SERVICE TAX ON MAINTENANCE CHARGES IN MALAYSIA: WHAT THE NEW RMCD EXEMPTION MEANS FOR NON-RESIDENTIAL PROPERTY OWNERS
If you own a non-residential strata property in Malaysia, you have likely paid service tax on your monthly maintenance charges billed by the Joint Management Body or Management Corporationsince the expanded service tax regime came into force. That is about to change.
On 24 June 2026, the Royal Malaysian Customs Department (RMCD) issued Service Tax Policy No 3/2026, confirming that Joint Management Bodies (JMBs) and Management Corporations (MCs) are exempt from charging and collecting service tax on maintenance charges and sinking fund contributions for non-residential premises effective from 1 July 2026.
This article explains what the exemption covers, the legal basis for it, the important cut-off that applies to amounts due before 1 July 2026, and what this means practically for property owners and JMB/MC committees.
Primary source: RMCD Service Tax Policy No 3/2026 (24 June 2026) — Royal Malaysian Customs Department
What Service Tax Policy No 3/2026 Says
The Minister of Finance has stipulated that maintenance or repair services including maintenance management services provided by a JMB or MC in relation to non-residential premises are not a taxable service. On the basis of that determination, the policy confirms the following:
- Maintenance charges and sinking fund contributions for both residential and non-residential buildings charged by any JMB or MC to property owners are now not subject to service tax.
- This applies to charges levied on property owners ie the person or entity that owns the strata unit or non-residential lot.
- The policy covers both JMBs (the body established under the Strata Management Act 2013 before the strata title is issued) and MCs (the body established after the strata title is issued).
In plain terms: from 1 July 2026, your JMB or MC should not be adding service tax on top of your monthly maintenance and sinking fund bills for non-residential premises.
The Legal Basis: Service Tax Act 2018, Sections 34(3)(a) and 34(4)
The exemption operates through a two-step legal mechanism under the Service Tax Act 2018.
Step one is the Ministerial exemption. Under Section 34(3)(a) of the Service Tax Act 2018, the Minister of Finance has the power to exempt any person from paying service tax. The policy confirms that this power has been exercised: property owners are exempted from paying service tax on maintenance charges and sinking fund contributions for non-residential premises charged by a JMB or MC.
Step two flows from that. Under Section 34(4) of the same Act, where a recipient is exempted from paying service tax, the JMB or MC is correspondingly exempted from charging and collecting that tax. The JMB or MC therefore has no obligation to collect service tax from property owners on these charges.
Why is there a gap before gazetting? The policy notes that the full legislative treatment confirming that these services are not taxable services will only take effect permanently once the Service Tax Regulations 2018 are formally amended and gazetted. That process takes time. The Ministerial exemption under Sections 34(3)(a) and 34(4) is the interim mechanism that bridges the gap between the policy announcement and the formal gazetting of the amendment.
The Critical Cut-Off: 30 June 2026
The exemption is prospective only. It applies from 1 July 2026. It does not apply to any period before that date.
This is the provision that JMB and MC committees need to take seriously:
Any service tax on maintenance charges and sinking fund contributions for non-residential premises payable for the period up to 30 June 2026 must be remitted to RMCD under Section 26 of the Service Tax Act 2018.
RMCD retains the right to take enforcement action to collect any service tax that was chargeable but not remitted for periods up to 30 June 2026.
For JMBs and MCs that have been collecting service tax on non-residential maintenance charges, this means:
- Service tax collected for periods up to 30 June 2026 must be properly accounted for and remitted.
- Do not assume the new exemption retrospectively clears any outstanding liability.
- If your JMB or MC has not been collecting service tax on non-residential maintenance charges and there is an exposure for pre-July 2026 periods, that is a matter that requires separate attention.
For property owners, if you have been paying service tax on your maintenance bills up to 30 June 2026, those amounts were correctly charged and there is no basis for a refund under this policy.
The Third-Party Services Carve-Out
The exemption has one important limitation that JMB and MC committees need to understand clearly.
The exemption covers the JMB or MC’s own service to property owners — the charging of maintenance fees and sinking fund contributions. It does not extend to taxable services that the JMB or MC procures from third parties.
The policy states:
If a JMB or MC acquires any taxable services from a third party and pays for them using maintenance charges and sinking fund contributions, the JMB or MC is required to pay the service tax charged on those services.
In practical terms: if your JMB or MC engages a cleaning contractor, a security services provider, a lift maintenance company, or any other service provider whose services attract service tax, the JMB or MC remains liable to pay the service tax on those invoices. The fact that the funds used to pay those contractors come from maintenance fee collections does not change the tax treatment of the underlying services.
This is a straightforward application of the general principle: the exemption runs between the JMB/MC and the property owner, not between the JMB/MC and its own suppliers.
What This Means Practically
For property owners of non-residential premises
From 1 July 2026, your maintenance charges and sinking fund bills from your JMB or MC should not include a service tax component for the management of the premises. If your JMB or MC continues to charge service tax on these items after 1 July 2026, that charge is no longer legally supportable under the exemption.
If you are unsure whether your property falls within the scope of this exemption — for example, if your development is a mixed-use development with both residential and non-residential components — it is worth checking with your solicitor or raising the question directly with your JMB or MC committee.
For JMB and MC committees
There are three immediate actions to consider:
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Stop collecting service tax on maintenance charges and sinking fund contributions from property owners for non-residential units from 1 July 2026. The exemption under Section 34(4) of the Service Tax Act 2018 means you are no longer obligated to collect it, and collecting it when you are not entitled to would create its own complications.
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Ensure pre-July 2026 service tax obligations are settled. If your JMB or MC collected service tax on non-residential maintenance charges for any period before 1 July 2026 and has not remitted those amounts to RMCD, do so promptly. RMCD retains enforcement powers for those periods.
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Continue paying service tax on your own third-party service invoices where those services are taxable. The exemption does not affect what you owe your own suppliers.
Frequently Asked Questions
What is the difference between a JMB and a MC for the purposes of this exemption?
A Joint Management Body (JMB) is established under the Strata Management Act 2013 to manage a strata development before the strata title is issued. A Management Corporation (MC) is established once the strata title is issued and takes over the management function from the JMB. The exemption applies to both — the legal analysis under Sections 34(3)(a) and 34(4) of the Service Tax Act 2018 does not distinguish between the two.
My development is a mixed-use building with both shop lots and residential units. Does the exemption apply to the shop lot owners’ maintenance charges?
Yes. The exemption applies to maintenance charges for non-residential premises regardless of whether the development also contains residential units. The non-residential unit owners’ maintenance bills from the JMB or MC fall within the exemption from 1 July 2026.
We are a JMB that did not charge service tax on non-residential maintenance before. Is there any back-payment liability?
The policy is explicit that no service tax exemption is granted for periods prior to 1 July 2026. However, if your JMB did not charge or collect service tax that was properly chargeable for those earlier periods, that is a potential exposure under the pre-existing service tax framework and this is not resolved by this exemption. This is a question for your tax adviser rather than a matter this policy addresses.
When will the amendment to the Service Tax Regulations 2018 be gazetted?
The policy does not specify a timeline.
Service Tax Policy No 3/2026 is a straightforward and welcome clarification for the non-residential strata property sector. The practical effect from 1 July 2026 is clear: service tax should not be charged on maintenance fees and sinking fund contributions by JMBs and MCs.
If you own a commercial or non-residential strata property in Kuala Lumpur and have questions about how this policy applies to your specific situation, or if you are a JMB or MC committee member navigating the transition, you are welcome to get in touch.
This article reflects the position under RMCD Service Tax Policy No 3/2026, issued 24 June 2026. The exemption is subject to the formal amendment of the Service Tax Regulations 2018 and any subsequent changes to the relevant policy. Nothing in this article constitutes tax or legal advice in respect of any specific transaction. Please consult a qualified adviser for advice on your particular circumstances.