Malaysia’s service-tax rate for relevant rental and leasing services is 6% from 1 January 2026. That doesn’t mean every rental invoice should simply have 6% added.
You need to separate three questions:
- Is the provider required to register?
- Is this rental or leasing service taxable?
- Does the tenant qualify for an exemption or relief?
Mixing those tests is one of the easiest ways to reach the wrong conclusion.
What changed in 2026?
MOF’s statement dated 5 January 2026 announced the 6% rate from 1 January 2026 and expanded tenant relief. Customs’ SST overview confirms the rate.
Rental Policy 2/2025, amendment 5, dated 22 July 2026, records that the 6% rate was gazetted under P.U.(A) 125 on 13 March 2026 with effect from 1 January 2026.
The earlier non-reviewable-contract relief for rental ended on 30 June 2026. Construction service tax relief has different conditions and dates, so check each arrangement under its own rules.
Provider registration and tenant relief are different
The provider’s RM1 million registration threshold, described in MOF’s June 2025 release, concerns whether the provider falls within the registration framework.
Tenant relief has its own requirements. PMKS means micro, small and medium enterprises. Item 4 of the July 2026 policy requires a qualifying tenant to register and make the declaration through Customs’ MyPMK system, using the relevant annual sales supported by its latest income-tax declaration.
The policy distinguishes these sales bands:
| Relevant annual sales | Relief start under the stated policy conditions |
|---|---|
| Below RM1 million | 1 July 2025 |
| Above RM1 million and below RM1.5 million | 1 January 2026 |
The capital condition is paid-up ordinary share capital of no more than RM2.5 million. For a PMKS established by a company in the same group, the owning company’s shareholding in the PMKS must not exceed 20%. Check the actual ownership structure rather than treating the 20% figure as a general allowance for every group arrangement.
Eligible tenants registered in MyPMK by 31 December 2026 can receive the policy’s retrospective treatment for the relevant sales band. Annual sales must be updated in MyPMK by the last day of the month following submission of the latest income-tax declaration. Keep the evidence for both the status and the period claimed.
The table follows the July policy's strict wording. Exactly RM1 million is omitted from its two bands, and exactly RM1.5 million is not below the upper limit. The boundary section below explains how to handle those amounts without treating an older guide as current approval.
Fictional case study: the same rent, different tenant treatment
Assume a registered provider charges each of two established businesses RM10,000 for otherwise taxable commercial premises in September 2026. Both tenants have traded for more than a year.
Nadia’s company has RM1.2 million of relevant annual sales supported by its latest tax declaration, RM500,000 paid-up ordinary capital and individual shareholders, with no corporate-group ownership issue. It registered and made an accurate declaration in MyPMK in March 2026, has kept the information current and satisfies the remaining policy conditions for the period.
Harun’s company has RM2 million of relevant annual sales. Assume it has no other exemption or relief.
| September invoice | Nadia’s company | Harun’s company |
|---|---|---|
| Rental charge | RM10,000 | RM10,000 |
| Service tax | RM0 under the assumed qualifying tenant relief | RM10,000 × 6% = RM600 |
| Total, excluding any other charges | RM10,000 | RM10,600 |
Nadia supplies the eligibility evidence and the provider verifies its application to the rental period. Harun’s team confirms the taxable treatment and accepts the RM600 charge. The lesson is to establish tenant relief before calculating the tax. This example concerns the stated commercial service; it does not establish that residential rent or every lease is taxable.
What should a tenant check?
Review:
- the property or asset being rented;
- the service period and invoice date;
- the provider’s registration details;
- the lease or rental agreement;
- the tenant’s MyPMK status;
- the annual-sales evidence used;
- paid-up capital and relevant ownership information;
- the effective date shown on the relief evidence; and
- whether the information has been updated as required.
For a newly established PMKS, item 9 provides conditional relief for one year from registration with SSM or the equivalent agency in Sabah or Sarawak. The clock does not simply start when the tenant signs a lease. The capital, ownership and MyPMK conditions still apply, with income-tax submission and updated declarations needed for subsequent eligibility.
What if annual sales are exactly RM1 million or RM1.5 million?
Use the later policy's wording when reviewing current eligibility, and keep any earlier-period entitlement separate.
Exactly RM1 million: item 4(b) of the July policy lists sales below RM1 million, then sales above RM1 million and below RM1.5 million. Exactly RM1 million fits neither stated band. The published wording therefore does not establish entitlement at that exact amount. Do not round the figure down or assume which relief start date applies.
Exactly RM1.5 million: the July policy expressly uses a below-RM1.5-million limit, so this amount does not satisfy that published sales band. Do not describe the current policy as automatically covering sales “up to and including RM1.5 million”.
The history explains why different summaries exist. Amendment 4, dated 6 February 2026, item 4(b), and the 14 May guide, printed page 18, used an inclusive RM1.5 million ceiling. That older wording should not be used alone to override the later policy. Equally, the changed wording is not enough to decide the treatment of every earlier rental period or an exemption already granted.
For either exact amount, assemble the latest declared sales, rental periods and MyPMK evidence and ask Customs for written confirmation of the applicable treatment and effective date. Keep any existing approval with the query; agree the invoice treatment with the provider and adviser while it is being clarified. A portal registration alone does not answer a disputed policy interpretation.
For example, an otherwise eligible fictional tenant with exactly RM1 million of annual sales should record “boundary confirmation required”, rather than “exempt”. Its next completed step is a documented query with the relevant periods and evidence. No exemption or rejection is invented to make the example look finished.
What if an invoice used 8% instead of 6%?
Annex B of the July policy specifically addresses overpayment arising from the two-percentage-point rate reduction. It describes a provider refund application under subsection 38(1)(b), supported by the prescribed application documents, tax records, invoices, service-period evidence and customer repayment or credit-note evidence.
For a separate fictional RM10,000 taxable rental charge wholly relating to January 2026, assume the provider charged and accounted for RM800 at 8% when RM600 at 6% should apply. The difference is RM200. The tenant raises that amount with the provider; the provider checks the Annex B requirements and documents the customer adjustment and any Customs application.
That process does not guarantee an automatic refund. A claim that the tenant should instead have been fully exempt is a different issue: identify its relief basis and applicable correction procedure rather than treating Annex B as a general refund route for every disputed invoice.
Joint-provider arrangements also have separate treatment under Rental Policy 4/2026.
Keep an invoice-review file
For each disputed or material rental arrangement, keep the lease, invoices, service periods, registration details, MyPMK evidence, sales and ownership information, correspondence and any credit note. The accountant document checklist can help you organise the handover.
The useful habit is to write down which of the three questions you are answering: provider registration, taxable service or tenant relief. That small distinction makes this complicated area much easier to discuss accurately.
Sources checked on 24 September 2026 against Customs’ policy index, February and July policies, and May guide. The ordinary worked invoices use the July conditions. Exactly RM1 million remains a gap in the stated bands; the later strict RM1.5 million ceiling must be distinguished from older inclusive wording and any earlier-period entitlement.
Sources referred to in this guide (7)
We’ve taken reasonable steps to verify the cited sources and check this information as at the source-check date. We can’t guarantee 100% accuracy, completeness or that it remains up to date. This is general information and does not replace professional accounting, tax or legal advice tailored to your circumstances. How these guides were prepared.