KUALA LUMPUR: Service Tax on rentals for micro, small and medium enterprises (MSMEs) has been reduced to six per cent from eight per cent, said Prime Minister Datuk Seri Anwar Ibrahim.
The eight per cent tax was implemented on July 1, 2025, and applies to the rental of non-residential premises such as offices, warehouses and commercial assets.
"The Service Tax on rentals has indeed been an issue because it rose from zero to eight per cent.
"So far, I am only able to reduce it to six per cent, with a loss of nearly half a billion ringgit in revenue annually,” he said in his New Year’s address today.
Anwar, who is also the Finance Minister, said newly established MSMEs will enjoy a one-year deferment of the Service Tax on rentals.
The tax exemption threshold for MSMEs will be increased to include those with an annual turnover of up to RM1.5 million. Previously, tax exemptions applied only to businesses with an annual turnover between RM500,000 and RM1 million.
"We have decided to exempt MSMEs with annual sales ranging from RM500,000 to RM1 million, and we are now extending the exemption to those with total annual sales of up to RM1.5 million,” he said. - Bernama
