KUALA LUMPUR: The government has reduced the service tax rate on rental or leasing services for industrial use to six per cent from eight per cent, effective Jan 1, 2026, as part of updated policy measures under the Sales and Services Tax (SST) framework.
In a statement today, the Finance Ministry (MOF) said the revised measures followed decisions announced by Prime Minister Datuk Seri Anwar Ibrahim, who is also finance minister, today.
MOF said the annual sales threshold for micro, small and medium enterprises (MSMEs) exempted from paying service tax on rental or leasing services has been increased from RM1 million to RM1.5 million.
Newly established MSMEs will also be granted a one-year exemption from service tax on rental or leasing services starting from the date of their registration.
Separately, the ministry announced a sales tax exemption on critical raw materials or inputs used by registered manufacturers, effective Jan 1, 2026, aimed at helping to control the prices of essential goods.
The exemption covers inputs for the livestock and agricultural sectors, including animal feed, fertilisers and pesticides.
MOF also said service tax exemptions for construction contracts signed before July 1, 2025, and which do not include a reviewable clause, will be extended for another year from July 1, 2026, to June 30, 2027.
This will allow eligible construction service contracts to enjoy service tax exemption for a total period of two years, the ministry said.
In addition, MOF reiterated that service tax exemptions for the construction of religious buildings, including surau, mosques, temples, churches and religious halls, remain in effect from July 1, 2025, and are not subject to service tax. - FMT
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