6% Service Tax Rate for Rental or Leasing Services

The much awaited reduction in the rate of Service Tax for Rental or Leasing Services to 6% have been gazetted via the Service Tax (Rate of Tax) (Amendment) Order 2026.

The Amendment Order provides that provision of rental or leasing services would be subject to Service Tax at 6% and is deemed to have come into operation on 1 January 2026.

With the above Amendment Order, the procedures for issuing invoices and reporting requirements in the SST-02 Returns for the previous 2% Service Tax exemption on rental or leasing services as provided in the Notice dated 27 January 2026 issued by the Royal Malaysian Customs Department (“Customs”) (link here) would no longer be required.

Businesses should immediately look into the invoice format and keep track of the reporting requirements before and post the issuance of this Amendment Order, to ensure proper documentation and compliance with reporting, in the event of a Customs audit.