KUALA LUMPUR, January 6 — Prime Minister Datuk Seri Anwar Ibrahim today announced a reduction in the service tax on rentals for micro, small and medium enterprises (MSMEs) to 6 per cent from 8 per cent, acknowledging concerns over rising business costs since the tax was introduced in July 2025.
Anwar said newly established MSMEs will also receive a one-year deferment, while the tax exemption threshold has been expanded to cover businesses with annual turnover of up to RM1.5 million, compared with the previous cap of RM1 million.
In a separate announcement, Anwar directed all ministries to immediately fast-track small-scale development projects, including rural roads, government quarters and clinic repairs, with work expected to begin as early as next month.
To speed up implementation, direct contractor appointments will be allowed for projects worth up to RM200,000, while quotation-based procurement may be used for projects valued at up to RM1 million.
The prime minister said RM2.4 billion has been allocated for small projects involving G1 to G4 contractors, most of whom are Bumiputera, and stressed that execution must begin without delay at state and district levels.
He added that the general expenditure warrant for 2026 was issued earlier than usual in December 2025 to ensure faster rollout and immediate economic impact.
