06/10/2025

BIZ & FINANCE MONDAY | OCT 6, 2025

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Implementation of SST expected to be fine-tuned

BUDGET 2026 WISH LIST

Ű BY JOHN GILBERT usnbiz@thesundaily.com

KUALA LUMPUR: Budget 2026 is expected to focus on refining or fine tuning the implementation of the Sales and Service Tax (SST), which came into effect on July 1, rather than introducing further significant changes to the framework. Ernst & Young Tax Consultants Sdn Bhd partner, indirect tax, Yeoh Cheng Guan, said key areas likely to be addressed include the expansion of the business-to-business (B2B) exemption coverage. He stated that the B2B exemption currently applies only when a taxable person acquires the same type of taxable service that they provide, which limits the scope of the exemption. “It is hoped that the exemption will be expanded such that it applies to all categories of services acquired by a taxable person from suppliers or subcontractors, as long as the service is acquired for onward provision of services to the end-customer and not for own consumption. “Further sector-specific policies and clarifications can also be anticipated as industry players actively engage with the authorities to share their views and seek practical guidance and concessions. Sectors for which policy refinements are expected include construction,” he told SunBiz . Yeoh said these refinements will help maintain the SST regime as fair, efficient and aligned with Malaysia’s broader economic goals. He explained that the SST forms the core of Malaysia’s indirect tax system. Reintroduced in 2018 to replace the Goods and Services Tax (GST), SST consists of a single-stage sales tax latory hurdles and labour shortages are placing significant pressure on both developers and homebuyers, threatening the resilience and affordability of the local housing market. At Trinity Group, we commend the government’s continued focus on affordable homeownership and sustainable urban development. These are critical priorities for ensuring that Malaysians from all walks of life can access quality homes in thriving communities. However, to meet these goals, Budget 2026 must go further and introduce bold, targeted reforms that address the structural challenges currently hindering the property market. One immediate step is the reintroduction of the Home Ownership Campaign with 100% stamp duty exemptions on the memorandum of transfer and loan agreements for properties priced up to RM1 million. Coupled with 100% financing options for first-time buyers, this will empower more Malaysians to fulfil their homeownership dreams while injecting much-needed momentum into the property sector. In addition, the minimum pur chase price threshold for foreign buyers of strata properties in

o Expert says key areas likely to be addressed include expansion of business to-business exemption coverage on manufacturers and importers and a service tax on specified local and foreign services. Designed to be simple yet equitable, SST exempts essential goods and services while taxing discretionary items to ensure a fair, progressive burden. It is a single-stage tax, meaning – unlike GST or Value Added Tax – it becomes a cost to the payer. To reduce cascading effects, the government provides B2B exemp tions and group relief for service tax. Yeoh said while Budget 2025 introduced significant SST reforms, including review of the sales tax rates and scope expansion of service tax to sectors such as rental or leasing, construction, education, financial services and healthcare, Budget 2026 presents an opportunity for the government to refine and rebalance the framework to serve the business community better. To that end, Yeoh said, several targeted measures and incentives

Firm calls for better energy efficiency, sustainable solutions KUALA LUMPUR: An industry player has urged the government to strengthen energy efficiency and embed sustainable solutions, such as district cooling systems (DCS), to cut emissions, lower costs, and build resilient infrastructure for the future. Engie Services Malaysia Sdn Bhd managing director Wong Yin Kee said demand for cooling systems is set to surge with the growth of data centres and advanced manufacturing. Cen tralising cooling systems is more sustainable and efficient than having each building use its own system. “Countries at the forefront of sustainable urban development already embed DCS as a standard, and Malaysia should do the same to reduce emissions, lower energy costs, and ensure reliability,” he told Bernama. He said Engie Services Malaysia supports businesses, cities, and industries in moving towards a low carbon future by delivering energy efficiency solutions, modernising industrial facilities, providing district cooling, and developing large-scale renewable energy projects. Wong urged the government to strengthen the Energy Efficiency and Conservation Act by setting clear, enforceable targets for large energy users. He suggested that the govern ment introduce clear efficiency targets to drive real progress while enabling industries to reinvest savings into growth and innovation. “SST remains central to Malaysia’s fiscal strategy, reflecting a global shift toward consumption-based taxes. For businesses, compliance readiness and proactive engagement are key, while Budget 2026 offers a chance to refine B2B exemptions and sector clarity to keep SST a driver of sustainable growth – not a barrier,” Yeoh said. digitalisation, green technology, and export-oriented services, to stimulate investment and competitiveness. “Finally, it should institutionalise stakeholder engagement mech anisms to ensure SST policies remain adaptive, inclusive, and responsive to evolving business needs,” Yeoh said. Policymakers should consider broadening and relaxing the conditions of B2B exemptions to reduce tax-on-tax effects and enhance supply chain efficiency, while also providing clear, consistent, plain language guidance and sector specific policies to minimise com pliance ambiguity, he added. They should extend transitional reliefs and penalty waivers through voluntary disclosure programmes to support businesses adapting to the expanded scope, and introduce a voluntary Indirect Tax Governance Framework to encourage proactive compliance and risk management. Yeoh said these measures would not only ease the compliance burden but also reinforce the government’s commitment to a fair and business friendly tax environment.

Yeoh says further sector-specific policies and clarifications can be anticipated.

should be considered. Budget 2026 could introduce clearer and broader B2B exemptions, particularly for industries with extended value chains such as construction and logistics, to reduce compliance friction, minimise tax cascading and improve cost efficiency. He said it could also raise the registration thresholds for service tax – as was done for rental and leasing services (from RM500,000 to RM1 million) – in more sectors to ease the entry burden on smaller, growing Furthermore, banks should be allowed to consider informal income when assessing loan applications. Many Malay-sians earn through informal channels, yet their incomes are excluded, which reduces their housing loan eligibility. By recognising these earnings, financial institutions can expand access to credit and enable more Malaysians to enter the property market. Affordability can also be enhanced by reducing premiums on land conversions and development charges. This measure will lower overall costs for developers and translate into more affordable housing options, especially for lower income groups and first-time buyers who are most vulnerable in today’s market. To combat labour shortages that drive up construction costs, we recommend expediting approvals for foreign labour intake in the con struction sector. Stabilising the workforce will help contain esca lating costs and ensure timely project delivery. Furthermore, targeted tax in centives on essential building materials will help mitigate the impact of rising input costs. This is a practical step to keep housing prices within reach for ordinary Malaysians. Budget 2026 offers an oppor tunity to recalibrate and strengthen

businesses, allowing them to focus on recovery, reinvestment and ex pansion. In addition, transitional rules and sector-specific clarifications should be provided to address ambiguities in service classification, tax treatment, and documentation, especially for mixed-service providers and complex industries, such as construction, where disputes are common. “The government could further consider targeted SST exemptions or rebates for strategic sectors aligned with national priorities, such as

Chance to build stronger, more inclusive property market AS Malaysia prepares for Budget 2026, set to be tabled in Parliament on Friday, the nation faces pressing challenges in the property sector that require urgent and decisive attention. Rising construction costs, regu homeowners navigate financing options in a way that reflects real world earning capacities. Malaysia’s property market with policies that promote resilience, affordability, and inclusiveness. Trinity Group stands ready to work alongside the government and industry partners to realise these reforms.

Together, we can reimagine urban living and deliver innovative, accessible homes that meet the evolving needs of Malaysian com munities. In doing so, we can help ensure that every Malaysian family has the opportunity to live in a quality home, an essential foundation for building vibrant and sustainable communities nationwide. To support this vision, it is equally important to address structural challenges within the development ecosystem. The government should consider measures to reduce upfront utility connection costs, while streamlining contributions and premiums to utility companies. At the same time, maintaining consistency in land premium structures will help reduce the financial burden on developers. In parallel, more efficient and transparent approval mechanisms should be introduced to minimise red tape, enabling projects to pro gress more swiftly and ensuring that supply keeps pace with demand. This article is contributed by

Selangor should be revised from RM2 million to RM1 million, in line with Kuala Lumpur’s policy. Given that both states share similar urbancharacteristics and market dynamics, aligning these thresholds would strengthen Selangor’s competitiveness, attract more foreign investment and stimulate greater economic activity within the state’s property market. Equally important is improving loan accessibility. Revising the debt service ratio calculations from “net” to “gross” income and removing the 70% loan-to value cap for third or subsequent housing loans will pro vide greater financial flexibility. These adjustments will help aspiring

Trinity Group founder and managing director Datuk Neoh Soo Keat (pic) .