SST 1st July, What to Watch For?
It has been the buzz recently, the S.S.T !
The expanded Sales and Service Tax (SST), effective 1 July 2025, has shaken things up in Malaysia’s from imported goods to non imported goods. After much back and forth, it has now been confirmed that certain imported food and fruits have been excluded from SST. Unlike avocados, strawberries, tuna, and salmon — which remain taxable — common staples in the Malaysian household such as apples, oranges, mandarin oranges, and kurma are now SST-exempted, recognising their role as everyday essentials during both festive and non-festive seasons..
How about the real estate industry ? What does the SST basket for real estate look like? From developers to investors to everyday buyers, everyone has been observing this shift.
Residential property transactions are largely unaffected on the SST, as it won’t apply to residential property sales or rental. So homebuyers and homeowners leasing their properties won’t be directly taxed by SST.
For large construction projects with value over RM1.5 million, a 6% service tax now applies to construction services as of July 1, 2025 . What does this indirectly mean for new projects development out there ? Naturally, developers working on new construction builds may absorb or pass on this cost.
So with this SST, the add on taxes will affect the final development cost and developers may raise selling prices to offset their additional cost. — Smaller developers might postpone or scale back projects due to tighter margins. This will mean potentially affecting housing supply in the medium term
Implications for REITs & Commercial Rentals, the expanded SST now covers commercial leasing, with an 8% tax on rents above RM500,000
This imposed SST may shift to higher operating costs and further strain businesses for tenants, it may slow consumer spending, indirectly also affecting inflation and retail property returns .
For buyers and investors, it is advisable to stay informed and working with knowledgeable agents will be key to making smart, timely decisions in whichever area that the SST might affect your part.
The full impact of SST by the Malaysian government will unfold in the months ahead after its implementation and effective date of 1 July 2025 — with potential shifts in inflation, business trends, and overall market sentiment expected to emerge progressively. Nevertheless a grace period has been granted till 31 December 2025 for businesses to adhere and comply with the new SST.
Need clarity or have questions about how SST affects your property journey?
Reach out to a PropNex agent today — we're here to guide you with the right information and expert advice, every step of the way.
