FMM CALLS FOR SST RELIEF ON RENTALS, LOGISTICS TO AVOID COMPOUNDING TAX EFFECTS

KUALA LUMPUR, Jan 6 (Bernama) -- The Federation of Malaysian Manufacturing (FMM) recommends exempting small and medium enterprise (SME) manufacturers of taxable goods from paying Sales and Service Tax (SST) on input services such as rentals and logistics, to prevent compounding tax-on-tax effects that drive up costs.

Its president, Jacob Lee, said that relief from service tax and targeted sales tax exemptions would provide much-needed headroom for SMEs to manage cash flow, reinvest in productivity improvements, and support business continuity.

“FMM welcomes the waiver of service tax on rental services for SMEs with annual turnover up to RM1.5 million, alongside the reduction of the service tax rate to 6.0 per cent.

“The upward revision of the service tax threshold on rental services will help ease cost pressures for SMEs, especially manufacturers and supporting service providers that operate from rented premises due to limited financial capacity to purchase or build their own facilities,” he said in a statement today.

For many smaller businesses, rental expenses represent a fixed and unavoidable cost, and relief from additional tax burdens provides much-needed headroom to manage cash flow, invest in productivity improvements, and support business continuity, he said.

“This is a positive step to enhance SME competitiveness,” he added.

Yesterday, Prime Minister Datuk Seri Anwar Ibrahim announced that the Service Tax on rentals for MSMEs has been reduced to six per cent from eight per cent, while businesses recording annual sales of up to RM1.5 million are exempt from Service Tax on rentals.

-- BERNAMA