Malaysia’s tax environment has continued to evolve, with changes to the SST framework and the ongoing rollout of e-Invoicing affecting businesses across different industries. Tax treatment, registration requirements and e-Invoice obligations can differ depending on the type and size of the business, so keeping up is important.
Service Tax on Rental Services in Malaysia: What Changed
From 1 July 2025, Malaysia expanded the scope of service tax to include additional categories of taxable services, including rental or leasing services. Rental or leasing services are subject to a 6% service tax rate effective from 1 January 2026.
(Source: Royal Malaysian Customs Department, MySST)
Businesses providing rental or leasing services should assess whether they are required to register for service tax based on the latest Royal Malaysian Customs Department requirements and the nature and value of their taxable services. This is particularly relevant for businesses involved in commercial property, equipment rental and other arrangements that fall within the definition of taxable rental or leasing services.
Businesses should assess their specific activities and contracts against the latest Customs requirements rather than assuming that all rental or leasing arrangements are treated in exactly the same way.
The Standard Service Tax Rate vs the Rate on Rental Services
The standard service tax rate remains 8% for most taxable services, while certain categories are subject to different rates. For example, rental or leasing services are subject to the specific 6% rate applicable from 1 January 2026.
Budget 2027 also announced that, effective 1 January 2027, the service tax rate for elderly care services will be reduced from 8% to 6%. Elderly care services with annual fees of up to RM96,000 will be exempted from service tax.
Because SST treatment depends on the type of taxable service, businesses should identify the correct service category before applying a tax rate.
(Source: Royal Malaysian Customs Department, MySST; Prime Minister’s Office, Speech of the Fifth MADANI Budget 2027, 9 October 2026)
What e-Invoicing Changes for Businesses
Malaysia’s e-Invoice implementation has been introduced progressively according to annual revenue or sales. Under the latest HASiL implementation timeline:
- Businesses with annual revenue or sales exceeding RM100 million were brought into e-Invoice implementation from 1 August 2024.
- Businesses with annual revenue or sales exceeding RM25 million up to RM100 million were brought in from 1 January 2025.
- Businesses with annual revenue or sales exceeding RM5 million up to RM25 million were brought in from 1 July 2025.
- Businesses with annual revenue or sales up to RM5 million were scheduled for implementation from 1 January 2026.
- Taxpayers with annual revenue or sales below RM3 million are exempt from e-Invoice implementation.
(Source: HASiL e-Invoice Implementation Timeline, updated 30 August 2026)
For taxpayers in the up-to-RM5 million implementation group, HASiL’s e-Invoice Specific Guideline provides an interim relaxation period until 31 December 2027, subject to the conditions set out in the guideline.
(Source: HASiL e-Invoice Specific Guideline Version 4.9, 7 September 2026)
Businesses should check the latest HASiL requirements based on their own revenue, business structure and applicable exemption conditions. The Budget 2027 speech delivered on 9 October 2026 did not announce changes to the e-Invoice implementation timeline above.
(Source: Prime Minister’s Office, Speech of the Fifth MADANI Budget 2027, 9 October 2026)
e-Invoice and Tax Compliance
e-Invoice is also giving tax authorities greater visibility over business transaction data. In June 2026, HASiL reported that 52,540 taxpayers had come forward to report RM4.07 billion in previously unreported income following the implementation and review of e-Invoice data.
(Source: HASiL, 20 June 2026, via Bernama)
This highlights the importance of keeping invoicing, accounting records and tax reporting processes accurate and properly maintained.
What Good SST and e-Invoice Management Looks Like
Good tax management means understanding which services are taxable, applying the correct tax treatment, keeping accurate records and ensuring that accounting and invoicing processes are properly maintained. For businesses subject to e-Invoice, systems should also be kept updated according to the latest HASiL requirements and implementation guidelines.
The e-Invoice framework includes specific rules, exceptions and relaxation measures, so businesses should refer to the latest HASiL guidelines rather than relying on older implementation information.
Reviewing your tax processes is also a good time to review your wider technology. Read our guide: The Right IT Setup Matters More Than Ever for Malaysian Businesses.
At Emspaced Accounting, we help Malaysian businesses with accounting software, e-Invoice setup and accounting support, helping businesses keep their financial processes more organised and aligned with current requirements.
Talk to the Emspaced team to find out how we can support your accounting and e-Invoice needs.
Frequently Asked Questions
What is the service tax rate on rental or leasing services in Malaysia?
Rental or leasing services are subject to a 6% service tax rate from 1 January 2026, while the standard rate remains 8% for most taxable services. Businesses should assess whether they must register based on the latest Royal Malaysian Customs Department requirements.
Did Budget 2027 change SST or e-Invoice rules?
Budget 2027 included an SST measure reducing the service tax rate for elderly care services from 8% to 6% from 1 January 2027, with an exemption for services charging annual fees of up to RM96,000. The Budget 2027 speech did not announce changes to the e-Invoice implementation timeline.
Which businesses need to implement e-Invoice in Malaysia?
Implementation is phased by annual revenue or sales, with the latest group (up to RM5 million) scheduled from 1 January 2026. Taxpayers below RM3 million are exempt, and the up-to-RM5 million group has an interim relaxation period until 31 December 2027, subject to conditions. Check the latest HASiL guidelines against your own revenue and business structure.
Disclaimer: This article is for general information only and is based on the Budget 2027 announcement made on 9 October 2026. Announced or proposed tax measures remain subject to final legislation, gazette orders and official guidelines from the Royal Malaysian Customs Department and HASiL. This article is not tax, legal or financial advice. Please refer to the relevant authorities or consult a qualified tax professional before making any business or tax decisions.
