Service tax on construction works caught a lot of Malaysian property owners by surprise. SST on renovation in Malaysia is more nuanced than a flat six percent. Working out SST on renovation in Malaysia depends on the property type and how the job is billed. The rules are more nuanced than "renovation now has 6% tax", and the difference between the readings can be tens of thousands of ringgit on a commercial job.
SST on renovation in Malaysia: the basic position
From 1 July 2025, construction works services came within the scope of service tax at 6% under the expanded SST framework. The scope is broad: construction, extension, installation, repair, renewal, removal, renovation, alteration, dismantling, demolition and facility maintenance carried out during the construction period.
The residential exclusion
Construction works for residential buildings, and the public facilities related to them, are excluded from the scope. If you are renovating your own home, the works should not attract service tax. This exclusion is the single most important thing for homeowners to understand, because some contractors have applied 6% across the board.
Mixed development land is treated differently from pure residential, so the position on a project sitting within a mixed development needs to be checked rather than assumed.
Itemised billing changes the amount
The Royal Malaysian Customs Department issued a service tax policy in October 2025 confirming that the 6% applies to the value of the construction service rather than the entire contract value, where the contractor issues separate invoices or itemised billing splitting materials from works. Without that split, the tax applies to the whole contract sum. For a commercial fit-out where materials are a large share of the cost, itemised billing is worth insisting on.
Who has to register
The registration threshold for construction services is RM1.5 million of taxable turnover over 12 months. A smaller contractor below the threshold is not registered and does not charge service tax. If a contractor is charging you 6%, ask for their service tax registration number.
Legacy contracts
Exemption for construction contracts signed before 1 July 2025 was extended, running to 30 June 2027 for eligible non-reviewable agreements. If you signed before the cut-off, check whether your contract still qualifies before accepting a tax charge.
This is a general summary of published guidance as at early 2026, not tax advice. Confirm your specific position with your tax agent or with Customs, as policies in this area have been revised repeatedly.
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