Malaysia Updates Sales Tax Rates and Broadens Service Tax Coverage Effective 1 July 2025

• Malaysia’s 2025-26 tax revisions, effective 1 July 2025, adjust Sales Tax rates on discretionary goods and expand Service Tax coverage to sectors like leasing, construction, healthcare, education, and beauty services.

• Sales Tax remains at 0% for essential goods; discretionary items face 5% or 10% rates depending on classification, with imported fruits now subject to tax, while locally grown fruits remain exempt.

• New Service Tax rates range from 6% to 8% depending on the sector, with specific revenue thresholds and exemptions set for each service category to minimize cascading tax effects.

• Companies newly subject to Service Tax must assess revenue thresholds; those reaching thresholds in July must register by August, with tax collection starting September 2025 and a penalty grace period through December.

Source: Orbitax

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