23/06/2025

BIZ & FINANCE MONDAY | JUNE 23, 2025

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How should businesses prepare for SST expansion?

Malaysia optimistic trade with Uzbekistan will pick up: Envoy TASHKENT: Malaysia is optimistic about a potential increase in trade with Uzbekistan, as both countries work to deepen cooperation in new areas such as halal certification, Islamic finance, tourism and green technology. In an interview with Bernama and RTM, here, Malaysian ambassador to Uzbekistan Ilham Tuah Illias acknowledged a recent drop in trade volume, mainly due to import tax on palm oil. However, he expressed confidence in a potential turnaround. “We are hopeful that trade will pick up, if both governments can agree to waive or continue waiving the (import) tax on Malaysian palm oil. This would enable Uzbek retailers here to resume sourcing their palm oil supply from Malaysia,” he said. In 2024, Malaysia-Uzbekistan trade reached RM369.8 million, making Uzbekistan Malaysia’s second-largest trading partner in Central Asia. The trade balance was in Malaysia’s favour at RM360.3 million. From January to April 2025, trade between both countries reached RM106 million. Major exports from Malaysia to Uzbekistan include palm oil, coffee, palm-based oleochemical, margarine and shortening, processed food and coconut oil. Imports from Uzbekistan comprise mainly fertilisers, fruits and textiles. Ilham Tuah said the 5% tax on Malaysian palm oil is being reconsidered by Uzbek authorities. A continued exemption could significantly boost Malaysia’s exports. On the tourism front, Ilham Tuah highlighted that over 15,000 Uzbek tourists visited Malaysia last year – a significant increase from previous years, driven by enhanced air connectivity. He also noted strong interest in Malaysian halal certification in Uzbekistan, and said the Malaysian Islamic Development Department has signed a memorandum of understanding with the relevant Uzbek authorities to strengthen cooperation in halal certification efforts. To facilitate smoother trade and investment, both countries are exploring the possibility of establishing a preferential trade agreement. SC adds 59 entities to alert list in first quarter KUANTAN: The Securities Commission Malaysia (SC) added 59 names to its Investor Alert List in the first quarter of this year, said chairman Datuk Mohammad Faiz Azmi. He said the move is part of ongoing efforts to combat the increasingly rampant scams, alongside blocking fraudulent websites and social media pages. “In 2024, we added 273 names to the alert list, and in the first quarter this year we added 59,” he said in his opening remarks at the launch of Bersama InvestSmart@Pahang 2025. Mohammad Faiz said the SC collaborates closely with the Malaysian Communications and Multimedia Commission to block deceptive sites. “Last year, we blocked 153 websites and 261 social media pages. In the first quarter, we blocked 29 websites and 91 social media pages. These numbers show how much illicit activity we are fighting daily.” As of May 2025, the SC has received 1,218 complaints and enquiries about scams, Mohammad Faiz said. He reminded the public to be cautious of scams that claim to be syariah compliant, using religious sentiment to gain trust. Bersama InvestSmart@Pahang 2025 is a three-day programme which started on Saturday, bringing together government officials, capital market industry players, and regulators under one roof as part of the SC’s investor outreach initiative. Over 40 exhibitors are participating in the event, themed Bijak Labur, Hidup Makmur . – Bernama

ALL businesses will be affected directly or indirectly by the significant expansion of the Sales and Service Tax (SST) regime which will become effective from July 1. This will flow through to the businesses either through the removal of about 3,400

taxpayers largely because they are not registered for SST. A frequently used imported service could be financial services provided in the course of arranging financing for Malaysian companies. Another example would be leasing of assets by a foreign company to a Malaysian entity. Businesses should also review their contracts spanning July 1 to determine whether they are non-reviewable, in which case, they will be eligible for a 12-months exemption from charging service tax. You need to identify SME lessees whose turnover will be less than RM500,000 and therefore exempted from paying service tax on their rental. This can be done by checking the portal that will be available next week where such SMEs will need to register. Businesses should ensure they do not breach the Price Control and Anti-Profiteering Act. For example, if you have leftover stock which has not been subjected to sales tax, you cannot increase your prices to reflect the increase that will be triggered from July 1. The final advice is that if you are unclear on the definitions or any issues surrounding your transactions, it will be best to seek the views of the Royal Malaysian Customs Department in writing to avoid future disputes with them. This should be done before July 1 or as soon as possible. This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).

the changes, or reduce the consumption of the taxable products and services. The next step to keep your costs at the same level would be to identify all the possible exemptions and deductions in the sales tax regime and similarly identify the exclusions and exemp tions for service tax regime. Here, the focus should be to take advantage of the business-to-busi ness exemption for services, and to benefit from the exemptions available for goods. In the bigger picture when you are looking at managing the overall cost to the business, you should take into account exclusions, deductions and group reliefs. For businesses that are not registered, you need to quickly assess whether the thresholds stated for the different services will be exceeded within the next 12 months to be calculated from July 1. The thresholds vary for different services from nil to RM500,000 and to RM1.5 million. Similarly, for sales tax purposes, new registrants should qualify as a manufacturer and exceed the sales threshold of RM500,000 for the next 12 months. Broadly speaking, manufacturing involves the transformation of materials or products from one state to another. Businesses should carefully assess whether their activities fall within the definition of “manufacturing” under the Sales Tax Act. Importation of goods and services will attract imported sales tax and imported service tax. This is often ignored by the

items from the sales tax exemption list to the 5% and 10% categories, and through the introduction of six new taxable services. Unless the businesses are the final

Total trade exhibited a 2.6% increase to RM252.5 billion from RM246.1 billion in the previous year, primarily driven by a 6.6% growth in imports to RM125.9 billion, while exports went down by 1.1% to RM126.6 billion. The trade surplus continued for 61st consecutive month since May 2020, although it decreased 92.3% to RM766.3 million. Chief Statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said Malaysia’s export reduction in May was driven by a decrease in domestic exports. Domestic exports, which accounted for 79.6% of total exports, were down by 4.7% to RM100.8 billion, while re-exports, making up 20.4% of total exports, increased by 16.1% to RM25.8 billion compared with May 2024. Compared with April 2025, exports, imports, total trade and trade balance recorded decreases of 5.2%, 2%, 3.6% and 85.1%, respectively. From the perspective of commodity group, 136 out of 258 export groups showed a decrease. Meanwhile, 118 out of 260 import groups showed an increase compared with the same month of the previous year. Total trade, exports and imports for the period of January to May 2025 registered an improvement. Total trade grew by 6.2%, to RM1.23 trillion, in line with the rise in exports (+5.5%) and imports (+6.9%). However, the trade surplus decreased by 9.4% to RM46.9 billion compared with the same period in 2024. consumers of these goods and services, theoretically the role of the businesses would be to act as tax collectors for the government. In practice, inevitably some portion of the tax collected will be borne by the businesses as they will not be able to pass on the cost. Since services such as construction, finance and rental are integral to almost every industry sector, the tax increase in these areas will percolate or spread throughout the business ecosystem. What are the steps businesses should now undertake? Before July 1, businesses should review their supply chain and look at the impact of the SST changes on all the inputs and outputs of the business. This step will immediately give you an idea of the increased cost to doing business which will then lead you to determine whether you can increase and pass on the cost to customers. At this stage, you will be looking at reducing the cost through substitution with products and services that are not affected by

Malaysia’s trade in May rises to RM252.5 billion PETALING JAYA: Malaysia’s trade maintained its growth momentum in May 2025, driven by continued global economic growth and changes in demand for the country’s goods in international markets, the Department of Statistics Malaysia reported.