Service Tax Policy 2/2026 - Construction Works Services

The Royal Malaysian Customs Department has issued Service Tax Policy 2/2026 – Service Tax Treatment on Construction Works Services Carried Out on Completed Residential Buildings dated 18 June 2026 (available only in Malay language), which takes effect retrospectively from 1 July 2025.

Outlined below are the salient points:

1. Subject to meeting conditions, any construction works services carried out on residential buildings that have been completed are exempted from Service Tax prior to amendments to the Service Tax Regulations 2018.

2. Registered persons (under Group L – construction works services) who have charged and collected the Service Tax on construction works services on completed residential buildings may claim a refund of the Service Tax paid. Amongst others, note that the application for refund must be made by 30 June 2026 and that the registered person needs to refund the Service Tax collected to the customers first.