The Royal Malaysian Customs Department has issued Service Tax Policy No. 4/2026, dated 22 July 2026, to clarify how service tax registration applies when a rental or leasing service is provided jointly by more than one party under a single agreement. Rental or leasing services have been taxable under Group K, First Schedule, Service Tax Regulations 2018 since 1 July 2025.

The policy addresses a common situation in Malaysia, where a property is jointly owned or jointly rented out by more than one party under one tenancy agreement.

Under the first scenario, if the parties jointly providing the rental or leasing service each issue their own invoice for their own portion of the rental value, each party is treated as a separate service provider. Each one has to register for service tax individually, based on their own share of the taxable services reaching the threshold value.

Under the second scenario, if the rental or leasing service is provided as a whole under one agreement, and only a single invoice is issued without any breakdown, in the name of one party such as a joint venture or a representative, then that one party is treated as the service provider. That party bears the responsibility to register for service tax, once the threshold value is met.

In practice, this means the way an invoice is structured, whether broken down by owner or issued as one combined bill, determines who is legally responsible for service tax registration.

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