The Malaysian Institute of Economic Research (MIER) has provided further clarification on the expanded Sales and Service Tax (SST), confirming that the new 5 per cent sales tax effective July 1, 2025, will only apply to imported fruits, not local produce.
KUALA LUMPUR: The Malaysian Institute of Economic Research (MIER) has provided further clarification on the expanded Sales and Service Tax (SST), confirming that the new 5 per cent sales tax effective July 1, 2025, will only apply to imported fruits, not local produce.
Business Times reported yesterday that local fruits and cooking oil will not be taxed under the expanded Sales and Service Tax (SST) taking effect on July 1, 2025.
Addressing public confusion over the gazetted SST list, a Ministry of Finance (MOF) spokesman clarified that the 5 per cent sales tax only applies to imported fruits, not those grown locally.
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 spokesman said.
The spokesman further clarified that several essential imported food items, including rice, wheat, sugar, salt, and meat, are also exempt from tax under the expanded SST, as they are considered basic necessities.
Regarding sugar, the 5 per cent tax will apply only to raw sugar, which includes cane or beet sugar and chemically pure sucrose in solid form. In contrast, refined sugar will continue to carry a 0 per cent sales tax.
The clarification follows widespread public confusion after a gazetted list of taxable goods appeared to include everyday items such as bananas, papayas, durians, dried longans, cooking oil, sugar, and salt – previously identified as tax-exempt essentials.
“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.
“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. Sales tax on the imported fruits will be taxed at the point of entry into the country, that is, during customs clearance at ports.
“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,” it said.
By Sharen Kaur
