What Malaysians Really Need to Know About the July 2025 SST Changes

The Headlines Say “Avocado.” The Reality Hits Broader

If you’ve been on X (Twitter) lately, you’d think Malaysia was about to declare war on avocados. Jokes and memes aside, the new Sales and Service Tax (SST) expansion starting 1 July 2025 is real, structured, and — depending on where you stand — potentially disruptive.

But let’s get one thing straight:

It’s not just about avocados.

What’s really coming is a targeted SST expansion meant to increase government revenue by taxing more goods and services — specifically non-essential and high-consumption sectors. The Prime Minister called it “progressive,” but critics see it as tone-deaf. 

Either way, here's what you should know.

What’s Being Taxed (And Why It Feels Personal)

Imported Goods

You’ll now pay more for:

• Imported fruits like avocado, grapes, and oranges
• Premium seafood like salmon and king crab
• Lifestyle products including premium bicycles and antiques
• Smartphones and imported tech gear

These will be subject to 5–10% sales tax, depending on the classification.

Service Sector Expansion

SST will now apply to:

• Private healthcare services for non-Malaysians (6%)
• Private education for non-Malaysians (6%)
• Construction services and non-residential property leasing (6%)
• Beauty and wellness services (8%)
• Financial services such as commissions and fees (8%)

This is not a blanket tax on everyone — it targets service areas traditionally out of the SST net, especially ones involving foreigners or upper-middle consumption patterns.

The Real Reason Behind the Move

Let’s call it what it is: fiscal pressure.

Malaysia is still working its way out of the pandemic-induced deficit, with a fiscal consolidation plan aimed at reducing the deficit to 3.8% of GDP by end-2025.

But the country has limited choices:

• GST? Still politically radioactive
• Income tax? Already tapped
• Fuel subsidy cuts? Risky
• Foreign borrowing? Unpopular

So what’s left?

Widen the indirect tax base — and hope it stings less if you say it’s aimed at the “rich.”

Why the Avocado Excuse Fell Flat

Yes, technically avocado is affected. But using that as the poster boy for this tax hike was a communications blunder.

Here’s why:

1. Imported produce isn't just for the elite — many rely on it due to limited local supply.

2. It dismisses the broader tax scope, making it seem petty when the real targets include tech, bikes, and services.

3. It gave meme-makers a field day — and the backlash distracted from the policy's seriousness.

People aren’t just reacting to the tax. They’re reacting to how it was framed.

What the Government Got (Partially) Right

To be fair, this isn’t a full-scale tax on everyday essentials.

Things like:

• Local staples (rice, eggs, cooking oil)
• Essential medicines
• Electricity below a certain threshold
• RON95 fuel

remain exempt. The idea is to avoid regressive taxation on low-income households.

The government also gave businesses a grace period until 31 December 2025 before strict enforcement kicks in. That’s a fair move to ease transition and avoid compliance panic.

Who Will Feel the Pinch?

This isn’t a tax you’ll notice all at once. It creeps in through:

• That extra RM3 on your next facial appointment
• The increase in private school fees for expats
• Higher cost to lease an office space
• Small jump in the price of your favorite salmon sushi

And while you may shrug off some of that — businesses will eventually pass the cost down to someone.

The real question isn’t “how much is taxed?”

It’s “who’s absorbing it?”

If the answer is “consumers,” then inflation quietly ticks higher — again.

Why Public Sentiment Feels Cold

Malaysians aren’t angry just because of the tax itself.

They’re frustrated because:

• Income hasn’t kept pace with rising costs
• There’s still perceived wastage in government spending
• The middle class is constantly told they’re “doing fine” when in fact, they’re doing the financial equivalent of treading water

This SST expansion might make fiscal sense.

But people don’t live in fiscal theory.

They live paycheck to paycheck.

And when someone earning RM3,000/month hears “don’t worry, it’s just an avocado,” it feels like salt on a wound.

What Happens Next?

For Consumers:

* Expect modest price hikes — not crippling, but noticeable

* Review where your money goes monthly. Imported goods = more expensive

For Businesses:

* Get SST-compliant before year-end

* Communicate clearly to customers about price adjustments

* Avoid profiteering — public sentiment is watching

For Government:

* This tax only works if public trust holds

* That means visible accountability, not just clever tax expansion

* Communicate better next time — or don’t mention avocados at all

 

Final Word

Yes, taxes are necessary.

Yes, Malaysia needs to diversify revenue.

But how it’s done — and how it’s communicated — makes all the difference.

So if you’re laughing at the avocado memes, you're not alone.

But beneath the humour is a deeper frustration.

People are tired of being told they’re doing okay — while paying more for what used to feel like a normal life.

And no, it’s not just about the avocado.

Disclaimer:

This article is written for informational and general awareness purposes only. While every effort has been made to ensure accuracy based on publicly available sources as of June 2025, tax policies are subject to change and interpretation. Readers are encouraged to consult official government announcements or seek professional financial or tax advice for their specific circumstances. The views expressed are personal and do not represent any official institution or body.