Malaysia Reduces Service Tax on Industrial Rentals, Expands MSME Exemptions, and Zero-Rates Key Inputs

• Service tax rate on rental/leasing services for industrial use reduced from 8% to 6% starting 1 January 2026.
• MSME exemption threshold for service tax on rental/leasing services increased from MYR 1 million to MYR 1.5 million.
• Service tax exemption for construction contracts signed before 1 July 2025 extended to 30 June 2027; religious buildings remain exempt.
• Sales tax zero-rated for critical raw materials and agricultural inputs (animal feed, fertilisers, pesticides) for registered manufacturers.
• These changes aim to reduce business costs, support MSME growth, and provide tax savings of around MYR 500 million annually to tenants.

Source: bdo.global

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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