Malaysia's SST Revision: Will REITs and Financial Services Absorb the Hit?

Malaysia's SST Revision: REITs and Financial Services Brace for Impact Kuala Lumpur, June 11, 2025 – The Malaysian government's recent revision of the Sales and Service Tax (SST) is causing significant ripples in the country's real estate and financial sectors. The expansion of the taxable scope now includes previously exempt services offered by REITs, fund managers, and financial advisors. This change raises concerns about increased operational costs and potential impacts on investors and consumers. Ng Sue Lynn, Head of Indirect Tax at KPMG Malaysia, offered insights into the situation. "For REITs, the expanded taxable services, particularly rental and leasing, will be levied at 8 percent on commercial properties," she explained. However, she noted exemptions exist for micro, small, and medium tenants with annual revenue below RM500,000. The impact on financial services is also substantial. Previously exempt fees and commission income are now subject to an 8 percent tax. While some basic banking services remain exempt, the increased costs may be passed on to consumers, impacting the demand and profitability of REITs. The expert highlighted the importance of businesses exploring available exemptions and incentives to mitigate the impact. The discussion also raised questions about a potential return to the Goods and Services Tax (GST) system. While Ng Sue Lynn didn't advocate for a change, the current situation underscores the complexities of the SST and the need for careful consideration of its effects on the Malaysian economy.