only listed coconut.

However, the Finance Ministry clarified that fruits grown locally are exempt from SST.

Under the Sales Tax Act, only manufactured local goods are taxed - as well as any imported items.

“Agricultural produce grown in Malaysia is not manufactured; hence, it is not subject to sales tax.

“But if the fruits are imported, then it would be subject to the tax.

“This includes tropical fruits such as banana, pineapple and rambutan,” it said in a statement today.

Previously, consumer groups Malaysiakini spoke to highlighted concerns that local fruit supply is insufficient, and that imported fruits played an important role in creating a nutritionally balanced diet for Malaysians.

The new SST rates come into effect July 1.

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