Treasury secretary-general Johan Mahmood Merican said the review of the SST was a progressive approach towards broadening the national revenue base.

“The tax burden is skewed towards those who can afford it,” Bernama reported him as saying after a visit to the customs department today.

Johan said efforts had been made in determining the scope of the tax to ensure it would be implemented in a targeted manner.

Previously, finance minister II Amir Hamzah Azizan projected that the improved SST would generate revenue of RM51.7 billion in 2025, up from the earlier SST collection forecast of RM46.7 billion.

On June 9, the government announced a targeted revision of sales tax rates as well as expansion of the scope of the service tax, effective July 1.

Zero tax rates will remain for essential goods, while a rate of 5% to 10% will be imposed on non-essential items from July 1.

The scope of the service tax will be expanded to cover rental, leasing, construction, financial services, and private healthcare and education services.

Under the new tax regime, a 6% service tax will be imposed on construction services for infrastructure, commercial, and industrial buildings if the taxable value exceeds RM1.5 million annually.

The same rate applies to private healthcare, traditional and complementary medicine, and allied health services provided to foreigners, on service providers exceeding the RM1.5 million threshold.

Services directly impacting Malaysians such as public and some private healthcare will continue to be exempted from the service tax.