Malaysia’s Indirect Tax Reforms: Challenges, Compliance, and Future Budget Expectations

• Indirect taxes have become major revenue sources globally with rates increasing as governments face pressure to review direct taxes and implement measures like BEPS Pillar II
• Malaysia has undergone significant indirect tax reforms over the past decade including GST introduction and removal, recent Sales Tax reviews, and Service Tax scope expansion in July 2025
• Businesses face compliance challenges including interpreting taxable goods and services, determining exemptions, system enhancements, and customer communication, though the government provided a six month no penalty period
• The Royal Malaysian Customs Department offers support through helplines, seminars and workshops to ease the transition and provide clarifications to taxpayers
• The government projects additional revenue of RM5 billion in 2025 and RM10 billion in 2026 from recent changes, with hopes that Budget 2026 will not bring further expansions or rate increases to allow adaptation time

Source: news.futunn.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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