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      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

      Long Yen Ping
      Partner - Head of Global Mobility Services  
      yenpinglong@kpmg.com.my
      + 603 7721 7018

      Tai Lai Kok
      Partner – Head of International & Domestic Tax Advisory
      ltai1@kpmg.com.my
      + 603 7721 7020

      Ng Sue Lynn
      Partner - Head of Indirect Tax
      suelynnng@kpmg.com.my
      + 603 7721 7271

      Bob Kee
      Partner - Head of Transfer Pricing
      bkee@kpmg.com.my
      + 603 7721 7029

      Neoh Beng Guan
      Partner – Head of Corporate Tax
      bneoh@kpmg.com.my
      + 603 7721 7025 

      Outstation Offices

      Penang
      Poh Sin Yue
      Partner
      sypoh@kpmg.com.my
      +603 7721 7285

      Johor
      Ng Fie Lih
      Partner 
      flng@kpmg.com.my
      +603 7721 2514

      Kuching & Miri
      Regina Lau
      Partner
      reglau@kpmg.com.my
      +603 7721 2188

      Ipoh
      Crystal Chuah Yoke Chin
      Associate Director
      ycchuah@kpmg.com.my
      +603 7721 2714

      Kuching
      Chan Wing Hong
      Executive Director
      whchan@kpmg.com.my
      +603 7721 7424

      Kota Kinabalu
      Caroline Chong
      Director
      carolinechong@kpmg.com.my
      +603 7721 2818