Official Announcement:
The Royal Malaysian Customs Department has issued Service Tax Policy No. 3/2025 , outlining the Service Tax Exemption for Construction Services , effective 1 July 2025 .
Here are the key highlights:
⚠️ Exemption does not apply to cases involving fraud or deliberate offenses.
Important Reminder:
Here are the key scenarios you must be aware of:
| 1 | Project completed before 1 July | Exempted |
| 2 | Services performed after 1 July | Fully taxable (if invoice issued & payment made after 1 July) |
| 3 | Services performed after 1 July | Exempted (If invoice issued & payment made before 1 July) |
| 4 | Projects that straddle 1 July | must be apportioned and taxed accordingly |
| 5 | Services performed after 1 July, invoices issued before 1 July but payment received after 1 July | attract SST |
| 6 | Retention sum | exempted of project handed over before 1 July |
| 7 | Retention sums | taxable even if unbilled beyond 12 months after project handover |
Why This Matters:
Correctly determining your tax exposure ensures compliance, prevents disputes with clients, and protects your business cash flow.
Quick Reference Guide
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