Is there service tax on shop rent in 2026, and who pays it?

Yes, but at 6%, not 8%. Service tax on rental and leasing services has been 6% since 1 January 2026. It is charged by registered landlords, and the tenant pays it on top of the rent. A landlord only has to register once taxable rent reaches RM1 million in 12 months, so many individual shop owners do not charge it at all. SME tenants with annual turnover below RM1.5 million can be exempt.

This is general information, not legal or tax advice. Check with your tax agent before you act.

The rate is 6%. The Royal Malaysian Customs MySST Background page lists rental or leasing services at 6%, effective from 1 January 2026 (page updated 19 Jul 2026).

Many websites, and even some older FAQ pages, still say 8%. That was the rate for only six months:

Source for the history: L&Co, summarising the Customs Rental & Leasing Services Guide (2nd Ed.), 5 Jun 2026.

The Ministry of Finance media release of 5 Jan 2026 (reproduced by MAICSA, 13 Jan 2026) made three changes:

• the rate fell from 8% to 6%
• the turnover threshold for SME tenants to be exempt rose from RM1m to RM1.5m
• newly established SMEs get a one-year exemption

Customs then released the 2nd edition of its rental and leasing guide on 14 May 2026, in Malay, replacing the 1st edition of 9 Jun 2025.

Only landlords whose taxable rental reaches RM1,000,000 in 12 months. The 1st edition of the guide said RM500,000; the 2nd edition uses RM1m (L&Co, 5 Jun 2026).

In practice, an individual who owns one or two ground-floor shops will usually be below that line. A shop let at RM15,000 a month earns RM180,000 a year. Large owners with many units, REITs and property companies are the ones most likely to be registered.

If your landlord is not registered, there is no service tax on your rent. If a landlord adds 6% to your invoice, ask for their SST registration number.

SME tenants whose annual turnover is below RM1.5 million, and newly established SMEs for their first year, under the MOF changes of 5 Jan 2026. The exemption does not apply automatically. L&Co notes that eligible SME tenants must register through the MyPMK system before the exemption applies.

Tenant checklist:

• Confirm your business qualifies as an SME and check your annual turnover.
• Register on MyPMK and keep the confirmation.
• Send the confirmation to your landlord before the next invoice.
• Check that later invoices no longer add 6%.

Yes, in many cases. According to L&Co's summary of the 2nd edition guide:

• Utility recharges billed by the landlord form part of the taxable rent, even when charged at cost.
• Utilities you pay directly to TNB or the water provider are not taxed.
• Display space, racks and promotional areas inside retail premises are expressly taxable.

If you can, put the electricity and water accounts in your own name. That is cleaner for you and avoids tax on a recharge. Our guide to tenancy clauses to check before renting a shop explains how to word the utilities clause.

A simple example, assuming a registered landlord and a tenant who is not exempt:

At the old 8% rate, a RM12,000 rent would have carried RM960 a month. The cut saves that tenant RM240 a month, or RM2,880 a year.

Remember that deposits are usually set as months of rent. Ask whether your shop rental deposit is calculated on the rent alone or on rent plus tax.

It can. Henry Butcher's HB Perspective 2026, written when the rate was 8%, said the tax "has increased the financial burden on tenants" and may make landlords rethink rent increases. A tenant comparing two shops looks at the total monthly cost, not the rent alone. A registered landlord should price with that in mind. See how much rent to ask for your shop lot and check returns with the rental yield calculator.