PETALING JAYA: The Malaysia Retailers Association (MRA) has urged the Ministry of Finance (Mof) to waive the planned 8% Sales and Service Tax (SST) on commercial rental and leasing services, scheduled to take effect on July 1.
Retail businesses across the country are already under immense pressure from a succession of cost increases, including but not limited to the minimum wage increase to RM1,700; electricity tariff hikes; stamp duty on employment contracts; fuel subsidy rationalisation; the SST rate hike from 6% to 8%; and the 10% sales tax on low-value imported goods, MRA said in a statement, adding that these are just a few examples of rising fixed operational costs.
“The full scope of burdens faced by retail businesses is much broader, but even these alone are already impacting business sustainability and bottom lines,” it added.
MRA said the additional 8% SST on commercial rentals – introduced without any consultation or engagement with the retail sector – adds further pressure.
“Rental is among the largest fixed costs for many businesses and this tax will push operating expenses even higher. It is unrealistic to expect retail businesses to absorb the full impact and many may have no choice but to pass these costs on to consumers – contributing to inflation and intensifying the rakyat’s cost-of-living burden,” the association said.
Compounding these challenges, it said, is the growing uncertainty in the global economy, especially in light of the recent escalation in geopolitical tensions between Iran and Israel. This conflict has already begun affecting regional confidence, global commodity prices, and trade flows – making it an especially inappropriate time to introduce new tax burdens.
In light of these concerns, MRA strongly urged that a complete waiver of SST on commercial rental and leasing services or at minimum, defer implementation sine die, until macroeconomic and geopolitical conditions stabilise.
If implemented, the association urged that the SST should be shared fairly between landlords and tenants, rather than passed entirely to retail businesses.
It also urged that service charges and shared area fees should be excluded from the SST scope; the SST exemption threshold should be raised to RM2 million in annual sales to safeguard small and independent retail businesses; defer the SST on rentals until after Visit Malaysia Year 2026 to preserve industry stability and support tourism-linked growth and introduce the SST gradually, starting at 3% and increasing progressively to 8% over five years.
MRA said that retail businesses play a vital role in domestic economic growth and employment and thus it is critical that policies impacting this sector are implemented with transparency, fairness and proper stakeholder engagement.
MRA said it welcomes further discussion with MoF to find a balanced and sustainable approach that supports both businesses and consumers.
