If you have hired a contractor to renovate or carry out construction works on a completed residential property, there is a service tax update that directly affects you.

The Royal Malaysian Customs Department issued Service Tax Policy No. 2/2026 on 18 June 2026. It confirms that construction services carried out on completed residential buildings are exempt from service tax, effective 1 July 2025. This means homeowners and residents are not required to pay service tax on such works, and registered contractors are not required to charge or collect it.

To qualify, the contractor must be registered under Group L of the Service Tax Regulations 2018. The contractor must also obtain proof from the property owner confirming the building is a residential property. Accepted documents include a strata or individual title, a sale and purchase agreement under the Housing Development Act, a utility bill, an approved building plan from the local authority, or any other recognised document. The name and address of the residential property must also be stated clearly in the invoice. Contractors can apply this exemption directly through self-compliance, without waiting for a separate approval.

The more pressing issue is the refund. If a contractor has already charged and collected service tax on residential construction work done on or after 1 July 2025, and has declared and paid that amount to JKDM, a refund can be claimed. However, the contractor must first return the collected service tax to the client before submitting the claim. The deadline to submit a refund claim is 30 June 2026.

That is a tight window, and it closes at the end of this month.

If you are a contractor or a business owner managing property-related services, review your past invoices now and act before the deadline passes.