SST expansion: No big impact on parents sending children to private kindergarten
KUALA LANGAT: The expansion of the Sales and Services Tax (SST) will not have a significant impact on parents who send their children to private nurseries, kindergartens or preschools, said Women, Family and Community Development Minister Datuk Seri Nancy Shukri.
She said this was because the service tax would only apply to operators imposing annual tuition fees exceeding RM60,000 per student.
"The public need not worry, as it is understood that most private institutions currently do not charge fees that reach the RM60,000 threshold per year," she told reporters after the Anjung Sinar 2025 Programme appreciation ceremony here yesterday.
Nancy also reminded entrepreneurs not to capitalise on efforts to strengthen the country's fiscal position and broaden the tax base in ways that would burden parents.
"We hope they (business operators) will act honestly to help parents so that they are able to work.
"Operators must also remember that people need their services, so do not charge excessively," she said.
The six per cent service tax, which will be imposed from July 1 on educational services including private preschools and schools, will not apply to Malaysian citizens with disabilities.
At the programme, Nancy presented awards to five outstanding icons of the Anjung Sinar Programme by Yayasan Kebajikan Negara (YKN), representing the education, leadership, community, career and volunteer categories.
The icons were selected based on their achievements and significant contributions over the three years they were mentored and guided through the comprehensive approach offered under the Anjung Sinar Programme, which began in 2023.
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Malay Mail
12 minutes ago
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Taxing without reform: Why Malaysia's SST hike misses the mark — Tan Wei Siang
JUNE 30 — On July 1, 2025, Malaysians will begin paying more for a range of services as the government raises the Sales and Service Tax (SST) from 6 per cent to 8 per cent. Framed as part of the Madani Government's broader fiscal reform efforts, this move is projected to generate an additional RM3 billion annually. However, a deeper look reveals that this is less about meaningful reform and more about plugging short-term fiscal gaps. The SST hike may be the most visible tax adjustment since the Goods and Services Tax (GST) was repealed in 2018, but it is not a structural solution to Malaysia's longstanding fiscal challenges. The government justifies the increase by pointing to Malaysia's low tax-to-GDP ratio — about 11.8 per cent compared to Thailand's 16 per cent or Vietnam's 19 per cent — and its need to diversify revenue away from volatile petroleum sources. But the SST, by design, is narrow in scope, non-transparent, and prone to inefficiencies. Unlike the GST, which taxed consumption broadly with built-in mechanisms for input tax credits, the SST is a single-stage tax. This results in cascading effects, where businesses simply pass the hidden costs down the supply chain, ultimately inflating prices for consumers. Because the SST only applies to selected goods and services, a large portion of the economy remains untaxed. In an economy where the informal and shadow sectors are growing, this limited coverage raises questions about fairness and effectiveness. Many economists agree that Malaysia had a better system with GST, abandoned not because it failed in principle, but because it was poorly implemented. The GST was broad-based, efficient, and allowed for more accurate tracking of economic activity. Its input credit mechanism prevented tax-on-tax effects, and it aligned with international best practices. What it lacked was political and operational maturity: it was rolled out without strong public communication, and it was not paired with sufficient protections for lower- and middle-income households. Instead of fixing these shortcomings, the government of the day chose to scrap it entirely. Now, we are left with a weaker alternative that raises revenue less equitably. The Ministry of Finance has clarified that agricultural produce grown in Malaysia are not subject to sales tax under the expanded Sales and Service Tax. — Bernama pic The current administration has signalled that more tax changes are coming, including new luxury taxes and further subsidy rationalisation. But so far, these announcements have been scattered and lack a clear, time-bound roadmap. What Malaysia urgently needs is not just higher taxes, but a comprehensive and transparent fiscal reform strategy. The government should publicly commit to a timeline for phasing out blanket fuel and electricity subsidies, expanding targeted assistance, reforming income tax structures, and, if needed, reintroducing the GST in a way that is progressive and fair. Without these steps, Malaysia risks falling into a cycle of temporary fixes and long-term stagnation. The people of Malaysia are not resistant to reform. What they resist is uncertainty and the feeling that they are being asked to pay more without knowing where the money is going or how it will improve their lives. Fiscal responsibility is not simply about collecting more money from the public — it is about governing more transparently, spending more effectively, and building trust. The SST hike, taking effect on July 1, may raise revenue in the short term, but it does not constitute real reform. Without a transparent plan, bold political leadership, and clear accountability, the government risks losing the very trust it needs to implement future reforms. If the government is truly serious about building a sustainable, inclusive economy, it must stop relying on patchwork fixes. Malaysia cannot afford to raise taxes without also tackling leakages, rationalising subsidies, and laying down a concrete roadmap for structural change. The rakyat deserves more than ad hoc policies. They deserve a government with a long-term vision, the courage to make tough decisions, and the discipline to follow through. * Tan Wei Siang writes on economic policy, structural reform, and Malaysia's development agenda. He believes in honest governance, equitable growth, and long-term nation-building. ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
Malay Mail
13 minutes ago
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SST will not impact private kindergarten fees, says women's minister
KUALA LANGAT, June 30 — The expansion of the Sales and Services Tax (SST) will not have a significant impact on parents who send their children to private nurseries, kindergartens or preschools, said Women, Family and Community Development Minister Datuk Seri Nancy Shukri. She said this was because the service tax would only apply to operators imposing annual tuition fees exceeding RM60,000 per student. 'The public need not worry, as it is understood that most private institutions currently do not charge fees that reach the RM60,000 threshold per year,' she told reporters after the Anjung Sinar 2025 Programme appreciation ceremony here yesterday. Nancy also reminded entrepreneurs not to capitalise on efforts to strengthen the country's fiscal position and broaden the tax base in ways that would burden parents. 'We hope they (business operators) will act honestly to help parents so that they are able to work. Operators must also remember that people need their services, so do not charge excessively,' she said. The six per cent service tax, which will be imposed from July 1 on educational services including private preschools and schools, will not apply to Malaysian citizens with disabilities. At today's programme, Nancy presented awards to five outstanding icons of the Anjung Sinar Programme by Yayasan Kebajikan Negara (YKN), representing the education, leadership, community, career and volunteer categories. The icons were selected based on their achievements and significant contributions over the three years they were mentored and guided through the comprehensive approach offered under the Anjung Sinar Programme, which began in 2023. — Bernama
New Straits Times
14 minutes ago
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F&B operators aim to stay resilient amid SST and cost pressures
KUALA LUMPUR: Food and beverage (F&B) prices are expected to rise as operators manage higher costs under the expanded Sales and Service Tax (SST), industry groups say. Associations representing restaurants, retailers and small and medium enterprises (SMEs) noted that the eight per cent SST on services, including commercial rentals, combined with rising input costs will leave many businesses with little choice but to adjust prices, despite the risk of losing some customers. Persatuan Pengusaha Restoran Muslim Malaysia (PRESMA) president Datuk Jawahar Ali told Business Times that prices are likely to increase in certain segments, especially those already operating on tight margins. "While many operators are trying their best to absorb the cost, cumulative increases from SST, higher raw material prices and rising labour costs make it very difficult to do so. "Our members are encouraged to be transparent with customers by displaying breakdowns of pricing and tax where possible, as well as communicating the reason for any price adjustment clearly to avoid misunderstanding or loss of trust," he said. Meanwhile, SME Association of Malaysia national president Dr Chin Chee Seong said a price increase in the F&B sector is widely expected following the implementation of the revised SST, driven largely by the tax on commercial rentals, which is set to cascade through operating costs and ultimately impact menu prices. "For many F&B operators, rental constitutes a significant portion of fixed overheads, especially in high-traffic malls or prime commercial locations. "The imposition of an 8 per cent tax on rental charges directly increases cost burdens, which most businesses find difficult to absorb without adjusting their pricing structures," he added. Chin also said that the sector is highly price-sensitive; hence, marginal increases can influence consumer behaviour. "Operators fear that price hikes may lead to lower footfall, reduced frequency of visits, or a shift in customer preferences towards home-cooked alternatives or lower-cost options," he said. Short notice and uneven readiness While some larger chains are ready for the rollout, many small and medium-sized operators remain unprepared. The Small and Medium Enterprises Association (Samenta) national president Datuk William Ng said larger SMEs, especially those in the retail and F&B sectors with modern point-of-sale (POS) systems, tend to be more prepared, while smaller ones are still in the midst of adjusting. "It's not as simple as updating the POS. You need to reprint materials, price lists, and signages and train employees on the expanded SST, especially if you are caught with multiple tiers of SST. "In fact, some manual POS do not have the option of adding a second or third button for varying SST levels," he said. Ng added that many SMEs remain hesitant about whether to pass the tax burden onto consumers, caught between the risk of losing customers in a highly competitive, price-sensitive market and the strain of absorbing additional costs amid weak consumer spending. "Micro and small enterprises are disproportionately affected, despite the revenue threshold. Many do not have access to proper accounting support or digital tools, making compliance more challenging. "Awareness and understanding of SST regulations are also limited in this group. Without targeted outreach and education, there is a risk of non-compliance, either inadvertently or out of necessity," he warned. Bumiputra Retailers Organisation president Datuk Syed Naqiz Shahabuddin Syed Abdul Jabbar added that although larger franchises are likely compliant, many SMEs and independent eateries are still adapting, especially those newly crossing the RM1.5 million annual revenue threshold for mandatory registration. Despite a Customs Department grace period for penalty-free adjustments until December 2025, he said uncertainty around taxable services and implementation procedures persists. "The transition period is tight and many are still finalising changes, particularly in ensuring system accuracy and customer communication," Syed Naqiz Shahabuddin said. Datuk Jawahar said not all POS vendors serving PRESMA members are ready to deliver the necessary system updates, especially for operators still using older systems. "There's also confusion on how exactly to apply SST for dine-in versus takeaway or delivery orders, which complicates system setup and pricing," he added. This, he said, poses significant challenges for small F&B operators, many of whom lack the technical capability to update their POS systems quickly. The additional costs for software upgrades, staff training and accounting support also place further strain on already thin profit margins. Chin Chee Seong warned that the expanded SST, combined with other cost pressures like new EPF contributions for foreign workers, higher electricity and gas tariffs, and logistics costs, would significantly erode profit margins. "The SST regime is widely perceived by our members as less business-friendly compared to GST. SST's cascading tax effect, coupled with its limited input tax credit mechanism, reduces transparency and increases compliance burdens, especially for service-based SMEs. "Most SMEs anticipate that the increased tax burden will inevitably be passed down to consumers, which is expected to contribute to rising inflation, with many estimating inflation could rise up to 5.0 per cent in 2025, driven by higher retail and service prices," he said. While businesses exceeding RM1 million in annual revenue are clearly mandated to register and comply, Chin said even those below the threshold face confusion and operational strain, especially with the upcoming implementation of e-Invoice. Calls for policy review and gradual rollout In response, associations are urging the government to revise the SST implementation approach. PRESMA called for a grace period for enforcement, clearer sector-specific guidelines and a public awareness campaign to manage expectations. "We are not against taxation, but we believe a more gradual, better-informed rollout will ensure fairness and long-term sustainability for both the government and the business community," Jawahar said. The Bumiputra Retailers Organisation proposed deferring SST on rental services until economic conditions stabilise and raising the SST registration threshold for rental income to RM5 million to support micro and small businesses. The SME Association of Malaysia urged the government to immediately postpone or reconsider the implementation, particularly with regard to rental and leasing charges, which pose significant risks to business sustainability across multiple sectors. Chin said the revised tax will dampen the growth and resilience of SMEs, many of whom are already struggling with rising operational costs and limited margins. He said the additional tax burden will inevitably be passed on to consumers and is likely to drive inflation in the coming year, further weakening consumer spending and economic stability. "We call for a comprehensive, evidence-based impact assessment, coupled with meaningful engagement involving all affected stakeholders, including industry associations, SMEs and business leaders. "A policy of such significance must be shaped through inclusive dialogue to ensure that it is both economically sustainable and socially equitable," he added.
