Malaysia’s targeted revision of sales tax
Date of Publication: July 2, 2025
Malaysia’s Ministry of Finance has recently announced in P.U. (A) 170/2025 and P.U. (A) 171/2025 the revision of the list of items subject to Sales Tax, effective 1st July 2025. This marks the first major update to the Sales Tax since 1st June 2022 and aims to strengthen the country’s fiscal position by boosting revenue and broadening the tax base.
The government has indicated that the adjustment of the Sales Tax will primarily target non-essential and premium goods. Essential goods consumed by the public will continue to be exempt from Sales Tax, minimizing the impact on most people.
Summary of changes
Sales Tax is a single-stage tax imposed on taxable goods manufactured domestically by registered manufacturers or imported from abroad. The latest revisions are as follows:
- Essential goods consumed by the public will remain at 0%
- Non-essential and certain discretionary goods will be subject to a 5% or 10% Sales Tax
- A specific rate will apply to certain products under Chapter 27
Sales Tax Rate | June 2022 (Tariff Lines) | July 2025 (Tariff Lines) |
|---|---|---|
Exemption/0% | 5218 | 1809 |
5% | 961 | 4077 |
10% | 5341 | 5560 |
Specific Rate | 26 | 25 |
Rate adjustment and types of goods
Rate Adjustment | Types of goods |
|---|---|
Remain 0% | Daily essential goods such as basic food items (livestock/poultry/vegetables/local fruits), medicine, medical devices, reading materials, and pet food, basic construction materials and key agricultural inputs like fertiliser, pesticides, and machinery, etc. |
Remain 5% | Cheese, fruit jam, smartphone, etc. |
0% to 5% | King crab, salmon, certain industrial machineries, etc. |
0% to 10% | Tungsten waste and scrap, racing bicycle, antique hand-painted artwork, etc. |
5% to 10% | Clocks, watches, camera lens, etc. |
Remain 10% | Alcoholic beverages, cigarettes & cigars, leather goods, etc. |
important
The above list is not exhaustive.
With the expansion of taxable goods and adjustments in tax rates, businesses should review their product classifications and update their systems accordingly, as a broader range of manufactured or imported goods will be subject to the 5% and 10% Sales Tax.
This targeted revision of Malaysia’s Sales Tax framework underscores the government’s commitment to fiscal sustainability while minimizing the impact on the public. With significant changes taking effect from 1st July 2025, businesses must act promptly to ensure compliance and avoid potential disruptions.
Recognizing the importance of these changes for our clients, we have already updated the information on OneSource Global Trade Content and will continue to monitor future developments to provide timely updates.
To learn more about how the ONESOURCE Global Trade suite of tools and services can help businesses analyse potential impacts, explore alternative sourcing options, and optimize their trade operations to mitigate risks and capitalize on potential advantages, please contact your Account Manager or Customer Success Manager.