The sugar tax has been running in Malaysia since 2019, and the most-consumed sweet drink in the country has never paid a sen of it. That is not a loophole someone found. It is how the tax was designed — and why a policy in its seventh year has moved the needle far less than its supporters hoped. An ISIS Malaysia research note from February 2026, reported by CodeBlue, lays out the arithmetic.
What the sugar tax actually taxes
The sugar-sweetened beverage (SSB) excise applies to packaged, ready-to-drink beverages. It started at 40 sen per litre in 2019, rose to 50 sen from January 2024, and has been 90 sen per litre since 1 January 2025.
Two thresholds decide whether a product is caught: more than 5g of sugar per 100ml for most sweetened drinks, or 12g per 100ml for fruit and vegetable-based ones. Below the line, no tax. Above it, 90 sen per litre regardless of how far above.
The tax is also volumetric — per litre, not per gram. A 250ml bottle and a 1.5-litre bottle at identical sweetness pay wildly different totals, which ISIS argues nudges people towards smaller servings rather than less sugar.
Half our sugar never passes a cashier
Here is the number that reframes everything. National Health and Morbidity Survey 2024 data shows half of all sugar Malaysians consume comes from beverages. Not desserts. Not kuih. Drinks.
And most of those drinks are made in front of you. ISIS cites Malaysian adults consuming 7.3 self-prepared sweetened drinks a week, against 4.6 servings of packaged ones. Teh tarik. Milo. Three-in-one coffee. Air balang. None of it packaged, so none of it taxed.
So the tax lands hardest on the bottle in the chiller and never touches the glass on the table — even though the glass holds more of the sugar. Ordering kurang manis remains the only lever on that side of the counter, and it belongs entirely to you.
For scale: per capita sugar consumption stood at 57kg in 2023, the highest in ASEAN and about 27 per cent above second-placed Thailand.
The 5g line that quietly became a ceiling
The threshold was meant to be a floor manufacturers would be pushed below. It worked, and that is the problem. ISIS argues mass reformulation has already brought most packaged drinks under 5g/100ml, so future increases to the rate have less to bite on.
That same 5g figure is the sole criterion for the Ministry of Health's Healthier Choice Logo (HCL), introduced in 2017. Additives, sweeteners and nutritional value do not enter the calculation. ISIS is blunt: a number of carbonated soft drinks now carry the sticker while some full-sugar colas do not, implying a relative healthiness the criterion cannot support. The MOH's planned nutri-grade system, announced last October, still keys on sugar alone.
The takeaway: the logo tells you one thing — the drink is under 5g of sugar per 100ml. The nutrition panel on the back is the more informative label, and reading numbers rather than badges is the same habit that serves you when checking whether a supplement is registered.
The subsidy pulling the other way
The part that rarely makes it into coverage: Malaysia taxes sugary drinks and subsidises sugar at the same time.
RM1/kg incentive payments to sugar manufacturers were reintroduced in November 2023. ISIS puts the annual cost of keeping sugar cheap at RM500 million to RM600 million — against roughly RM358 million a year raised by the SSB tax. Refined sugar also stays tax-free under the revised SST. The state spends more holding sugar down than it collects from taxing sweet drinks.
Against that, a joint WHO and Ministry of Health report put the annual economic loss from four major non-communicable diseases at RM64.2 billion. Obesity prevalence sits around 22 per cent and diabetes around 21 per cent, among ASEAN's highest. Those costs land somewhere — increasingly on a health financing system already under strain, the pressure driving schemes like MediAsas.
What's being proposed next
ISIS recommends switching to absolute sugar taxation, per gram rather than per litre (at 2 sen per gram it estimates roughly RM1.68 billion a year); lowering the 5g threshold to 4g/100ml or removing it; and extending the tax to condensed milk.
That last one is the interesting fight. Taxing condensed milk means taxing the mamak pour — and the price of a teh tarik is not a small political object here.
None of this is settled policy. It is a think tank's argument, published into an ongoing debate. But it is the clearest available map of where the pressure is building.
FAQ
How much is the sugar tax in Malaysia right now?
The excise duty on sugar-sweetened beverages is 90 sen per litre, effective 1 January 2025, up from 50 sen through 2024 and 40 sen when introduced in 2019. It applies to packaged drinks above 5g of sugar per 100ml, or 12g per 100ml for fruit and vegetable-based drinks.
Is teh tarik or Milo at a mamak covered by the sugar tax?
No. The excise applies to packaged, ready-to-drink beverages. Drinks prepared fresh at a stall or kopitiam fall outside it, as do the condensed milk and sugar used to make them.
What does the Healthier Choice Logo actually mean on a drink?
For beverages, it means no more than 5g of sugar per 100ml. That is the single criterion — it does not assess sweeteners, additives or overall nutritional value, and it does not rank one logo-carrying drink against another.
Has the sugar tax reduced how much Malaysians drink?
Modestly. Research ISIS cites found a 10 per cent tax increase associated with a reduction in purchases of under 2 per cent, and Malaysia's per capita sugar consumption remains the highest in ASEAN.
This reports on tax and public health policy, not medical or dietary advice. For guidance on your own health, speak to a doctor or registered dietitian.
