The government has been urged to reconsider the eight per cent service tax imposed on elderly care homes and similar welfare organisations, amid concerns that the move could place additional strain on both operators and families.
Community activist Tan Sri Lee Lam Thye said the policy raises serious concerns as care homes play a vital role in society by providing accommodation and support for senior citizens and vulnerable individuals.
According to him, these facilities indirectly assist the government by easing overcrowding in public hospitals and reducing pressure on the nation’s healthcare system.
“We believe imposing a service tax on care homes is unfair and inappropriate,” he said in a statement on Tuesday.
Lee stressed that most elderly care centres are not profit-driven businesses but organisations dedicated to serving the public and supporting those in need.
“As a result, the tax burden will ultimately be passed on to care homes and the families who rely on their services,” he said.
Under regulations introduced on 1 July 2025, elderly care centres registered under the Social Welfare Department (JKM) are classified as healthcare facilities and are therefore subject to an eight per cent Service and Sales Tax (SST).
However, care homes licensed under the Health Ministry are exempt from the tax.
Lee warned that operators may have no choice but to raise fees in order to remain financially viable. If families are unable to afford the higher costs, many could be forced to seek long-term care through public hospitals instead.
“This would place an even greater and more costly burden on the government’s healthcare budget, far exceeding any revenue collected through the service tax,” he said.
He argued that taxing care homes could weaken an important support network that helps prevent public hospitals from becoming overwhelmed.
Many care facilities, he added, are already struggling with rising costs for food, medical supplies and utility bills.
“Treating these homes as commercial entities ignores their charitable nature and the significant role they play in supporting the government’s social welfare responsibilities,” he said.
Lee described elderly care homes as frontline partners rather than competitors to the healthcare industry, helping to ensure the healthcare system remains sustainable.
“By taxing these essential services, the government is effectively taxing its own social safety net,” he said.
He stressed that operators are not seeking special treatment, but rather a policy review that recognises the difference between commercial profit and the cost of preserving human dignity.
The call comes amid growing concern that higher operating costs could eventually impact the affordability and accessibility of care services for Malaysia’s ageing population.
