Malaysian Retailers Urge MOF to Waive or Defer SST on Commercial Rentals

Marcus Liew
Jul 14
3 min read

The Malaysia Retailers Association (MRA) is calling on the Ministry of Finance (MOF) to waive or postpone the implementation of the upcoming 8% Sales and Service Tax (SST) on commercial rental and leasing services, warning that it would severely burden the retail sector and fuel inflation.

In a statement issued on June 16, MRA highlighted that the new tax, set to take effect on July 1, 2025, was introduced without industry consultation and could deal a heavy blow to business sustainability and consumer purchasing power.

“Rental Is Already One of Our Largest Costs”

“Rental is among the largest fixed costs for many businesses, and this tax will push operating expenses even higher,” said MRA.

Retailers are already grappling with a wave of rising operational costs, including:

Minimum wage increase to RM1,700
Electricity tariff hikes
Stamp duty on employment contracts
Fuel subsidy rationalisation
10% sales tax on low-value imported goods

Inflation, Job Loss, and Cost-of-Living Risks

MRA warned that the SST will likely be passed on to consumers, worsening the cost-of-living burden and contributing to inflation.

“It is unrealistic to expect retail businesses to absorb the full impact,” the association said, noting that some may be forced to raise prices or shut down operations.

It also cited geopolitical uncertainty, particularly the escalating Iran-Israel conflict, as a key reason why now is not the right time for tax expansion.

“This conflict is already affecting regional confidence, commodity prices, and trade — making it an especially inappropriate time to introduce new tax burdens,” it added.

MRA’s Recommendations to the Government

To mitigate damage to the retail industry, MRA outlined several proposals:

1. Defer SST on Commercial Rentals

Postpone the tax until after Visit Malaysia Year 2026 to maintain industry stability and support tourism-related growth.

2. Waive or Gradually Phase In the Tax

Start with 3%, increasing incrementally to 8% over five years.

3. Protect Small Retailers

Raise the SST exemption threshold to RM2 million in annual sales to safeguard micro and independent retailers.

4. Share the Burden

Ensure that landlords and tenants share SST costs, rather than pushing the full impact onto retailers.

5. Exclude Shared Area Fees

Exempt service charges and shared facility fees from SST to prevent compounding cost effects.

MRA Calls for Stakeholder Engagement

MRA stressed the importance of consultative policy-making, especially for sectors as crucial as retail:

“Retail businesses play a vital role in domestic economic growth and employment. It is critical that policies impacting this sector are implemented with transparency, fairness, and stakeholder engagement,” it said.

The association also expressed willingness to work with the Ministry of Finance to explore balanced solutions that support both business growth and the government’s fiscal objectives.

SST Expansion: What You Need to Know

Announced in Budget 2025, the SST expansion includes:

A new 8% service tax on commercial rental, leasing, construction, finance, education, private healthcare, and beauty services
An expanded sales tax of 5%–10% on selected non-essential goods

The government has maintained that these measures are designed to broaden the tax base without burdening the general public. However, industry pushback is growing.

Final Thoughts

The MRA’s latest appeal adds to the growing chorus of retailers, SMEs, and business associations urging the government to reassess the timing and structure of the SST expansion.

With retailers under pressure, consumers facing inflation, and tourism on the national agenda for 2026, delaying or modifying the SST rollout may be essential to protect the broader economy.