Finance Ministry Highlights Broader Exemptions Under SST
KUALA LUMPUR, August 20 — The Ministry of Finance (MOF) has revealed that the Sales and Service Tax (SST) includes a significantly broader range of tax-exempt or zero-rated items compared to the now-defunct Goods and Services Tax (GST). In a written response presented in Parliament, the ministry stated that 1,826 items are exempted under SST, which is more than triple the 607 items that were exempted under GST before its abolishment in 2018.
The reply was in response to a question from Yuneswaran Ramaraj, Member of Parliament for Segamat, who sought clarification on the scope of exemptions under the SST system. The ministry emphasized that the list of exempted items under SST includes a wide variety of daily essentials used by the general public.
Essential Goods Among Exempted Items
According to the MOF, items exempted under both SST and GST include essential unprocessed food such as chicken, beef, mutton, fish, vegetables, local fruits, and rice. Additionally, processed food items like flour, sugar, salt, white bread, milk, and palm cooking oil also remain untaxed.
In the healthcare domain, medicines and medical devices are included in the list of exempted items, along with reading materials to encourage educational development. The ministry added that this broad exemption coverage reflects the government’s commitment to minimize the tax burden on lower and middle-income households.
Additional Items Free From SST
The Finance Ministry further elaborated that several other critical items are not subject to SST. These include livestock feed, basic construction materials, fertilizers, pesticides, and agricultural or livestock machinery. These exemptions are aimed at supporting the agriculture and construction sectors by reducing operational costs and encouraging economic activity.
“These measures are part of the government’s strategy to ensure that key economic sectors remain competitive and that essential goods remain affordable for the rakyat,” the ministry noted.
Service Tax Scope Narrowed
Regarding the service tax component, the MOF pointed out that SST affects only about 70 per cent of services in the economy, in contrast to the broader 76 per cent under the previous GST regime. This comparison is based on the Malaysia Standard Industrial Classification Codes.
Several basic services continue to be exempted from service tax under SST. These include land and sea passenger transport services such as school buses, express buses, LRT, trains, and ferries. Furthermore, air passenger transport provided under the Rural Air Services in Sabah and Sarawak is also not taxed.
Everyday Services Also Exempted
Among the daily services that remain exempted are prepaid telecommunications, food and beverage delivery via e-commerce platforms, and services related to residential rentals, maintenance, and cleaning. Additionally, water supply and electricity usage below 600 kilowatt-hours for households are not subject to the SST.
The ministry emphasized that these exemptions are specifically designed to alleviate the cost of living, especially for lower-income groups, while ensuring that essential services remain accessible and affordable.
Government’s Commitment to Public Welfare
The MOF stressed that the broader range of exemptions under the SST, in comparison to GST, reflects the government’s continuous efforts to safeguard the welfare of citizens without compromising the nation’s fiscal health. “This approach demonstrates the government’s commitment to public well-being and fiscal sustainability as part of the Madani Economy framework,” the ministry stated.
The ministry also underlined the importance of avoiding double taxation, a concern often raised by critics during the implementation of GST. Measures have been instituted to ensure minimal overlap and to prevent tax-on-tax scenarios that could lead to price hikes for consumers.
Balancing Growth with Affordability
In conclusion, the MOF reaffirmed that the SST framework has been carefully structured not only to support economic growth but also to maintain affordability for the rakyat. By offering a more targeted taxation approach and significantly expanding the list of tax-exempt items and services, the government aims to strike a balance between revenue generation and social welfare.
“The SST system is a reflection of our balanced approach,” the ministry added. “While ensuring sufficient revenue for national development, we are also keenly focused on protecting consumers from unnecessary financial burden.”
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