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Key Updates on Indirect Tax & SST by the Malaysian Government
23 June 2026
From May to June, the Malaysian Government implemented several key indirect tax reforms to formalise existing policies, provide greater clarity, and reinforce compliance. These updates impact multiple sectors and carry significant implications for businesses.
Our latest Indirect Tax Updates cover eight key areas:
- Updates to Service Tax Policy No. 5/2025 - Healthcare Services
- Issuance of Sales Tax Policy No. 3/2026 - Sales Tax Exemption on Ships and Vessels under Harmonised System (HS) Code 8901-8908
- Service Tax Guide on Parking Space Services dated 4 June 2026
- Guide on Completing the SST-02 Return (Manual/Amendment) dated 31 May 2026
- Service Tax Guide on Employment Services dated 9 June 2026
- Service Tax Guide on Motor Vehicle Services or Repair dated 10 June 2026
- Guide on Refund, Drawback and Review of Sales Tax and Service Tax dated 15 June 2026
- Issuance of Service Tax Policy No. 2/2026 - Service Tax Treatment on Construction Works Carried Out on Completed Residential Buildings
Explore our full commentary below for more insights.
22 May 2026
Updates on Rental & Leasing and Sales Tax Drawback
Recently, the Malaysian Government implemented several key indirect tax reforms to formalise existing policies, provide greater clarity, reinforce compliance, and support businesses in navigating global uncertainty. These updates affect multiple sectors and carry significant implications for businesses.
Our latest Indirect Tax Updates cover two key areas:
- Service Tax Guide on Rental or Leasing Services dated 14 May 2026
- Public Ruling No. 2/2026 – Meaning of the Word “Used” under Subregulation 17 (1)(g), Sales Tax Regulations 2018
Explore our full commentary below for more insights.
12 May 2026
From April to May, the Malaysian Government has implemented several key Indirect Tax reforms designed to formalise existing policies, provide clarity and reinforce compliance. These updates impact multiple sectors and carry significant implications for businesses.
Our latest Indirect Tax Updates cover six key areas:
- Customs Public Ruling 1/2026 – Foreign Exchange Rates for Invoices Issued under Sales Tax and Service Tax
- Announcement on Interim Exemption of Import Duty and Sales Tax on Reimportation of Malaysia-made Goods and and Issuance of Sales Tax Policy No. 2/2026
- Service Tax Guide on Transmission and Distribution of Electricity Services dated 16 April 2026
- Updates to Service Tax Policy No. 1/2025 – Financial Services
- Issuance of Service Tax Policy No. 1/2026 – Healthcare Management Services (released on 4 May 2026)
- Service Tax Guide on Management Services dated 6 May 2026
Explore our full commentary below for more insights.
30 March 2026
Recently, the Malaysian Government implemented several key Indirect Tax reforms designed to formalise existing policies, provide clarity and reinforce compliance. These updates impact multiple sectors and carry significant implications for businesses.
Our latest Indirect Tax Updates cover five key areas:
- Official gazettement of an order regarding the reduction of the service tax rate from 8% to 6%
- Service Tax Guide on Information Technology Services dated 26 February 2026
- Service Tax Guide on Healthcare Services by Private Healthcare Facilities, Practice of Traditional and Complementary Medicine Private Services and Private Allied Health Related Services dated 1 March 2026
- Service Tax Guide on Construction Works Services dated 17 March 2026
- Sales Tax Guide on Registration dated 6 March 2026
Explore our full commentary below for more insights.
23 February 2026
Following the Malaysian Ministry of Finance (MoF) Press Release dated 5 January 2026, the Royal Malaysian Customs Department (RMCD) issued updated Service Tax Policies as well as a new Sales Tax Policy, outlining key updates to the following areas:
- Refund mechanism arising from the reduction of service tax rate from 8% to 6% for rental or leasing services
- Extension of service tax exemption on construction work contracts signed before 9 June 2025 without a reviewable clause until 30 June 2027
- Sales Tax exemption on critical raw materials or manufacturing inputs
Explore our full commentary below for more insights.
27 January 2026
The Royal Malaysian Customs Department (RMCD) has issued Service Tax Policy 2/2025 (Amendment No. 3) on 23 January 2026, outlining updates for rental and leasing services.Key changes include:
- Service tax rate reduced from 8% to 6%
- MSME threshold increased from RM1 million to RM1.5 million
- One‑year service tax exemption for newly registered MSMEs in MyPMK
New Update:
To supplement item 8, STP No 2/2025 (Amendment No. 3) which relates to the reduction of service tax rate from 8% to 6% for rental or leasing services, the RMCD released the Procedure For Issuing Invoices and Reporting The Rate Of Tax on Rental or Leasing Services (the Procedure) dated 27 January 2026 to guide impacted registered persons in complying with this exemption.Under Regulation 10 (1A), Service Tax Regulations 2018, the impacted registered person must reflect the service tax exemption at the rate of 2% for rental or leasing services in both their invoices and SST-02 reporting.
From an invoicing perspective, the impacted registered person can choose either option when invoicing their customers:
| Option 1 | Option 2 | ||
| Rental Services | RM 1,000 | Rental Services | RM 1,000 |
| 8% Service Tax | RM 80 | 6% Service Tax | RM 60 |
| 2% Exemption | (RM 20) | Total | RM 1,060 |
| Total | RM 1,060 | Note: Exemption of 2% service tax (tax rate) with a value of RM20 | |
From a reporting perspective, the impacted registered person is required to state the value of the exempted services in column 18(c) (3) in the SST-02 return. Details are as follows:
| Column in SST-02 Return | Value | Remarks |
| 10 - Value of Taxable Service | 1,000 | The specified value of the rental services provided. |
| 11(c) - Taxable Services at 6% Rate | 1,000 | To select service tax at a rate of 6% in the MySST Portal. |
| 18 – Value of Exempted Taxable Services under Other Exemption | 1,000 | To state the value of the rental services provided that are subject to the service tax exemption at the rate of 2%. |
Commentary:
The reduction of the service tax rate on rental and leasing services to 6% under STP No. 2/2025 (Amendment No. 3) itself is an exemption provided by the RMCD, pending the gazettement of an order. In this regard taxpayers will need to follow this procedure until the gazette order has been issued. In addition, taxpayers will still need to ensure that the transitional provisions are met to accurately impose the correct tax rates on their rental or leasing services.
Explore our full commentary below for more insights.
8 January 2026
As we step into 2026, the Malaysian Government has introduced a series of important Indirect Tax changes aimed at reducing business costs, supporting economic growth, and strengthening compliance. These updates impact multiple sectors and carry significant implications for businesses.
Our latest Indirect Tax Updates cover four key areas:
- Sales Tax and Service Tax (SST) Updates under Prime Minister Anwar Ibrahim's 2026 New Year Message
- Public Ruling 1/2026: Meaning of the word “Used” under Regulation 17 (1)(g), Sales Tax Regulations 2018
- Limitation on Vehicle Tax Exemption in Langkawi and Labuan
- Policy Update for Import Duty and Sales Tax Exemptions for Importation of Multimedia/ICT Equipment by Malaysia Digital (MD) Companies
Explore our full commentary below for more insights.