Malaysia cuts service tax on rental and leasing to 6%, backdated to 1 January 2026
This page records one dated change. For the rules in Malaysia as they stand today, see the Malaysia guide →
- Jurisdiction
- Malaysia
- Tax
- Service Tax
- Change type
- Rate change
- Status
- In force
- Impact
- FYI
- Announced
- 13 March 2026
- Effective
- 1 January 2026
- Instrument
- MY-SUBSIDIARY-LEGISLATION-P-U-A-125-2026
- Authority
- Attorney General's Chambers, Malaysia (Warta Kerajaan Persekutuan / Federal Gazette)
- Verified
- Fetched from official source · high confidence
Registered providers of Group K rental or leasing services in Malaysia (RM500,000 threshold) and their tenants and lessees.
No action — monitoring only. The 6% rate applies retroactively from 1 January 2026.
The Service Tax (Rate of Tax) (Amendment) Order 2026 [P.U.(A) 125/2026], made 10 March 2026, gazetted 13 March 2026 and deemed to have come into operation on 1 January 2026, inserts 'Provision of rental or leasing services' as item 14 of the First Schedule to the Service Tax (Rate of Tax) Order 2018 [P.U.(A) 213/2018]. Rental and leasing services (Group K, taxable since 1 July 2025 at the general 8% rate) are therefore taxed at the reduced 6% rate from 1 January 2026.
What changed in detail
The Service Tax (Rate of Tax) (Amendment) Order 2026 [P.U.(A) 125/2026] was made on 10 March 2026 and gazetted on 13 March 2026. It is deemed to have come into operation on 1 January 2026.
It amends the First Schedule to the Service Tax (Rate of Tax) Order 2018 [P.U.(A) 213/2018], the list of services taxed at the reduced rate, by inserting a new item 14: “Provision of rental or leasing services”.
Rental and leasing of tangible assets became taxable under Group K on 1 July 2025, with a RM500,000 registration threshold, as part of the July 2025 SST expansion. Because the service was not on the First Schedule, it was taxed at the general rate of 8%. With item 14 in place, rental and leasing is taxed at 6% from 1 January 2026.
What it means
The order is in force and backdated, which is what makes it more than a rate change. Invoices issued between 1 January and 13 March 2026 were raised before the order existed. Customs’ own policy document, Service Tax Policy No. 2/2025 (Amendment No. 5), confirms the 6% rate and sets out how over-collected tax is refunded. Lessors still reconciling that period should work from that record. Lessees should check that invoices from 2026 show 6%.
Proof
This Order is deemed to have come into operation on 1 January 2026.
Source snapshot of the official page. Open full size ↗Archived from the official distribution · P.U.(A) 125/2026 — Service Tax (Rate of Tax) (Amendment) Order 2026 (Federal Government Gazette, 13 March 2026) · lom.agc.gov.my