MSM welcomes MOF clarification on raw sugar SST rules
The ministry's statement today confirmed that while a five per cent sales tax will apply to raw sugar, a key input for refined sugar production, refiners may apply for tax exemptions under prescribed conditions.
In a statement today, MSM said that this clarification follows MSM highlighting the potential significant cost pressures arising from the expanded SST regime during its annual general meeting on June 19, 2025.
'The group emphasised that these input cost increases could impact refined sugar pricing, which could in turn push up prices of refined sugar for industrial buyers.
'We appreciate the ministry's prompt attention to this matter and its reaffirmation of a clear pathway for eligible refiners to seek relief,' it said.
MSM added that this is particularly crucial given the challenging operating environment, where retail sugar prices have been capped at RM2.85 per kilogramme since 2011 despite substantial rises in global raw sugar costs in recent years.
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The Star
4 hours ago
- The Star
Contradictheory: GST. SST. It's all complicated, and it all affects our pockets
Sometimes, something isn't what you want it to be, even if it's what you really, really want. Take the new animated movie KPop Demon Hunters , for example. I first thought it was just a silly cash grab to capitalise on the popularity of presumably K-pop and demon hunter fiction. It's like if you came out with a movie titled Taylor Swift's F1 or Dubai Chocolate ChatGpt . But the truth is, the movie is actually good. As good as a film about a K-pop girl group whose members are also demon hunters fighting a rival boy band whose members are secretly demons can be. At one point, I even wondered if it was meant to be a satire. Each group tries to win over fans, and I thought: Would the good group rely on honest talent and emotional sincerity, while their demonic nemeses use flashy promos and cheap tricks? Would the finale reveal that the boy band has no musical talent at all and (*gasp*) were lip-syncing? Unfortunately, it's just your standard story about learning to accept who you are, demon stripes and all. But there's a reason why this is such a universal theme: We want our heroes to be perfect – but the real world runs on pragmatism and compromise. A bit like taxation. What's the best way for a government to extract money to run the country from its citizens and economic activity? Ten years ago, Malaysia's answer was the goods and services tax (GST). Introduced in 2015, it was abolished just three years later and replaced by the sales and service tax (SST). This was despite the fact that GST collected more revenue. Analysis of Finance Ministry data by a business newspaper showed that tax collection dropped from just over RM44bil under GST in 2017 to just below RM30bil under SST in 2019. In particular, while GST's contribution represented slightly over 3% of Malaysia's GDP, SST in 2019 was slightly under 2%. This is relevant because Malaysia's tax-to-GDP ratio is among the lowest in the region, at just under 13% (compared with an Asia-Pacific average of 19.3% in 2022, and an Organisation for Economic Co-operation and Development average of 34%). Hence the rationale for the expanded SST, effective earlier this week on July 1. Depending from which direction you're looking at it, you see a different face of it. The government expects total SST collection in 2025 to hit RM51.7bil, overtaking the peak GST figure of RM44.3bil in 2017. Of course, as a percentage of GDP, it's still lower (around 2.5%), since Malaysia's economy has grown since then; but collection from SST is expected to continue to rise into 2026 (and presumably beyond). This is great for the government. From a consumer's perspective, however, it feels like there are now just more ways to pull a few more ringgit from our pockets. RHB Research estimates that the expanded SST will have a 'minimal impact' on overall inflation (about 0.3%), but my back-of-the-envelope calculations for myself suggests that if these rules had come into force last year, I would have spent an extra 4%-5% of my annual expenses on SST. In theory, lower-income households should be mostly spared. Essential goods like rice, milk, vegetables, and local fruits are zero-rated. But organisations like Fomca (the Federation of Malay-sian Consumers Associations) have warned that the taxation of raw materials and intermediary goods will eventually lead to overall higher retail prices anyway. From the viewpoint of a manufacturer, things aren't great. Imported goods now face SST as well as goods manufactured, so costs can pile on. A 2020 study found that when SST was reintroduced and expanded in 2018, the total cost of production across the economy rose by over 10%. In short, SST is not fun for either manufacturer or consumer. But it's also a cause for concern for accountants. According to the Malaysian Institute of Accountants (MIA), SST is structurally more complex and harder to implement than GST. 'One of the biggest problems with SST is that it causes cascading tax unless exemptions are properly desig-ned. Unlike GST, there's no input- output credit mechanism,' notes MIA council member Dr Veerin-derjeet Singh. It's no surprise that further tweaks, exemptions, and revisions can be expected in the near future, with businesses potentially caught trying to keep up, although I assume the government will be continually in contact with them for feedback. Which sort of makes me wonder to what extent they considered just reverting back to the GST? In many ways, it was the devil we knew. It had clear mechanisms, systems, and policies. Sure, it was unpopular, but many bitter pills that are good for the economy are. And given how political promises tend to evolve or detour mid-term, reintroducing GST would've just been one more page of difference in a manifesto with many others already torn out. Originally, I was going to be flippant and say that this new SST is basically just GST with a new face. It's collecting almost as much money and it broadens the tax base (though not quite as much as GST). But after reading the many concerns raised over the last few months, I think it's more accurate to say: it's complicated, with a lot of wrinkles to still iron out. Indeed, if GST was originally done away with because its three years of implementation made it unpopular enough to contribute to a change in government, I am curious to see what this new face of SST will do, especially when elections next roll around in three years time. Logic is the antithesis of emotion but mathematician-turned-scriptwriter Dzof Azmi's theory is that people need both to make sense of life's vagaries and contradictions. Write to Dzof at lifestyle@ The views expressed here are entirely the writer's own.
Borneo Post
4 hours ago
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FSI: Compounded tax and regulatory burdens impacting Sabah industries
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Focus Malaysia
5 hours ago
- Focus Malaysia
Faizal: Government should consult ex-PMs before expanding SST
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