KUALA LUMPUR: The Malaysian Institute of Economic Research (MIER) has clarified that the upcoming 5% Sales and Service Tax (SST), scheduled to take effect on July 1, 2025, will apply solely to imported fruits and not those grown locally.
This follows recent confusion over a gazetted list that led the public to believe common items such as bananas, durians, and even cooking oil would be taxed under the expanded SST.
As reported by Business Times, local fruits and cooking oil will remain exempt from the revised tax framework.
Responding to public concerns, a spokesperson from the Ministry of Finance (MOF) said, “If the fruits are imported, they will be subject to the 5 per cent sales tax. Locally grown fruits are exempt from any sales tax.”
The spokesperson added that essential imported food items — including rice, wheat, salt, sugar, and meat — will also remain exempt from the SST as they are categorised as basic necessities.
However, raw sugar such as cane or beet sugar, along with chemically pure sucrose in solid form, will carry the 5% tax. Refined sugar, on the other hand, continues to enjoy a 0% tax rate.
MIER acknowledged that the confusion arose because the 2025 Sales Tax (Rate of Tax) Order did not distinguish between local and imported goods in its tariff codes. “MIER understands that the rakyat’s confusion arises from the fact that the sales tax (rate of tax) order 2025 does not appear to differentiate between imported and local produce because the HS tariff code only defines taxable items.”
The institute explained that “In practice and according to Section 8 of the Sales Tax Act 2018, sales tax is imposed on locally manufactured taxable goods as well as on imported taxable goods.”
The MOF clarified that the 5% sales tax will be collected when the imported fruits are cleared through customs at the country’s entry points. “Sales tax on the imported fruits will be taxed at the point of entry into the country, that is, during customs clearance at ports.”
Meanwhile, locally grown fruits do not pass through customs and are not classified as locally manufactured goods. Therefore, “locally grown fruits do not go through customs clearance and do not fall under the definition of locally manufactured goods. Therefore, the new sales tax is not imposed on locally grown fruits.”
