Malaysia’s Ministry of Finance has announced that 1,826 items are now exempt from or zero-rated under the expanded Sales and Service Tax (SST), which took effect on July 1. This number represents a significant increase from the 607 items that were tax-exempt under the Goods and Services Tax (GST) before its abolishment in 2018.
In a parliamentary reply, the ministry stated that the exemptions cover essential goods and daily necessities. This includes unprocessed foods like chicken, beef, goat, fish, and various vegetables, as well as local fruits and rice. Processed staples such as flour, sugar, salt, white bread, milk, and palm cooking oil are also exempt, along with key medical and educational items like medicines, medical devices, and reading materials.
The expanded SST framework also includes exemptions for a wider range of goods, including livestock and pet food, basic construction materials, fertilizers, pesticides, and agricultural and livestock machinery.
The reply was provided in response to an inquiry from Member of Parliament R. Yuneswaran, who sought clarification on the number and categories of items exempted under SST in 2025 compared to the previous GST system.
The ministry further noted that the service tax now applies to 70% of services in the economy, a reduction from the 76% covered by GST. Key exempted services include public transportation, such as school buses, express buses, trains, and ferries, as well as rural air services in Sabah and Sarawak and prepaid telecommunication services.
According to the ministry, the government is progressively implementing the SST expansion to minimize its impact on the cost of living. The increased number of exempted goods and the narrower scope of taxed services demonstrate the government’s commitment to citizen welfare and fiscal sustainability, aligning with the principles of the Madani economic framework.
The SST expansion is projected to generate an additional RM5 billion in revenue in 2025, with a further increase to RM10 billion anticipated in 2026.
