Sabah amends sales tax law, approves forest degazettement and launches Malaysia's first carbon credit law
The first Bill introduced 37 amendments to the State Sales Tax Enactment 1998 to strengthen fiscal governance, improve tax administration, and ensure continued sustainable revenue for the state.
Finance Minister Datuk Masidi Manjun said the amendments do not introduce any new taxes but instead refine and update the existing law to make it more efficient, fair, and responsive to the current economic environment.
'This is not just a technical exercise, but a holistic reform to ensure our sales tax system remains effective in a complex and evolving economy,' said Masidi.
'We are actively tightening the system, closing leakages, and protecting the rights of taxpayers,' he added.
One update expands the definition of 'sale' to include the removal of taxable goods from Sabah, even if the transaction occurs outside the state.
Other changes criminalise the unlicensed sale of taxable goods, sales outside authorised premises, refusal to provide computerised data, and impersonation of tax officials.
Taxpayers will now be able to appeal to an Appeal Board or tribunal and apply to pay sales tax or penalties by instalments.
A new State Sales Tax Appeal Board will be established to handle disputes, though the cost of setting up the board is still unknown.
'We consulted some of the best tax lawyers in the country and also the State Attorney General,' said Masidi.
'This is about closing gaps, not raising taxes,' he said, noting the changes balance administrative effectiveness with taxpayer fairness.
State sales tax revenue has grown from RM89 million or 7 per cent of state revenue in 1999 to RM3.03 billion or 44.5 per cent in 2024.
The number of items taxed under the State Sales Tax has increased from three in 2018 — crude palm oil, lottery tickets, and slot machines — to nine in 2025, including petroleum products, fishery commodities, scrap metal, silica sand, palm biomass, and locally mined gold and silver.
As of June 2025, total collections since its inception stood at RM32.26 billion, with 386 licensed taxpayers contributing an average of RM250 million monthly.
'This demonstrates that the SST is no longer a supplementary revenue stream — it is now a primary source of Sabah's fiscal sustainability and development,' Masidi told the House.
While some opposition members raised concerns about a potential rise in living costs, it remains unclear whether the amendments will impact consumer prices.
Meanwhile, the Forest Enactment (Amendment) 2025 Bill proposed the degazettement of 16,728.9 hectares from 10 forest reserves to formalise 40 rural villages, build the Serudong–Simanggaris ICQS complex, and support local infrastructure and livelihoods.
The areas affected span across Sipitang, Tenom, Kemabong, Tawau, Kalabakan, Ranau, and Pitas, and will benefit over 12,000 residents.
The degazetted forest classes include Class I (Protection), Class II (Commercial), Class IV (Amenity), Class V (Mangrove), and Class VI (Virgin Jungle Reserve).
'Despite the degazettement, Sabah's total Permanent Forest Reserve will only shrink by 0.47 per cent, from 3.575 million hectares to 3.558 million hectares,' said Assistant Minister in the Chief Minister's Department Datuk Nizam Abu Bakar Titingan.
He said the state government would replace the removed forest areas with equally sized reserves to uphold its conservation commitments.
The final Bill passed was the Climate Change and Carbon Governance Enactment 2025, the first legislation of its kind in Malaysia.
Assistant Minister Datuk Abidin Madingkir said the Bill protects Sabah's status as a 'net carbon sink' — one of the few places globally that absorbs more carbon than it emits.
He described it as a 'strategic economic asset' that must be safeguarded to maintain Sabah's environmental and economic standing.
The law will establish a full carbon governance framework, promote inclusive climate action, and ensure climate benefits are shared by all Sabahans.
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Free Malaysia Today
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- Free Malaysia Today
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Hasnah is set to retire on Nov 15 this year, and Zabariah even earlier, on Oct 10. Meanwhile, Chief Judge of Sabah and Sarawak Abdul Rahman Sebli retires on July 24, having already had his tenure extended. Two other senior Federal Court judges will also have to step down soon. Nallini Pathmanathan will turn 66 on Aug 22 this year, and will vacate her office unless her tenure is extended, while Hanipah Farikullah, whose tenure was extended earlier this year, will leave the bench on Nov 22. Of those who remain, Abu Bakar Jais turns 66 on June 27 next year, Lee Swee Seng (Nov 26, 2026), Rhodzariah Bujang (Nov 5, 2027), Vazeer Alam Mydin Meera (Jan 3, 2028), Nordin Hassan (July 13, 2028), and Ahmad Terrirudin Salleh (April 12, 2034). Given Tengku Maimun and Abang Iskandar's retirement and the impending loss of five judges, it would appear that the prime minister has a lot to answer for. 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As prescribed under Article 122B(1), all appointments were made on the advice of the prime minister. There were no complaints at the time that the JAC was idle. Clearly, it performed its statutory duty of vetting the candidates and recommending their appointment. Neither did anyone accuse the prime minister of impropriety or interference. Once again, the commission will have a lot to do this time round. After all, promotions to the apex court will result in vacancies in the Court of Appeal, which will have to be filled through promotions from the High Court, resulting in even more vacancies at the bottom tier. The primary gripe of many appears to be that Anwar had apparently dismissed recommendations made by the JAC for appointments to the judiciary's top posts during Tengku Maimun's tenure. 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