MRCA recognises the government’s intention to broaden the national tax base and enhance fiscal sustainability through targeted measures. We also note the exemptions granted on essential goods and basic services, which aim to mitigate the impact on the public.
However, from the perspective of retailers, particularly those operating physical outlets, the extension of the service tax to commercial rental presents considerable challenges. As rent forms a major component of retailers’ operating costs, an additional tax on rental further burdens businesses that are already facing rising expenses from minimum wage hikes, employee contract stamping requirement, and increased regulatory obligations, putting further strain on profit margins.
In the context of the supply chain from manufacturers and distributors to retailers, the increased cost of doing business is expected to translate into higher end prices for consumers. Retailers across the board may find it increasingly difficult to absorb these additional expenses, particularly with a weaker consumer sentiment amid expectations of gradual removal of government subsidies in the second half of this year. Therefore, we strongly urge the government to postpone the implementation of the 8% SST on rental and leasing services.
MRCA remains committed to supporting their members in navigating these changes, and they will continue to engage with the Ministry of Finance and relevant agencies to ensure that policy implementation remains balanced, transparent, and conducive to the sustainable growth of the retail sector.
