Topic: SST | Rental Services
Malaysia rental services fall under Group K of the Service Tax Regulations 2018. The current service tax rate is 6% from 1 January 2026. A rental or leasing service provider generally becomes liable to register when the value of taxable services exceeds RM500,000 in a 12-month period.
This guide focuses on recurring rental arrangements such as commercial premises, vehicles, machinery, equipment and other tangible assets. Rental and leasing are one official SST category, but they are explained in separate HTL guides so businesses can find the treatment relevant to their contracts.
Malaysia rental service tax at a glance
| Question | Current position |
|---|---|
| When did rental SST begin? | 1 July 2025 |
| What is the current rate? | 6% from 1 January 2026 |
| What was the previous rate? | 8% from 1 July to 31 December 2025 |
| What is the registration threshold? | More than RM500,000 of taxable rental or leasing services in 12 months |
| Which official category applies? | Group K — Rental or Leasing |
Which rental services are generally taxable?
Group K covers the rental or leasing of tangible assets and other services that form part of the rental arrangement. Common examples include:
- commercial offices, shops, warehouses and other non-residential premises;
- machinery, production equipment and office equipment;
- vehicles and other movable assets; and
- bundled services that form part of the rental agreement.
The contract, invoice description, location of the asset and whether ownership will transfer are important. A business should review the actual arrangement rather than relying only on the word “rental” in an invoice.
What is excluded from Group K?
The Service Tax Regulations exclude several arrangements from Group K, including:
- rental or leasing of housing accommodation;
- rental or leasing of reading materials;
- tangible assets located outside Malaysia; and
- qualifying financial leases or hire-purchase arrangements where ownership transfers at the end of the term.
Residential accommodation is not the same as commercial property. Mixed-use properties and bundled contracts should be reviewed carefully because the tax treatment may depend on how the consideration is allocated.
Current rental SST exemptions and reliefs
RMCD’s Service Tax Policy No. 2/2025 (Amendment No. 5), dated 22 July 2026, is the current policy for rental or leasing services. Important reliefs include:
- Federal and State Governments: exempt from charging and paying service tax on rental or leasing services.
- Eligible MSME tenants: tenants must register and declare their MSME status through MyPMK. The policy covers annual sales below RM1 million from 1 July 2025 and annual sales above RM1 million but below RM1.5 million from 1 January 2026, subject to all stated conditions.
- New MSMEs: qualifying newly established MSME tenants may receive a one-year exemption from the SSM or equivalent registration date, effective from 1 January 2026, subject to MyPMK and other conditions.
- Group relief: qualifying rental or leasing services between companies in the same group may be exempt, subject to the control and outside-group conditions.
- Aircraft and sea vessels: qualifying rentals or leases are exempt, with exclusions stated in the policy.
The temporary relief for qualifying non-reviewable contracts ended on 30 June 2026. Businesses should not continue applying that relief to rental periods from 1 July 2026 unless a later official measure applies.
What should landlords and rental providers do?
- Identify all rental and leasing income under Group K.
- Test the RM500,000 threshold using both the historical and future 12-month methods.
- Confirm whether each asset or property is within Malaysia and whether an exclusion applies.
- Validate tenant exemption documents before treating a transaction as exempt.
- Issue an SST-compliant invoice and apply the correct rate for the service period.
- Keep agreements, invoices, MyPMK declarations and supporting records for the required retention period.
What should tenants check?
Tenants should confirm that the provider is SST-registered, the tax rate is 6%, and the invoice identifies the taxable rental service. An eligible MSME tenant should complete the MyPMK process and provide the necessary evidence to the landlord before relying on an exemption.
Rental and leasing are related, but not identical
For equipment, vehicles, operating leases, financial leases and ownership-transfer arrangements, read HTL’s Malaysia Leasing Service Tax Guide 2026. For the wider rate, registration, return and payment framework, see the Malaysia Service Tax Guide 2026.
HTL can assist businesses with SST registration and compliance, transaction reviews, exemption documentation and SST return preparation.
Official references
- RMCD Guide on Rental or Leasing Services
- Service Tax Policy No. 2/2025 (Amendment No. 5)
- Service Tax (Rate of Tax) (Amendment) Order 2026
- RMCD FAQ: Expansion of Service Tax Scope 2025
This article provides general information and is not a substitute for advice based on a specific agreement or transaction.
