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Malaysia: Service tax and sales tax policy updates

New guidelines clarify service tax exemptions on maintenance charges and update documentation requirements for sales tax exemptions on manufacturing raw materials

june 29, 2026

The Royal Malaysian Customs Department (RMCD) in June 2026 issued Service Tax Policy 3/2026 and an amended Sales Tax Policy 1/2026 to clarify tax treatments for maintenance charges and raw material manufacturing exemptions.

  • Under Service Tax Policy 3/2026, maintenance or repair services, including maintenance management services related to nonresidential premises provided by any joint management body (JMB) or management corporation (MC), are nontaxable services. Consequently, the maintenance charges and sinking fund contributions for both residential and nonresidential buildings charged by a JMB or MC to property owners are not subject to service tax. Pending publication in the Service Tax Regulations 2018, this treatment is in the form of a ministerial exemption that becomes effective July 1, 2026. This treatment does not apply to periods before July 1, 2026, and any service tax payable up to June 30, 2026, must be remitted to the RMCD. Furthermore, a JMB or MC must pay service tax on taxable services procured from third parties, even when funded by the maintenance or sinking fund.
  • Under the amended Sales Tax Policy 1/2026, manufacturers importing or purchasing raw materials to manufacture animal feed, fertilisers, or pesticides are eligible for a sales tax exemption upon submitting certain documentation. Prior to May 18, 2026, the required document is a manufacturing certificate or license issued by the Department of Veterinary Services, the Pesticides and Fertilisers Control Division of the Department of Agriculture, or the ministry of domestic trade and cost of living (KPDN). Effective May 18, 2026, manufacturers must submit a manufacturing license (ML) or a confirmation letter for exemption from manufacturing license issued by the Malaysian Investment Development Authority (MIDA). Additionally, the refund application deadline has been extended to no later than October 31, 2026, with no further extensions of time granted after this date.

Read a June 2026 report prepared by the KPMG member firm in Malaysia

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