
Tax policy must not leave indigenous communities behind, PBDS warns
KUCHING (July 7): Parti Bansa Dayak Sarawak (PBDS) has voiced deep concern over the implementation of the Sales and Services Tax (SST) effective July 1, warning that the policy risks could intensify economic hardship for the rural Dayak population in Sarawak.
PBDS Permanent Chairman, Dr John Brian Anthony, stressed that the broad application of the SST could further marginalise indigenous communities, who are already struggling with low income levels, high living costs, and limited infrastructure.
'While we understand the government's need to strengthen national revenue through taxation, such fiscal policies must not come at the expense of the socio-economic wellbeing of rural Sarawakians,' said Dr John in a statement.
He noted that many rural Dayaks depend on subsistence farming, manual labour, and small-scale trade, making them particularly vulnerable to price increases resulting from the SST.
Dr John further explained that this impact is in stark contrast to urban communities, which have more diversified economic opportunities.
He also criticised the lack of targeted exemptions and the absence of meaningful consultation with native leaders prior to the tax's implementation.
'There was no proper consultation with indigenous stakeholders. A one-size-fits-all approach shows a serious disconnect from realities on the ground,' he asserted.
He also cautioned that the SST may undermine the inclusive development goals outlined under the Malaysia Madani framework.
For that, he called upon the federal and Sarawak governments to introduce exemptions for essential goods and services used in rural areas, and to establish a Rural Economic Impact Assessment Committee to examine how national fiscal measures affect indigenous populations.
He also called for increased in rural subsidies, development grants, and continuous engagement with Dayak leaders and civil society organisations in policy development.
'Economic justice is integral to indigenous rights, while development cannot be considered fair if it leaves the rural poor behind,' he said.
'Dayak voices matter and PBDS demands inclusive fiscal policies,' he added, reiterating the party's commitment to defending indigenous interests.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Malay Mail
2 hours ago
- Malay Mail
Towards economic resilience: Malaysia's SST expansion is a tough but necessary step if done right — Goh Lim Thye
JULY 7 — On 1 July 2025, Malaysia implemented a revised and expanded Sales and Service Tax (SST) under the Madani economic framework. While this move had been anticipated by policymakers and industry players, it nevertheless sparked considerable public backlash, particularly among middle-income and urban households already coping with rising living costs. Such frustration is understandable. However, it is also crucial to examine the rationale, intended outcomes, and broader implications of the revised SST through a clear, evidence-based lens. Though not without flaws, the policy represents an important step in Malaysia's broader effort to strengthen fiscal stability and could deliver long-term benefits if implemented thoughtfully and fairly. The SST, reintroduced in 2018 to replace the GST, has been criticised for its narrow tax base and inefficiencies in enforcement. The revised SST seeks to correct some of these weaknesses. The new measures include an increase in the service tax rate from 6 per cent to 8 per cent for selected sectors, excluding essential services such as food and beverage, telecommunications, logistics, and parking. It also expands the scope of taxable services to include private clubs and karaoke centres. Importantly, the government responded to public sentiment by exempting daily essentials such as rice, vegetables, fish, eggs, and certain imported fruits like apples and oranges from sales tax. Additionally, the threshold for SST registration for financial and rental services was raised from RM500,000 to RM1 million, shielding many MSMEs from the expanded tax burden. Malaysia climbed 11 positions to 23rd in the 2025 IMD World Competitiveness Ranking, its highest placement since 2020. Fiscal management is one of the key pillars in this ranking. A stronger tax structure that supports reduced fiscal deficits and sustainable debt management sends a positive signal to investors and rating agencies. — Unsplash pic From a macroeconomic standpoint, Malaysia's tax-to-GDP ratio was just 12.2 per cent in 2022 and has since risen modestly to 13.2 per cent as of Q3 2024. This remains significantly lower than Thailand (16 per cent) and well below the OECD average of over 30 per cent. Such a low tax base constrains the government's ability to fund development expenditure and social protection sustainably. The 2025 Budget estimates an additional fiscal revenue of RM5 billion from newly included items under the revised SST, helping to close the fiscal gap. With Malaysia's national debt standing at RM1.22 trillion — around 63 per cent of GDP as of April 2024 — and the fiscal deficit narrowing from 5.0 per cent in 2023 to 4.1 per cent in 2024, enhancing domestic revenue mobilisation is not a policy choice but a necessity for fiscal resilience. The government has targeted a further reduction in the deficit to 3.8 per cent by 2025. This strategy is not unique to Malaysia. Many economies have broadened their indirect tax systems in the wake of the pandemic. Singapore currently imposes a 9 per cent Goods and Services Tax (GST) as of January 2024, having increased it from 8 per cent the year before. This rate is higher than Malaysia's and reflects a commitment to broad-based consumption taxation while maintaining redistributive policies through schemes like the GST Voucher and permanent U-Save utilities rebates. Indonesia applies a Value Added Tax (VAT) of 11 per cent as of 2022, up from 10 per cent, and is considering increasing it further to 12 per cent by 2025. This reflects an ongoing effort to strengthen revenue mobilisation and support long-term fiscal sustainability. New Zealand runs a 15 per cent GST with minimal exemptions but offsets regressivity through targeted welfare transfers and a progressive income tax system. These international examples underscore that indirect tax systems can be sustainable if designed and implemented within a broader framework of redistribution and transparency. Nonetheless, the regressivity of indirect taxes remains a valid concern. Lower-income households tend to spend a larger portion of their income on consumption and are thus more vulnerable to price hikes. To address this, it is essential that part of the revenue generated from SST expansion be reinvested into targeted assistance. Strengthening direct cash transfer schemes like Bantuan Tunai Rakyat (BTR), expanding food and transport subsidies, and enhancing public healthcare accessibility are crucial to offset the distributional impact of the tax. Moreover, policymakers must ensure there are no leakages in revenue deployment. Effective monitoring by the Auditor General and the Public Accounts Committee (PAC), alongside the use of digital public finance dashboards, would enhance accountability and trust. An often overlooked dimension of tax reform is its contribution to macroeconomic stability and global competitiveness. Malaysia climbed 11 positions to 23rd in the 2025 IMD World Competitiveness Ranking, its highest placement since 2020. Fiscal management is one of the key pillars in this ranking. A stronger tax structure that supports reduced fiscal deficits and sustainable debt management sends a positive signal to investors and rating agencies. If the additional SST revenue contributes to narrowing the deficit from 5 per cent to the targeted 3.8 per cent of GDP over the medium term, it could enhance Malaysia's sovereign credit outlook and investor confidence. Still, effective policy implementation requires clear and consistent communication. The government's decision to reverse the taxation of beauty services and exempt select fruits after public outcry shows policy responsiveness but also highlights the need for better stakeholder engagement. Economic policy, particularly one that affects consumer behaviour and firm-level pricing decisions, must be grounded in transparent consultation. Deliberative dialogue with civil society, chambers of commerce, and think tanks can help preemptively identify blind spots and build public buy-in. Ultimately, the revised SST is a step toward fiscal sustainability and institutional maturity, not an endpoint. It must be accompanied by broader structural reforms improving tax administration efficiency, reducing procurement leakages, and adopting medium-term expenditure frameworks. Equally important is ensuring that taxation is linked to visible and equitable service delivery. Citizens are more likely to accept taxation if they see tangible returns in the form of improved infrastructure, quality education, and accessible healthcare. In conclusion, while the expanded SST is far from perfect, dismissing it outright would ignore the urgent fiscal imperatives confronting Malaysia. The challenge lies in translating tax collection into inclusive development. If additional revenues are allocated with integrity and directed toward closing equity gaps, the SST reform could represent not merely a tax hike, but a pivot toward a more resilient and just economic model. * Dr Goh Lim Thye is a senior lecturer at the Department of Economics, Faculty of Business and Economics, Universiti Malaya, and may be reached at [email protected] ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.


The Sun
4 hours ago
- The Sun
Tax Matters – Non-reviewable contracts: Relief or missed opportunity from SST?
IT IS very common for businesses to sign long-term contracts that will go beyond one year. At the time of signing these contracts, the parties to the contracts would not have anticipated the expansion of the Sales and Service Tax (SST) and therefore not built in the necessary clauses to apply the additional taxes. When the announcements came out together with the guides on June 9, 2025, that was the first time taxpayers started understanding the impact of the expansion on their business. At that point, taxpayers were informed that they will be given some leeway via the 'non-reviewable contracts' exemption for a period of 12 months to cushion them from the impact of the expanded SST on ongoing contracts. Is stamping really necessary? On June 29, 2025, a major surprise was thrown at taxpayers which curtailed many businesses from enjoying this temporary exemption for 12 months. The principal impediment which will prevent businesses from enjoying the 12-month non-reviewable contract exemption is a particular condition that states that only contracts that were stamped before June 9, 2025 will be able to enjoy the exemption. This exemption is only available for construction contracts, rental or leasing services contracts and financial services contracts. The requirement to have documents stamped before June 9, 2024 is of a retrospective nature and one of the important principles of tax is 'certainty'. Bringing in rules and legislation that are applied retrospectively is not good practice or law. We believe the purpose of introducing June 9, 2025 as stamping date, although the announcement was made on June 29, 2025, was intended as anti-avoidance measure to prevent the abuse of this provision. The fear could have been on the basis that businesses would attempt to create new documents or modify existing ones to benefit from the exemption. Unfortunately, this can be an 'overkill' because genuine transactions which have been entered into by the parties is effectively thrown out of the window. Genuine transactions that are unlikely to be litigated in court need not be stamped and these transactions will be barred from enjoying the exemption. The Stamp Act does not mandatorily require every written instrument to be stamped. It merely states that if you wish to have it stamped, you must send it for adjudication and seek an assessment. On this understanding, many taxpayers genuinely may not have stamped their agreements. Imposing the stamping requirement condition as a prerequisite to benefit from the exemption appears to be contradictory to the commercial relationship of the parties of the contract. Other problems around non-reviewable contracts It is very likely that we are going to face in the future the same problems we faced when we dealt with similar provision when the Goods and Services Tax was in force. The kind of problems that taxpayers are going to face is the meanings of the phrases 'fixed contract values', 'reviewable or not reviewable' and 'price revision clause or value adjustment mechanism', etc. What happens when existing contracts contain specific tax clauses that allows the parties to pass on any new taxes without changing the original contract price? Similarly, what happens to other clauses that allow certain reimbursable costs without affecting the original contract price for the services or goods provided? How will such changes be interpreted? Will it fall within the non-reviewable contract exemption, or would it be outside? There are many more challenges taxpayers will face when dealing with this exemption. Way forward To avoid any disputes with the Royal Malaysian Customs Department, we would urge taxpayers to immediately bring up all their uncertainties around this issue to the authorities and obtain a ruling. This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (


The Star
4 hours ago
- The Star
Property sector earnings visibility set to improve
Affin Hwang Investment Bank Bhd said it will maintain an 'overweight' stance on the sector. PETALING JAYA: Malaysia's property market is expected to experience a reacceleration in the second half of 2025, says Affin Hwang Investment Bank Bhd. In a report, it said it will maintain an 'overweight' stance on the sector as earnings visibility is set to improve as developers ramp up billings from deferred launches and back-loaded execution. 'While the revised sales and service tax (SST) framework introduces incremental cost pressure, 6% to 8%, our analysis suggests that margin drag remains manageable,' it noted. SST absorption could weigh incrementally on margins for developers with larger exposure to industrial, data centre, or non- Housing Development Act mixed-use products. 'Developers typically pass on SST-related costs via higher selling prices, though weaker markets like offices may see partial absorption to sustain take-up. 'However, we think demand in the industrial and commercial segment should remain strong and enhance pass-through ability, reducing the likelihood of any meaningful margin erosion,' the report said. But it is worth noting that serviced apartments built on commercial land but intended for residential use will be exempted from the 6% SST on construction services. The research house explained the sector is shifting its focus toward industrial monetisation and lease-based recurring income, with developers like Sime Darby Property Bhd (SimeProp) and Eco World Group Development Bhd (EcoWorld Malaysia) benefiting from strong traction in data centre (DC) and custom built facilities) deals. It also said UOA Development Bhd (UOAD) is gaining momentum, supported by healthy sales at well-located projects such as Bamboo Hills. 'We favour developers with active land banking strategies, strong DC land sales, and rising leasing income. 'SimeProp (industrial projects comprise 35% of remaining gross development value) and EcoWorld Malaysia (33%) stand out for their execution consistency and leasing strength,' it noted. Furthermore, the research house said the sector's current share price discount to revalued net asset value is at 41%, nearly a standard deviation below its five-year average. Affin Hwang Investment noted it sees a potential re-rating as the Johor-Singapore Special Economic Zone remains a standout catalyst. A catalyst would be Exsim Group's Causewayz @ Lumba Kuda that achieved full take-up within an hour for phase one. 'EcoWorld Malaysia and SimeProp are best positioned to leverage industrial and data centre demand given strong land monetisation pipelines. 'UOAD now offers a differentiated angle via its Johor RTS-linked project; with average-selling-prices guided at RM1,000 to RM1,200 per sq ft, pricing could be revised upward amid expectations of stronger-than-expected demand,' Affin Hwang explained. Meanwhile, Affin Hwang said while it has a positive view, key downside risks still exist, and include a rise in property overhang adversely impacting demand and product pricing; and labour shortages and rising building material costs, which will lead to higher operation costs.