SST Malaysia Updates in 2026: What Businesses Need to Know
Understanding the latest SST changes and what they mean for Malaysian businesses.
Malaysia’s Sales and Service Tax (SST) framework continues to evolve as the government balances cost pressures on businesses while protecting consumers from inflation. The latest SST updates introduce several important changes that directly impact SMEs, manufacturers, construction players, and property-related businesses.
Here is a clear breakdown of what has changed and what it means for your business.
1. Service Tax Reduction for Rental Services
Effective from 1 January 2026, the service tax rate for rental and leasing services has been reduced from 8% to 6%. In addition to the rate reduction, the exemption threshold for Small and Medium Enterprises (SMEs) has been increased from RM1 million to RM1.5 million. Newly registered SMEs will also benefit from a one-year exemption from service tax on rental services.
From a business perspective, rental expenses are often a fixed and recurring cost. This reduction provides some relief for businesses operating from rented offices, retail outlets, or warehouses, and can help improve cash flow planning, particularly for companies managing more than one location.
2. Sales Tax Exemption on Key Agricultural and Livestock Inputs
Starting 1 January 2026, sales tax exemptions will apply to selected essential inputs used in agriculture and livestock activities, including animal feed, fertilizers, and pesticides.
These exemptions are intended to reduce cost pressures within the food production supply chain. For businesses involved in manufacturing, distribution, or related support activities, lower input costs can contribute to more stable pricing and reduce the likelihood of passing downstream cost increases on to consumers.
3. Extended Construction Service Tax Exemption
The government has also extended the existing service tax exemption for construction services under specific conditions. This extension applies to construction contracts signed before 1 July 2025 that do not include reviewable clauses. The exemption period has now been extended until 30 June 2027, providing a total exemption period of two years.
For construction and property-related businesses, this extension offers greater certainty for ongoing projects. With service tax costs remaining unchanged for eligible contracts, businesses can better manage project budgeting and reduce the risk of cost adjustments midway through execution.
4. Service Tax Exemption for Places of Worship
Effective from 1 July 2025, service tax exemptions apply to construction and related services for buildings used as places of worship. This includes mosques, suraus, churches, temples, and other religious or spiritual buildings.
This exemption ensures that religious and community organizations are not burdened by additional tax costs when developing or maintaining facilities intended for public and community use.
Conclusion
These latest SST updates introduce targeted relief measures across rental services, selected inputs, and specific activities, which businesses should review carefully in relation to their operations.
Navigating compliance requirements can feel complex as tax policies continue to change, especially when accuracy in invoicing and reporting becomes increasingly important. Goldsoft’s ERP system helps businesses maintain structured records, consistent reporting, and clearer product categorization, reducing the risk of errors as businesses adapt to evolving SST requirements.
Sources:
https://www.nst.com.my/news/nation/2026/01/1351049/service-tax-industrial-rentals-cut-6pct
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