In a recent announcement that brings significant relief to many small and medium enterprises (SMEs), the Ministry of Finance Malaysia has introduced two major updates to the Service Tax (SST) framework. These changes are aimed at lightening the tax burden on small businesses affected by the recent expansion of the SST scope.

The two key announcements are: a substantial increase in the registration threshold for rental and financial services, and a complete withdrawal of the planned service tax on beauty services. This guide will break down what these positive changes mean for your business.

1. Big News for Rental & Financial Sectors: Threshold Raised to RM1 Million

This is a major relief for smaller players in the property rental and financial services industries.

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  The Change: The mandatory registration threshold for Service Tax for both Rental or Leasing Services and Financial Services has been doubled, increasing from RM500,000 to RM1 million in annual turnover.
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  The Reason: According to the Ministry of Finance, this move is intended to ease the tax burden on small businesses in these sectors.
• The Impact: This means that landlords, equipment rental companies, and financial service providers with an annual taxable turnover of less than RM1 million are no longer required to register for SST or charge the 8% service tax to their customers. This reduces their administrative workload and makes their services more price-competitive.

2. A Win for the Wellness Industry: Service Tax on Beauty Services Cancelled

In another piece of welcome news, the government has decided not to proceed with the expansion of Service Tax to cover beauty services.

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  The Change: The plan to impose SST on the beauty services sector has been officially withdrawn.
• Services Now Confirmed as Exempt: This applies to a wide range of services, including:
  • Facial treatments (

    Rawatan muka)
  • Manicures and pedicures (

    Merias kuku tangan dan kaki)
  • Hairdressing and styling (

    Dandanan rambut)
  • Tattooing (

    Mencacah tatu)
  • Makeup and styling (

    Solekan dan andaman)
  • Body slimming treatments (

    Melangsingkan badan)
  • Herbal, milk, and flower baths (

    Mandian herba, susu dan bunga)
• The Impact: This provides immense relief to thousands of entrepreneurs and small businesses in the beauty and wellness industry. They will not have the additional burden of registering for, collecting, and remitting SST, which helps keep their services affordable for consumers.

What This Means for Your Business

1. For Landlords & Financial Advisors: If your annual turnover is between RM500,000 and RM1 million, you should immediately reassess your SST status. You may now be eligible to de-register, which requires a formal application to the Royal Malaysian Customs Department (RMCD).
2. For Beauty & Wellness Businesses: You can continue to operate without the need to register for or charge SST. This confirms your services remain outside the scope of the tax.
3. For All Businesses: These updates show that the tax landscape is dynamic. Staying informed of the latest changes is crucial to ensure you are not overpaying tax or failing to comply with new requirements.

Stay Ahead with Expert Guidance

Navigating frequent SST updates and understanding your registration obligations can be complex. At SMONE, we stay on top of the latest regulatory changes to provide our clients with timely and accurate advice. We can help you assess your SST liability based on the newest thresholds and ensure your business is fully compliant and optimized.

Contact us today for a professional consultation.

(Disclaimer)
This article is for general informational purposes and is based on materials published by the Ministry of Finance. It does not constitute legal or tax advice. Please consult with a qualified professional for advice tailored to your specific situation.