Malaysia’s Customs Department will implement revised service tax policies with additional exemptions from 1 July 2025, following the Ministry of Finance’s announcement of expanded SST regulations.

Malaysia’s Customs Department has revised its service tax policies, introducing additional exemptions following the broadened scope of the Sales and Service Tax (SST). The updated policies will generally take effect on 1 July 2025, unless otherwise specified.

The updated service tax policies supersede and revoke the following earlier policies:

  • Service Tax Policy No. 2/2025 and its Amendment No. 1;
  • Service Tax Policy No. 3/2025;
  • Service Tax Policy No. 4/2025 and its Amendment No. 1; and
  • Service Tax Policy No. 5/2025 (Amendment No. 1).

The amendments to the service tax policies are as follows:

Financial Services (Service Tax Policy No. 1/2025 (Amendment No.3))

  • Effective 17 October 2025,  exemption from payment of service tax on management services for fixed price funds under Amanah Saham Nasional Berhad (ASNB), including: (a) Amanah Saham Bumiputera (ASB); or (b) Amanah Saham Malaysia (ASM).
  • Effective 17 October 2025, exemption from payment of service tax for fee-based financial services on transactions relating to securities issued and guaranteed by the Federal or State Governments.
  • Effective 17 October 2025, exemption from the payment of service tax on the acquisition of re-insurance services or re-takaful services by insurance companies or takaful companies.

Rental or Leasing Services (Service Tax Policy No. 2/2025 (Amendment No.2))

  • Group relief is granted to companies within a group that receive rental or leasing services from any other company within the same group, whether inside or outside Malaysia. This exemption only applies to rental or leasing services that take effect from 1 July 2025.
  • Rental or leasing services of aircraft and ships are exempted from service tax. (a) All aircraft are included except drones. (b) Ships include any vessel that sails or moves on or under water, but exclude floating storage units (FSU) and similar vessels.
  • The business-to-business (B2B) exemption facility on rental or leasing services for the period from 1 July 2025 to 31 August 2025 is granted to rental or leasing service providers who newly reach the registration threshold in July 2025 and have applied for service tax registration on or before 31 August 2025.

Education Services (Service Tax Policy No. 4/2025 (Amendment No. 2))

  • Children and dependents of foreign diplomats are exempted from paying service tax on educational services, subject to conditions.
  • Exemption from service tax is granted on education fees or service charges that are fully sponsored by educational institutions, higher learning institutions, companies, foundations, or other organisations.

Private Healthcare Services (Service Tax Policy No. 5/2025 (Amendment No. 2) and Service Tax Policy No. 6/2025)

  • Service tax exemption applies to consultation fees charged by professional doctors at registered private healthcare facilities, practitioners of traditional and complementary private medical practices, and private allied health services are exempted from the imposition of service tax. The consultation fee must be separated from other medical treatment charges in the same invoice.
  • Any service tax that has been collected from customers must be remitted to the Royal Malaysian Customs Department (RMCD) in accordance with Section 26 of the Service Tax Act 2018. The Royal Malaysian Customs Department may take any necessary action to recover any amount of service tax not accounted for to RMCD in accordance with the prevailing legislation in force
  • Therefore, private healthcare facilities registered under healthcare services (Group I) and providing other taxable services such as accommodation services (Group A) and food and beverage services (Group B) are required to impose service tax on all taxable and non-taxable services provided, effective from 1 July 2025.
  • Providers of health screening management services for non-citizen workers, such as FOMEMA, are exempted from the payment of service tax.
  • Therefore, private healthcare facilities registered under healthcare services (Group I) and providing other taxable services such as accommodation services (Group A) and food and beverage services (Group B) are required to impose service tax on all taxable and non-taxable services provided, effective from 1 July 2025

This follows Malaysia’s Ministry of Finance’s announcement on 9 June 2025 of revisions to the sales tax and an expanded scope for the service tax, which took effect on 1 July 2025.