NEWS
Written by Fazrina Fezili
The Malaysian government’s latest move to expand the Sales and Services Tax (SST) has raised important questions among current and prospective homebuyers, property investors, and industry professionals. While residential property buyers are not directly taxed under the new rules, the implications of this new tax regime, taking effect on 1 July 2025, are far-reaching—affecting construction costs, commercial real estate investments, and service providers across the housing supply chain.
In this article, we explore how the SST expansion affects residential and commercial property buyers, what industry leaders are saying, and how you can navigate this evolving landscape.
The Sales and Services Tax (SST) is Malaysia’s current indirect tax system, replacing the previous Goods and Services Tax (GST) in 2018. Unlike GST, which imposed a broad-based 6% tax on most goods and services, SST is more targeted. Under the 2025 expansion, the government has broadened SST coverage to include additional service sectors—most notably construction services and commercial property leasing.
Although homebuyers are not taxed directly, indirect costs are expected to rise—potentially leading to higher selling prices for many properties, including construction, renovation, and related service fees.
Industry experts, including REHDA (Real Estate and Housing Developers’ Association), warn that this change could lead to higher home prices, especially in mixed-use and commercial-titled projects.
“This move will lead to a slowdown in the market, as developers make adjustments to their plans,” – Datuk Ho Hon Sang, REHDA President (NST, 2025)
According to market data, construction costs in Malaysia rose by over 10% in 2024, and the 6% SST on services adds further strain on budgets.
Under the former GST regime, homebuyers faced a uniform 6% tax across almost all services and materials, often resulting in 3–4% higher property prices. With SST, the scope is narrower but more targeted.
Tax System | Tax Rate | Input Tax Credit | Scope | Impact on Homebuyers |
---|---|---|---|---|
GST (2015–2018) | 6% | Yes | Broad (goods + services) | Moderate to high |
SST (2025) | 6–8% | No | Targeted (services + selected sectors) | Indirect, moderate |
Bottom Line: SST has less direct impact on end buyers than GST—but cost increases may still trickle through due to service-level taxation.
Commercial property owners and investors are directly impacted by the SST, especially those with high-rent assets or multi-use developments.
The SST expansion also affects property services commonly used by buyers, sellers, and landlords:
Service Category | SST Rate | Impacted Parties |
---|---|---|
Legal, valuation, property agency | 6% | Professional services in property transactions |
Renovation & building maintenance | 6% | Contractors and service providers |
Construction (commercial/infrastructure) | 6% | Projects over RM1.5 million |
Commercial leasing/rental | 8% | Annual rental > RM500,000 |
Financial, leasing, beauty, etc. | 6-8% | Depending on service and revenue thresholds |
If you’re planning to renovate your property or lease out commercial real estate, be prepared for SST-inclusive quotations and contracts.
The government continues to assure buyers that housing affordability remains a key priority. However, industry groups have expressed concerns over rising costs and shrinking developer margins.
With inflation relatively stable (~1.8%), the concern lies with project margins and the long-term housing supply—particularly affordable housing.
While the SST expansion doesn’t directly tax homebuyers, it does impact the broader property ecosystem—from construction to leasing. Buyers who understand the tax landscape will be better positioned to navigate the changes and secure the best deals.
Whether you're a first-time buyer, seasoned investor, or upgrading your home, it's more important than ever to consult trusted property advisors who can explain how SST may affect your decisions in 2025 and beyond.
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Article Highlights
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SST expansion Malaysia
impact of SST on property
SST vs GST
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SST construction tax
commercial property tax Malaysia
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