Malaysia’s steel industry calls for suspension of sales and service tax (SST) expansion

The Malaysian GL E460 steel Steel Industry Federation (Misif) recently stated that relevant manufacturers have issued warnings that the expanded Sales and Services Tax (SST) on steel products from July 1st will cause serious financial pressure on the industry. The federation pointed out that the current industry is in a fragile and unbalanced operating environment - with low capacity utilization, weak GL E460 steel Steel demand, and intensified regional competition. At this time, the timing of implementing sales and service tax expansion is seriously misplaced. The new tax system will impose taxes on previously tax-free services such as coking coal, steel components, scrap steel, industrial machinery and equipment leasing, leading to a rise in overall supply chain costs.

Specifically, it includes coking coal and coke (5%), steel components (5% -10%), scrap steel (5%), industrial machinery (10%), and 6-8% leasing services.

After the scrap steel traders pay 5% SST for procurement, this additional cost will not be absorbed by themselves, but will be passed on to the steel mills. With the increase of input costs, the profit margin of enterprises is compressed, and ultimately they can only choose to raise prices or bear losses, weakening their competitiveness. ”The Federation explains. In addition, the increase in core service tax will significantly increase the operating costs of manufacturers, especially those that rely on site leasing and construction services.

The federation emphasizes GL E460 steel Steel that these additional costs will be transmitted through the supply chain layer by layer, ultimately borne by consumers, and will have a negative impact on the construction industry, which accounts for over 63% of domestic steel demand.

Based on the above, the Federation has put forward three core demands to the government:

1. Suspend the implementation of steel related SST expansion

2. Conduct a comprehensive industry impact assessment, develop exemption lists and phased plans

3. Provide clear transition guidance and supporting measures