Malaysia SST Expansion 2025: Verified Insights on How It Impacts Expats’ Cost of Living

As of 1 July 2025, Malaysia has officially expanded its Sales & Service Tax (SST) — a move that reshapes how everyday services are priced. For expats living in Malaysia, this shift directly affects major expense categories like education, healthcare, rentals, and lifestyle services. While the headlines focus on “new taxes,” the real question for expats is: How much does this actually change my monthly cost of living?

This detailed, verified guide breaks down what changed under the Malaysia SST expansion 2025, what’s confirmed by official data, how much expats may pay extra, and practical steps to stay financially smart in 2025 and beyond.

Understanding Malaysia SST expansion 2025 — What Really Changed

Malaysia’s SST is made up of two components: a Sales Tax on goods and a Service Tax on selected services. When SST replaced GST in 2018, many sectors remained untaxed — until now. The July 2025 expansion significantly broadens what’s covered under “services,” meaning more businesses must register and charge tax.

According to the Ministry of Finance (MOF) and Royal Malaysian Customs Department (RMCD), these are the key updates:

• Private Education: International and private schools with fees exceeding RM 60,000 per student per year are now subject to service tax (6%).
• Private Healthcare: Non-Malaysians receiving services at private hospitals, clinics, or specialist centers are now taxed (6%).
• Commercial Rental & Leasing: Office, co-working, and business premise rentals above a defined threshold are taxed (8%).
• Construction & Renovation Services: Projects above RM 1.5 million in value attract a 6% service tax.
• Financial & Brokerage Services: Commissions, underwriting, and professional financial advisory services are taxed at 8%.
• Wellness, Beauty & Aesthetic Services: Non-medical spa, beauty, and wellness centers now fall under SST at 8%.

These categories impact expats the most because they overlap with the kind of services international residents regularly use — high-end schools, private medical care, serviced apartments, and lifestyle amenities.

How Much Has Malaysia’s Cost of Living Changed? (Validated Data 2025)

Before we discuss cost impacts, let’s ground the conversation in real data. As of Q2 2025, Malaysia’s property and service markets look like this:

• National average residential price: RM 490,376 per unit (NAPIC, Q1 2025).
• Average gross rental yield: 5.1% nationwide (Global Property Guide, Q1 2025).
• Kuala Lumpur average house price: RM 780,728 (Q2 2024; used for 2025 comparison).
• High-rise apartment average price: RM 378,414 (late 2024 benchmark).

These numbers confirm that property prices remain stable overall, but taxes on related services—like renovations, leasing, and management—have increased slightly post-SST expansion. Malaysia SST Expansion 2025

Chart: Validated Property Data + Estimated Context

Key Areas Where Expats Will Feel the SST Increase

1. International Schooling

For families with children, this is the biggest shift. Schools with annual tuition above RM 60,000 must now apply a 6% SST. That means an extra RM 3,600 per child per year if the total fee is RM 60,000 — and more for higher-tier institutions. Schools below that threshold remain exempt, making mid-range private schools and language centers increasingly attractive.

2. Private Healthcare

Previously, private healthcare for foreigners was largely exempt. Now, non-citizens receiving private medical care face a 6% tax. For example, a RM 1,000 diagnostic scan could now cost RM 1,060. The good news: government hospitals and university medical centers remain SST-free, offering expats an alternative for routine care.

3. Rentals & Leasing

Residential housing remains tax-free, but commercial leases—like office rentals, co-working spaces, or serviced offices—are taxed at 8%. Expats who run small businesses or work remotely from serviced spaces will feel this more than those renting regular homes.

4. Construction & Renovation

Planning to renovate or fit out a property? Large projects above RM 1.5 million now incur a 6% tax. Smaller home renovation works typically stay below the taxable threshold, but expect contractors to pass on higher costs in materials and compliance.

5. Lifestyle, Beauty & Wellness

Non-essential services like spas, gyms, and beauty centers are now taxed at 8%. Frequent users will notice a small bump in their monthly spending, especially in urban centers like Kuala Lumpur and Penang where premium wellness services dominate.

Estimated Monthly Impact on Expats

Note: These figures are illustrative estimates based on verified 2025 service tax rates and average spending levels in major Malaysian cities. Malaysia SST Expansion 2025

What’s Still Exempt (Good News for Expats)

• Groceries, basic food, and household essentials remain untaxed.
• Residential rental and housing leases are exempt.
• Public hospitals and government universities remain SST-free.
• Small service providers below threshold turnover are exempt.

Smart Tips to Manage Higher Living Costs

• Check if SST is included in your bills. Many service providers now add it separately.
• Ask schools about their SST policies. Some may absorb part of the tax to remain competitive.
• Mix public and private healthcare. Routine checkups in government clinics can offset higher specialist costs.
• Review your housing leases. Residential is exempt—avoid renting through commercial agreements where SST applies.
• Join loyalty programs or bundles. Some gyms, spas, and digital platforms offer SST-inclusive annual packages at lower rates.

Malaysia vs Neighbouring Countries (2025 Snapshot)

FAQ: Malaysia SST Expansion 2025 Explained

When did the new SST rules take effect?
On 1 July 2025.

Are expats directly taxed?
No, SST is applied at the service provider level but passed on to customers in prices.

Which sectors are most affected?
Education, healthcare, commercial leasing, financial services, and beauty/wellness industries.

What is the rate?
Typically 6% for education and healthcare, 8% for leasing and financial services.

Are groceries or housing rentals affected?
No, they remain exempt.

Can expats claim refunds?
No. SST is a consumption tax paid by the end user.

Conclusion

The Malaysia SST expansion 2025 marks an important fiscal shift. While overall inflation remains moderate, expats will notice higher costs in select service areas—particularly schooling, healthcare, and lifestyle spending. However, Malaysia still offers one of the region’s best cost-of-living balances, with property and essential goods prices staying stable.

By understanding what’s taxed, choosing smart alternatives, and tracking expenses closely, expats can continue enjoying Malaysia’s comfort, connectivity, and cultural diversity without breaking their budgets.

Data & References Summary (2025)

Sources: Ministry of Finance Malaysia, Royal Malaysian Customs Department (RMCD), National Property Information Centre (NAPIC) Q1–Q2 2025, Global Property Guide (rental yields), Grant Thornton Malaysia, Wolters Kluwer Malaysia, and The Edge Malaysia property reports.