From GST Gaffes to SST Surprises: Malaysia’s Tax Tango Under PM Anwar Ibrahim
Malaysia’s tax landscape is undergoing a seismic shift, and Prime Minister Anwar Ibrahim is at the center of a fiscal drama worthy of a soap opera. Just days ago, during the closing of the Madani Rakyat Programme (PMR) 2025 at Lumut Waterfront, Perak, on June 15, 2025, Anwar made headlines—not for policy brilliance, but for a verbal slip-up. He mistakenly dubbed the Goods and Services Tax (GST) as the “General Services Tax,” a phrase that left Malaysians scratching their heads. As if that wasn’t enough, he doubled down by claiming the Sales and Service Tax (SST) applies only to imported goods. Spoiler alert: it doesn’t.
Before the Madani Government’s ambitious 2025 overhaul, SST was a relatively modest affair. Sales tax applied to a limited range of goods—mostly local manufactured items and some imports—while service tax covered a handful of sectors like hotels and telecommunications. Essential goods enjoyed exemptions, and the tax net was tight enough to keep most Malaysians from feeling the pinch.
Fast forward to July 1, 2025, and the SST has morphed into a sprawling beast. The sales tax now blankets around 4,000 goods, including luxury items like king crab, imported salmon, racing bicycles, and even antique artworks. Service tax, once confined to a few sectors, now reaches into financial commissions, private healthcare for foreigners, rental and leasing services (excluding residential properties), construction (non-residential), private education, and wellness services like hairdressing and facials. The tax man is coming for your spa day and your yacht alike.
One might wonder if the government’s tax policy is evolving or simply improvising on a fiscal jazz tune. The expansion aims to bolster government coffers by an estimated RM5 billion, a tidy sum to support cash assistance programs and infrastructure projects under the Ekonomi MADANI framework. Yet, the public’s patience may be tested as the tax web tightens.
Meanwhile, Anwar’s verbal slip-ups have become a running gag in political circles. Calling GST a “General Services Tax” might sound like a harmless mix-up, but it underscores a disconnect between political rhetoric and economic realities. Similarly, insisting SST targets only imports ignores the complex reality that SST taxes a broad spectrum of local goods and services. These gaffes, while humorous, risk muddying public understanding of crucial fiscal reforms.
The government has tried to soften the blow with a grace period—no penalties for businesses striving to comply until the end of 2025. But for many Malaysians, the expanded SST feels less like a gentle nudge and more like a fiscal wake-up call.
In sum, Malaysia’s SST revamp is a bold move to modernize tax collection and secure financial stability. Yet, the accompanying political missteps remind us that clear communication is as vital as sound policy. As the nation navigates this new tax terrain, one hopes the government’s messaging improves faster than its tax net expands.