Malaysia exempts construction work on completed residential buildings from service tax

What changed in detail

Service Tax Policy No. 2/2026, dated 18 June 2026, exempts construction work services carried out on completed residential buildings from service tax, under paragraph 34(3)(a) and subsection 34(4) of the Service Tax Act 2018, with effect from 1 July 2025. The services concerned sit in Group L of the First Schedule to the Service Tax Regulations 2018, and the exemption runs until the amendments to those Regulations are approved and gazetted.

The exemption is conditional and evidence-based. The provider must be registered under Group L; it must obtain proof that the building is residential — a strata or individual title, a sale and purchase agreement under the Housing Development (Control and Licensing) Act 1966, utility bills, or approved building plans; the recipient’s name and the building address must appear on the invoice; and it is applied through self-compliance rather than by application.

A registered person that had already charged and remitted service tax on such work could claim a refund, provided the amount had been declared and paid in the SST-02 return, the tax had first been refunded to the customer, and the claim was submitted on or before 30 June 2026.

What it means

The substantive relief is settled, but the money window has closed: the 30 June 2026 refund deadline has passed, so anyone who charged service tax on completed-residential work between July 2025 and mid-2026 and did not claim in time has no route back through this policy.

The remaining action is confirmatory — check that construction work on completed residential buildings is no longer being taxed, and that the documentary conditions are actually being collected, since the exemption is self-applied and the evidence is what stands behind it on audit.