Sales and Service Tax is no longer a clause tenants can skim past. Effective 1 January 2026, Malaysia imposes a 6% service tax on commercial rental and leasing services, including office space, retail lots, and industrial premises. Residential accommodation remains exempt, as do landlords or service providers whose annual taxable turnover falls below the registration threshold of RM1 million.
For most standard leases in KL, the tenant bears this cost. Where SST applies, the landlord is entitled to charge it at the prevailing rate and must issue proper invoices for collection. The tenant typically indemnifies the landlord against any SST arising under the lease, and all consideration is treated as exclusive of SST unless the agreement states otherwise. This means the psf rate on a term sheet is rarely the full cost — SST sits on top, and the indemnity obligation should be checked explicitly rather than assumed.
For a Head of Real Estate comparing office options, the practical step is straightforward: confirm whether every quoted rent is SST-inclusive or exclusive before comparing buildings. A competitive psf rate can shift meaningfully once SST is added — particularly on larger footprints where the tax becomes a real line item in the annual occupancy budget.
Five reviews SST exposure as part of every lease negotiation we support, so tenants see the full cost picture before signing.
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Frequently Asked Questions
Is SST included in the asking rent for office space in Kuala Lumpur?
Not usually. Asking rents are typically quoted exclusive of SST, meaning the 6% tax on rental and leasing services is charged on top once it applies. Tenants should confirm this explicitly during negotiation before comparing rental figures across buildings — the difference affects the true occupancy cost, particularly for larger spaces where SST becomes a significant annual sum.