Malaysia’s 2024 Budget: Service Tax to be increased to 8%, More Taxes Coming

Anwar, Malaysia’s Finance Minister, said the government plans to increase the service tax from Sales and Services Tax (SST) rate to 8% from 6%. However, the increment does not include services such as food and beverages, and telecommunications. This had been announced on Oct 13’s Malaysia’s 2024 Budget announcement. If there would still be no further feedback or changes, the implementation could be done in year 2024.

The government will expand the range scope of taxable services to include logistic services, brokerage, underwriting and karaoke. 

With the logistic services sector being included in the scope, logistic expenses can go with an uptick. Higher logistic expenses eventually affect the cost of everyday goods, including fast-moving consumer goods (FMCG). There could really be concerns on the future impact of the tax on logistics costs. After all, many products are being imported daily into Malaysia and distributed widely for retail and usage.

Besides SST’s rate of change, The government will also enact new legislation to implement a tax at a rate of 5 to 10% on luxury items. For example, high-end luxury items such as watches and handbags can be included in the range.

Anwar mentioned that starting from March 1, 2024, the government will introduce a capital gains tax of 10% on the sale of unlisted shares by local companies, calculated based on the net profit.

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