Take Control, Spend Smart and Stay Prepared

As the government expands the Sales and Service Tax (SST) coverage from July 2025, many Malaysians may start to feel its effects on their daily expenses. While essential items such as staple foods, public transport and education remain exempt, the tax now covers more premium goods and services. Although individual price increases may seem small, they can accumulate over time, especially for households managing tight budgets. With thoughtful planning, Malaysians can navigate these changes without compromising their quality of life.

What type of goods and services are taxable?

1. The sales tax rate remains unchanged for essential goods, whether locally produced or imported, that are consumed by the public.

   Essential Goods	Sugar, salt, chicken, eggs, meat, fish, fruits, vegetables, cooking oil, rice and more.
   Reading Material	Books, journals, newspapers.
   Health Care	Medicine and medical devices.
   Construction Material	Cement, stones, and sand.
   Agricultural	Fertilisers, pesticides, machinery for farming and livestock.

   Source from Ministry of Finance Press Release
   https://www.mof.gov.my/portal/en/news/press-release/clarification-on-impact-of-sales-tax-on-raw-sugar (As of 20 June 2025)
   https://www.mof.gov.my/portal/en/news/press-release/revision-to-the-expanded-sales-tax-and-service-tax-take-into-account-public-and-industry-feedback (As of 28 June 2025)
   https://www.thestar.com.my/news/nation/2025/06/09/expanded-sst-comes-into-effect-july-1 (As of 09 June 2025)

   Refer Ministry of Finance official communication channels for more information.

2. Sales Tax at rates of 5% or 10% will apply to discretionary and non-essential goods.

   5% Sales Tax	King crab, salmon, cod, truffle mushrooms, essential oils, silk fabrics, and industrial machinery.
   10% Sales Tax	Racing bicycles and antique hand-painted artworks.

   Source from Ministry of Finance Press Release
   https://www.mof.gov.my/portal/pdf/siaran-media/expansion-sst-scope.pdf (As of 9 June 2025)

   Refer Ministry of Finance official communication channels for more information.

3. With the expansion of the Service Tax effective 1 July 2025, five new categories of services are set to be leasing or rental, construction, financial services, private healthcare, and education. This expansion includes targeted exemptions to avoid cascading tax effects and to ensure that certain essential services for Malaysian citizens remain exempted.

   New Categories Services	Description
   8% Leasing or Rental Services Tax	For those service providers whose total leasing or rental revenue exceeds the threshold of RM 1 million. Exemptions for residential buildings, overseas assets, financial leases, and business-to-business (B2B) transactions Exemption for Micro, Small, and Medium Enterprises (MSMEs) with sales below RM 1 million. 12-month exemption for non-reviewable contracts.
   6% Construction Services Tax	Tax applies to service providers exceeding RM1.5 million in revenue. Exemption for residential buildings, public amenities related to housing, and B2B transactions to avoid cascading tax effects. 12-month exemption from the effective date for non-reviewable contracts.
   8% Financial Services Tax	Applies to fee-based or commission-based services with registration threshold of RM 1 million. Exemptions for basic financial services, Islamic financing, foreign exchange, capital market gains, outward remittance transactions, shariah-compliant fee arrangements, Bursa Malaysia, Labuan entities and B2B transactions.
   6% Private Healthcare Tax to non-citizens	Malaysian citizens fully exempted for public and private healthcare services, as well as traditional and complementary medicine including Malay Traditional Medicine, Traditional Chinese Medicine, Traditional Indian Medicine, Islamic Medicine, Homeopathy, Chiropractic, and Osteopathy. Exemption including allied health services such as physiotherapy, audiology, and speech therapy.
   6% Private Education Tax	Tax imposed on private preschools, primary, and secondary schools that charge more than RM60,000 per student, as well as on private higher education institutions for international students. Exemption for Malaysian citizens with disabilities (OKU).

   Source from Ministry of Finance Press Release
   https://www.mof.gov.my/portal/en/news/press-release/targeted-revision-of-sales-tax-rate-and-expansion-of-service-tax-scope-effective-1-july-2025 (As of 9 June 2025)
   https://www.mof.gov.my/portal/pdf/siaran-media/expansion-sst-scope.pdf (As of 9 June 2025)
   https://www.mof.gov.my/portal/en/news/press-release/clarification-on-sst-expansion (As of 11 June 2025)
   https://www.mof.gov.my/portal/en/news/press-release/revision-to-the-expanded-sales-tax-and-service-tax-take-into-account-public-and-industry-feedback (As of 28 June 2025)

   Refer Ministry of Finance official communication channels for more information.

Practical Ways to Cope with SST Expansion

Leverage on Campaigns & Promotions

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Refer Cash Me if You Can Campaign for more rewards.

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* The interest rate is the prevailing board rate and subject to changes from time to time.
* Subject to campaign terms and conditions.

Prioritise Savings and Emergency Funds

With the potential for gradual price hikes, building a strong financial foundation is more important than ever. Healthy savings and an emergency fund can help you stay prepared and protected. One smart way to grow your fund safely is through a fixed deposit that offers fixed, predictable returns over a selected tenure, making it an attractive option for those seeking stability amid rising living costs. With Alliance Bank e-Fixed Deposit, you can enjoy attractive interest rates or profit with variable placement tenure from 1 to 12 months. Shariah-compliant fixed deposit is also available for customers who follow Islamic banking principles.

Your Finances, Your Move

This is not about eliminating every expense, but about making thoughtful, value-driven decisions that safeguard your finances today and prepare you for tomorrow. By staying informed and leveraging available financial tools, rewards and savings options, you can navigate rising costs with confidence. As The Bank For Life, we are committed to supporting your current lifestyle and your future financial aspirations – helping you live well today while building a secure future.