2% Service Tax exemption on Rental or Leasing services - Procedures for issuing invoices and SST-02 Returns reporting requirements
Further to our earlier Tax Whiz on the amendment to Service Tax Policy 2/2025 (link here), the Royal Malaysian Customs Department (“Customs”) has issued a Notice dated 27 January 2026 regarding the procedures for issuing invoices and reporting requirement in the SST-02 Returns for the 2% Service Tax exemption on rental or leasing services.
In summary, Customs has clarified that the Service Tax registered person is only allowed to issue invoice using one of the following methods:
As for Service Tax reporting in the SST-02 Returns purposes, the Service Tax registered person must report as follows:
No |
Field |
Value (RM) |
Notes |
1 |
10 – Value of Taxable Service |
1,000 |
Value of rental services |
2 |
11(c) – Taxable Services at 6% Rate |
1,000 |
Select 6% Service Tax |
3 |
18(c)(3) – Value of exempted taxable services – Other exemption |
1,000 |
Value of rental services exempted at the rate of 2% |
Note that the value of the services that is exempted and required to be declared in Field 18c(3) is the same as the value of the rental services that is subject to Service Tax (Field 10).
With this Notice, affected businesses should immediately look into the invoice format and keep track of the relevant values to be reported in the SST-02 Returns. Where required, proper reconciliation should be kept particularly if there are more than one type of transaction in each reporting field.
Please click on the above header link for a copy of the Notice (available in Malay language only).
Petaling Jaya Office
Soh Lian Seng
Partner - Head of Tax and Tax Dispute Resolution
lsoh@kpmg.com.my
+ 603 7721 7019
Ng Sue Lynn
Partner - Head of Indirect Tax
suelynnng@kpmg.com.my
+ 603 7721 7271
Tai Lai Kok
Partner - Head of Corporate Tax
ltai1@kpmg.com.my
+ 603 7721 7020
Bob Kee
Partner - Head of Transfer Pricing
bkee@kpmg.com.my
+ 603 7721 7029
Long Yen Ping
Partner - Head of Global Mobility Services yenpinglong@kpmg.com.my
+ 603 7721 7018
Outstation Offices
Penang
Poh Sin Yue
Partner
sypoh@kpmg.com.my
+603 7721 7285
Ipoh
Crystal Chuah Yoke Chin
Associate Director
ycchuah@kpmg.com.my
+603 7721 2714
Kuching & Miri
Regina Lau
Partner
reglau@kpmg.com.my
+603 7721 2188
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Titus Tseu
Executive Director
titustseu@kpmg.com.my
+603 7721 2822
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Ng Fie Lih
Partner
flng@kpmg.com.my
+603 7721 2514