Stagger SST rollout for SMEs, young entrepreneurs, Dapsy S'wak chief urges MOF

Borneo Post

12-06-2025

Hee says while Sarawak's youth are ready to contribute to national development, they 'need space to breathe, grow, and recover'.
MIRI (June 12): The Ministry of Finance should apply a staggered rollout of the Sales and Service Tax (SST) expansion to allow time for young entrepreneurs and small businesses in Sarawak to adapt, said Peter Hee.
The Democratic Action Party Socialist Youth (Dapsy) Sarawak chief argued that unlike places like the Klang Valley, the state's business ecosystem is not tax-ready as many small and medium enterprises (SMEs) still rely on manual systems, especially in smaller towns and rural districts.
'As many businesses are yet to adopt digital invoicing or have access to accounting support, pushing them into a complex tax system overnight would be unfair and likely to cause non-compliance through confusion rather than intent.
'Tax reform must be fair – not just administratively efficient. If the government's intention is to increase revenue, it must not do so by pushing young and small entrepreneurs out of business,' he said in a statement.
He said while Sarawak's youth are ready to contribute to national development, they 'need space to breathe, grow, and recover'.
'Let's not tax away their future before it begins,' he added.
The Ministry of Finance has announced that the expansion of the SST effective this July 1, covering a wide range of services including private healthcare, education, financial services, construction, leasing, and personal care.
According to Hee, the announcement has raised serious concern among youth entrepreneurs and small business owners in Sarawak.
He said while Dapsy Sarawak supports responsible tax reform, it must be fair, inclusive, and sensitive to the realities on the ground, especially in Borneo.
'Sarawak's young entrepreneurs are showing remarkable initiative by venturing into business. Many are self-employed, running cafés, mobile salons, creative services, and online shops.
'However, they are already operating under pressure of rising electricity and rental costs; a weak ringgit affecting imports; as well as higher labour costs and compliance overheads, all while still in the process of post-pandemic recovery.'
Hee believes that introducing a broader SST at this stage could be a tipping point as these small businesses would either have to raise prices – potentially losing customers – or absorb the cost and risk shutting down.
Instead of targeting micro-enterprises, he said Putrajaya should focus on addressing tax avoidance by high-income individuals, corporate loopholes and monopolistic sectors that contribute less than their fair share to the government's coffers.
'It sends the wrong message when small local traders are taxed while mega-profits go untaxed.'
He said Dapsy Sarawak is proposing the government exempt SMEs with under RM500,000 in annual revenue from the initial SST rollout; create a tax transition fund to support SMEs in system upgrades and tax literacy; and establish a youth enterprise relief scheme offering a three-year SST exemption for entrepreneurs under the age of 30.
'Sarawak should also be included in national tax policy conversations through an East Malaysia Tax Advisory Council,' he said. DAPSY Finance Ministry MoF Peter Hee SST