Asia

Malaysia Budget 2025: RON95 petrol subsidy to be tweaked so top 15% earners will not qualify, says Anwar

HIGHER TAX COLLECTIONS

Mr Anwar also said on Friday that the government will expand the scope of the Sales and Service Tax (SST) to increase revenue but also to make it more progressive and ensure the lower-income are not burdened.

The scope of the service tax will be expanded to include commercial services, such as financial services that are based on fees, Mr Anwar said.

“The sales tax will not be imposed on basic food items used by the people. It will be imposed on non-essential food items like premium imports, including salmon and avocado,” he added.

The government will meet with stakeholders like affected industries before finalising the expansion of the scope and rate of the SST.

“The progressive expansion of the SST’s scope will be take effect on May 1, 2025. A part of the revenue gained will be used to enhance cash assistance for the people and improve the quality of education and healthcare,” Mr Anwar said.

Direct tax collection in 2025 is projected to increase by 6.6 per cent to RM188.8 billion in anticipation of better income tax collection from the phased implementation of e-invoicing and an improving economic outlook.

Company income tax remains the largest contributor to direct taxes, followed by individual income tax, which is estimated to go up by 7.8 per cent to RM44 billion, in line with the stable job market and improved wages, the Finance Ministry said.

Indirect tax is forecast to rise by 9.8 per cent to RM70.2 billion, with the SST collection making up the bulk of it. The rise is in tandem with the full implementation of the new service tax rate, as well as improving business confidence and consumer sentiment, the ministry said.

Meanwhile, non-tax revenue is projected to decrease slightly to RM80.7 billion due to lower proceeds from investment income. National oil company Petronas is expected to pay a dividend of RM32 billion in 2025, the same as 2024, amid concerns over lower global oil prices.

“The government will continue strengthening revenue management, while enhancing efficiency through the use of technological advancements and innovative approaches,” the ministry added.

The budget statement will be debated at the policy level for eight days starting Oct 21, followed then by responses from the relevant ministries from Nov 6, according to the calendar posted on the Malaysian parliament portal.

Source: CNA

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