PUTRAJAYA, June 9 — The Ministry of Finance today confirmed that the targeted revision of the Sales Tax (CJ) rates and expansion of the Service Tax (CP) scope under the MADANI Government will be implemented beginning 1 July 2025.
The move, previously announced in Budget 2025, aims to strengthen Malaysia’s fiscal position by increasing revenue without burdening the general public, while enhancing the quality of social safety nets. Finance Minister II, Senator Datuk Seri Amir Hamzah Azizan, explained that the reforms were carefully structured through stakeholder engagement with industry associations and tax agents.
The government has ensured that essential goods such as staple foods, medications, and key construction materials will remain exempt from sales tax, while service tax will only be extended to selected new sectors in a targeted manner. Under the revision, luxury and non-essential items like imported fruits, premium seafood, essential oils, and antique artwork will see higher sales tax rates of 5% or 10%.
Meanwhile, the service tax scope will expand to include leasing, construction, financial services, private healthcare, education, and beauty services — with exemptions in place for small businesses and basic services for Malaysian citizens to avoid multiple taxation.
Key provisions include higher exemption thresholds for micro, small, and medium enterprises (MSMEs), as well as special exemptions for residential construction, basic financial services, and education for Malaysians. Notably, private healthcare and traditional medicine services for citizens will be exempted from the new service tax, ensuring affordability and accessibility remain intact.
To support compliance, the government will not impose penalties or prosecution for companies registering and adjusting to the new tax rules until 31 December 2025. Detailed guidelines, FAQs, and legal updates will be released progressively via the Ministry of Finance and Royal Malaysian Customs Department’s official channels.
