The Government of Malaysia has published the Service Tax (Amendment) Regulations 2025 [P.U. (A) 172] and Service Tax (Rate of Tax) (Amendment) Order 2025 [P.U. (A) 173] (collectively the “Gazette”) on 9 June 2025 and 3 June respectively. The Royal Malaysian Customs Department (“RMCD”) has also issued the Service Tax Policy No.1/2025 (Amendment No.2) on 17 September 2025.

Further to the amendment, the unit trust industry is not specifically exempted under Item 3, Group H, or paragraphs 2(a) and (b) of the amended regulations. As such:

• Financial services regulated by the Securities Commission Malaysia (SC) including those provided by fund management companies and distributors that involve fees, commissions, or similar payments exceeding RM1,000,000 annually will be subject to service tax at a rate of 8%, effective 1 October 2025.
• No specific exemption is granted under the current regulations for management fees, sales charges, or other related charges imposed by fund management companies and distributors.

Implication to the industry

Accordingly, all fund management companies and distributors providing financial services involving fees, commission or sales charges are required to comply with service tax requirements effective 1October 2025.