QCA – 2% Service Tax Exemption on Rental / Leasing Services (Effective 1 Jan 2026)

Overview:

Effective 1 January 2026, rental or leasing services that are subject to 8% Service Tax will receive a 2% exemption.  This means:

• Only 6% Service Tax is payable
• The exempted 2% must be declared in Item 18(c)(3) of the SST-02 form
• SST-02 declaration must follow the latest Customs guideline 

Scenario:

How to prepare a Service Tax Exemption for a Rental Service RM1,000 and displayed in SST-02 Form?

Solution:

1. In Tax Code Maintenance, by default system already created 2 tax codes as below: 

• SVTD-RL (Service Tax for Rental/Lease Services with 2% Service Tax Exemption (Payment Basis)
• SVT-RL (Service Tax for Rental/Lease Services with 2% Service Tax Exemption)

By default, this tax code is 6%

2. In Sales Invoice, by default there are no additional columns for “Rental Exempted Rate” or “Rental Exempted Tax Amount” , click on “Column Chooser”

To display the relevant columns, Tick “Rental/Lease Exempted Rate” and “Rental/Lease Exempted Tax Amount” > Apply Options.  

System displayed on screen these 2 columns on screen already.

3. When user create the Sales invoice and select the tax code “SVT-RL” system will automatically calculate the exempted of 2% and amount. Notice that service tax charged based on 6%

4. Check SST-02 Report, System declared exempted 2% of the taxable amount in Item 18(c)(3) of the SST-02 form

FAQ:
 

Q1: When is the 2% Service Tax exemption effective?

Answer:  The 2% Service Tax exemption on rental and leasing services is effective from 1 January 2026.


Q2: What type of services are eligible for the 2% exemption?

Answer: The exemption applies to specific rental and leasing services, subject to SST regulations issued by the Royal Malaysian Customs Department (RMCD). Users should verify whether their services fall under the eligible category.

Q3: Does this mean rental services are fully exempt from SST?

Answer: No. The exemption refers specifically to the 2% portion of the Service Tax, based on the applicable SST framework. Businesses should ensure correct tax code configuration.

Q4: How should this be reported in SST-02?

Answer: The exempted 2% amount must be declared under Item 18(c)(3) in the SST-02 form.

Q5: How should this be set up in the system?

Answer: Users should:

• Ensure they are using the correct SST tax code (SVT-RL or SVTD-RL)

• Confirm the system version supports the 2% exemption handling

• Verify reporting under the correct SST return item

(You can tailor this to QNE functionality.)

Kindly refer attachment for the PDF file