Industry Applauds Government Move to Reduce Operating Costs and Improve Financial Certainty
KUALA LUMPUR (June 26) — The Malaysian Institute of Property and Facility Managers (MIPFM) has welcomed the government's decision to exempt service tax on service charges and sinking fund contributions for non-residential buildings, effective July 1, 2026.
The industry body described the exemption as a timely and positive measure that addresses concerns raised by property and facility management stakeholders regarding the additional financial burden that service tax could impose on commercial property owners, businesses and building management entities.
Relief for Commercial Property Stakeholders
The exemption is expected to provide direct cost savings for various stakeholders involved in the management and ownership of stratified commercial properties, including:
Property owners
Businesses and commercial tenants
Joint Management Bodies (JMBs)
Management Corporations (MCs)
Building occupiers
Property management companies
By removing the service tax component from maintenance charges and sinking fund contributions, property owners and occupiers can better manage operational expenses while ensuring adequate funding for building maintenance and asset preservation.
Greater Certainty for Building Management
According to MIPFM, the exemption will provide greater clarity and certainty in financial planning for non-residential buildings.
Management bodies will be able to prepare budgets and maintenance plans without the added complexity of incorporating service tax costs into service charge calculations.
This is particularly important for commercial buildings, office towers, retail centres, industrial facilities and mixed-use developments where maintenance costs form a significant portion of annual operating expenditures.
The move is also expected to support long-term building upkeep by ensuring that maintenance funds can be allocated directly towards operational and capital expenditure requirements rather than additional tax obligations.
Positive Outcome from Industry-Government Collaboration
MIPFM President Haji Ishak Ismail described the exemption as a constructive outcome arising from ongoing engagement between government agencies and industry stakeholders.
He noted that the decision demonstrates the value of continuous dialogue in developing policies that are practical, balanced and responsive to the needs of the property management industry while protecting the interests of property owners and the wider public.
The association believes that collaborative policymaking can help ensure regulations remain aligned with industry realities and support sustainable property management practices.
Commitment to Industry Development
MIPFM reaffirmed its commitment to working closely with government authorities and relevant agencies to strengthen the property and facility management sector.
The association stated that it will continue advocating for policies that enhance professional standards, improve industry practices and support the effective management of Malaysia's growing stock of commercial and stratified properties.
As the property management sector becomes increasingly important in preserving building value and ensuring operational efficiency, constructive cooperation between regulators and industry participants remains essential for long-term sustainability.
Key Takeaways
Service Tax Exemption Effective July 2026
Service charges and sinking fund contributions for non-residential buildings will be exempted from service tax beginning July 1, 2026.
Lower Operating Costs for Property Owners
Commercial property owners and occupiers will benefit from reduced maintenance-related expenses.
Positive Impact on Commercial Properties
Office buildings, retail centres, industrial facilities and other non-residential stratified developments are expected to gain from the exemption.
Improved Financial Planning
JMBs and MCs can prepare maintenance budgets and sinking fund allocations with greater certainty and fewer administrative complexities.
Supports Building Maintenance Standards
More funds can be directed towards maintenance, repairs and asset preservation rather than tax-related costs.
Industry Feedback Was Heard
The government's decision reflects successful engagement and consultation between policymakers and industry stakeholders.
Potential Boost for Property Occupancy Costs
Businesses operating in commercial properties may experience lower overall occupancy costs, improving affordability and competitiveness.
Positive for Commercial Property Sector
The exemption may enhance the attractiveness of commercial and industrial properties by reducing recurring ownership and operating expenses.
Encourages Sustainable Property Management
Lower financial burdens support better long-term maintenance practices, helping preserve property values and building quality.
Constructive Regulatory Development
The decision demonstrates a balanced policy approach that considers both government objectives and industry operational realities.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 26 Jun 26
Malaysia