Amendments to the Expanded Sales Tax and Service Tax Legislations

Further to our earlier Tax Whiz (here) issued on 30 June 2025, the following amendments to the relevant Sales Tax and Service Tax Regulations and Orders have been gazetted to incorporate the latest announcements made by the Ministry of Finance (“MOF”):

a) Sales Tax (Rate of Sales Tax) (Amendment) Order 2025

b) Sales Tax (Goods Exempted from Sales Tax) (Amendment) Order 2025

c) Service Tax (Amendment) Regulations 2025 (Amendment) Regulations 2025

These Regulations and Orders come into operation on 1 July 2025.

We have prepared a brief summary as follows:

a) Sales Tax (Rate of Sales Tax) (Amendment) Order 2025

• Clarifies transitional rules for exempted goods that become taxable:
  ▪ If invoice is issued before 1 July 2025, no Sales Tax shall be charged or levied
  ▪ If such goods are used or disposed of on or after 1 July 2025, Sales Tax shall be charged and levied even if the usage or disposal was recorded before 1 July 2025

• Amendments to the First Schedule:
  ▪ Deletion of certain headings/ tariff codes:
   - 0804.10.00 00 (Dates)
   - 0805.10.10 00 (Fresh oranges)
   - 0805.21.00 00 (Mandarins, including tangerines and satsumas)
   - 0808.10.00 00 (Apples)
   - 1404.90.99 00 (Other vegetable products)
   - 86.09 (Containers specially designed and equipped for carriage by one or more modes of transport)
  
  ▪ Replacement and addition for:
   - Specific fish products (tariff code 0302.41.00 00)
   - Animal feed preparations (heading 23.09)
   - Laminated safety glass (heading 70.07)

b) Sales Tax (Goods Exempted from Sales Tax) (Amendment) Order 2025

• Deletion of certain tariff codes, including specific fish products under heading 03.05
• Revision or substitution, including under headings 04.02, 89.03, 89.06
• Refining or removing certain descriptions under headings 19.01, 30.06
• Addition of new exempted goods, including under headings 08.04, 08.05, 08.08, 39.25, 73.14, 86.09, 89.01 etc

c) Service Tax (Amendment) Regulations 2025 (Amendment) Regulations 2025

• Remove the definition of “wellness centre”
• Increase the Service Tax registration threshold from RM500,000 to RM1,000,000 for:
  ▪ Group H (Financial Services), items 2, 3, and 4
  ▪ Group K (Rental or Leasing Services)

With all the developments, businesses are encouraged to continuously stay up to date as the changes could impact the Sales Tax and Service Tax treatment, business operations as well as competitiveness.

Please click on the above header links for copies of the legislations at the Federal Legislation Portal of Malaysia and KPMG’s highlights (Tax Whiz) for further information.

Evelyn Lee
Partner
evewflee@kpmg.com.my
+603 7721 2399

Crystal Chuah Yoke Chin
Associate Director
ycchuah@kpmg.com.my
+603 7721 2714

Regina Lau
Partner
reglau@kpmg.com.my
+603 7721 2188

Titus Tseu
Executive Director 
titustseu@kpmg.com.my
+603 7721 2822

Ng Fie Lih
Partner 
flng@kpmg.com.my
+603 7721 2514