Date of Issue: 17 October 2025
Effective (Retrospective) Date: 1 July 2025
The Royal Malaysian Customs Department (RMCD) has released the updated policy
“Service Tax Policy 2/2025 (Amendment No. 2)”,
which provides clarification and updates regarding the Service Tax treatment for Rental and Leasing Services (Group K).
Rental services provided to or by the Federal, State, and Local Governments are exempted from Service Tax.
The exemption for Local Authorities is valid until 30 September 2025.
Tenants with annual sales turnover not exceeding RM1,000,000,
and registered under the MyPMK system,
are eligible for exemption from Service Tax on rental services.
Leasing activities between companies within the same group (including overseas subsidiaries)
are exempted from Service Tax,
provided that external leasing does not exceed 5% of the total rental value.
Leasing of aircraft (excluding drones) and vessels (excluding floating platforms)
is exempted from Service Tax.
Contracts signed and stamped before 9 June 2025
are exempted from Service Tax until 30 June 2026.
Businesses that reach the registration threshold in July 2025
and complete registration by 31 August 2025,
may apply for a refund by 30 November 2025
**Data updated on 29.10.2025
(201706002678 & AF 002133)