During the Prime Minister’s Department monthly assembly on 5 January 2026, the Minister of Finance announced several tax measures. These measures are intended to provide transitional relief, ease compliance obligations, and support businesses affected by the changes.
Key highlights and practical takeaways are set out below.
1.Stamp Duty – Voluntary disclosure opportunity
A six-month voluntary disclosure programme for stamp duty will be available from 1 January 2026 to 30 June 2026. The Inland Revenue Board (“IRB”) has since issued the relevant details of the programme, which will be covered in our next RB Inform.
2. Updates on SST
- a. Service tax on rental or leasing services
- Service tax rate reduced from 8% to 6%.
- Micro, Small and Medium Enterprise (“MSME”) tenants are exempted from service tax if annual sales do not exceed RM1.5 million (previously RM1 million).
- Newly established MSME tenants are exempt from Service Tax on rental for one year from registration date.
- Effective date: 1 January 2026
- b. Sales tax exemption on raw material or critical input used by registered manufacturers
- Registered manufacturers are exempt from sales tax on raw materials and key inputs used in producing livestock and agricultural products (e.g. animal feed, fertilisers, pesticides).
- Effective date: 1 January 2026
- c. Construction services
- Service tax exemption for non-reviewable construction contracts signed before 1 July 2025 is extended to 30 June 2027.
- Construction of places of worship (e.g. mosques, temples, churches, shrines that are religious and spiritual in nature) is fully exempt from service tax from 1 July 2025.
3. e-Invoicing
The IRB has extended the interim relaxation period for Phase 4 taxpayers (annual turnover up to RM5 million) to 31 December 2026.
During this period, businesses may issue consolidated e-Invoices and consolidated self-billed e-Invoices. In addition, wholesalers and retailers of construction materials may now issue consolidated e-Invoices, subject to the requirement to issue individual e-Invoices for single transactions exceeding RM10,000.
4.Section 44(6) – Approved Institution status
Institutions, Organisations or Funds (“IOFs”) approved under Section 44(6) of the Income Tax Act, 1967 will receive a 10-year tax exemption period for new approval and extension approval (for expiry falling on or after 31 December 2025) granted on or after 27 November 2025.
