KUALA LUMPUR: The Federation of Malaysian Manufacturing (FMM) has urged the government not to introduce new taxes in 2026 Budget, saying that further burdens will strain industries already grappling with rising costs and global uncertainties.

FMM president Tan Sri Soh Thian Lai said manufacturers have contributed significantly to government coffers, with the private sector accounting for more than 50 per cent of total revenue.

"We hope the government will give our industries some breathing space, allowing us to focus on our business activities and the economy.

"Let the money remain in the system to generate business activity and strengthen the economy," he said at a press conference on the release of FMM's business conditions survey for the first half of 2025 here today.

Soh cautioned that excessive taxation could backfire as industries struggling to maintain profitability will ultimately contribute less to government revenue.

"Doing business is no longer easy. With so many geopolitical shifts and uncertainties both in Malaysia and worldwide, we hope the government will listen to the industry.

"Allow us to focus on our business, generate revenue and in turn provide sustainable tax contributions," he said.

Soh said the expansion of the Sales and Services Tax (SST) under 2025 Budget has had an impact on manufacturers.

The survey found that only six per cent of companies reported no effect, while 39 per cent noted minor impacts, such as manageable cost increases or compliance adjustments.

By contrast, 44 per cent highlighted substantial effects, including heavier compliance requirements and operational challenges, while 11 per cent said the changes caused major disruptions, forcing them to adjust business models or reduce operations.

Soh said the most prominent recommendation from respondents was the reintroduction of the Goods and Services Tax, reflecting the industry's preference for a more transparent system that eliminates cascading costs and enables input tax credits.

He added that manufacturers hoped for stronger government action to address challenges from the expanded SST, particularly through broader exemptions for key industrial inputs and clearer product classification guidelines.

They also called for better support on mixed-supply compliance as well as financial or advisory assistance to help them adapt.

Source: https://www.nst.com.my/business/economy/2025/09/1276464/fmm-seeks-tax-stability-2026-budget