# The SST B2B Exemption and What Your Invoice Must Show

> How the business-to-business service tax exemption works group by group, and the invoice and record conditions that decide whether a claim actually holds.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/sst-b2b-exemption

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The B2B exemption fails on the same condition almost every time: the service
acquired must be **the same taxable service** the acquirer goes on to provide.
Not a related service, not a service in the same group — the same item.

A law firm buying legal services from another firm is exempt. The same firm
buying advertising is not.

## Where the exemption comes from

B2B relief is not in the Service Tax Act. It sits in the **Service Tax (Persons
Exempted from Payment of Tax) Order 2018, P.U.(A) 380/2018**, made under
s.34(1), which exempts persons in column (2) from payment of tax on the services
in column (3), subject to conditions in column (4). It is an exemption from
**payment**, not from scope — which is why exempted supplies still count toward
your registration threshold.

## Which groups have a B2B exemption?

| Item | Group | Conditions in outline |
| --- | --- | --- |
| 1 | Group G professionals, excluding items 10 and 11 | Both parties registered Group G persons; the exempted service is provided under the **same item** as the service the acquirer provides; excludes paragraphs (j) and (k) |
| 2 | Group I item 8 advertising | Both parties registered; the service is provided by a registered Group I item 8 person |
| 6 | Group H finance, for Labuan | Acquired from a registered Group H person or a person outside Malaysia, and used to provide a service regulated under the Labuan Financial Services and Securities Act 2010 or its Islamic equivalent |
| 8 | Group K rental or leasing | Both parties registered Group K persons; same taxable service; and provided **for the purposes of sublet or sublease and not for personal consumption** |
| 9 | Group L construction works | Both parties registered Group L persons; same taxable service; and **not for personal consumption** by the acquirer |

Items 6 and 8 to 10 were inserted by **P.U.(A) 174/2025** with effect from
1 July 2025.

Note the asymmetry. Rental B2B requires an onward sublet or sublease — a company
renting equipment to use itself cannot claim it. Construction B2B has no sublet
requirement; it only excludes personal consumption, which is what makes
main-contractor to sub-contractor chains work.

The same order carries two exemptions that are not B2B at all but are often
confused with it: item 7 exempts a **citizen** receiving private healthcare,
traditional medicine or allied health services under Group I items 14 to 16, and
item 10 exempts a citizen holding a valid Kad OKU under the Persons with
Disabilities Act 2008 from tax on Group M item 1 education.

## Where there is no B2B exemption

**Private healthcare.** Service Tax Policy No. 6/2025 states plainly that no B2B
exemption is granted for healthcare services obtained from third parties within
the same group of services.

**Design and build construction consultancy** is handled by policy rather than
the order — Service Tax Policy No. 3/2025 (Amendment No. 3) grants B2B for
consultancy under a design and build contract where the services sit in a single
contract covering the whole scope supplied by the main contractor to the
developer or landowner.

## What the invoice must show

There is no separate prescribed B2B invoice format. The requirements are the
ordinary ones in **regulation 10(1)** of the Service Tax Regulations 2018: the
invoice serial number and date; the **name, address and identification number
of the registered person**; a description sufficient to identify the services;
any discount; the amount excluding service tax, **the rate and the total tax
shown separately**; the total including tax; and any foreign-currency amount
also expressed in ringgit. Regulation 10(2) lets the Director General waive
particulars on written request.

In practice the exemption is evidenced by the conditions being met rather than
by wording on the invoice. Keep the counterparty's registration status, the
contract identifying the service, and the onward invoice — records must be kept
under s.24 of the Act.

## Common mistakes

- **Claiming across items.** The service acquired must be the same taxable
  service you provide.
- **Claiming where the customer is unregistered.** Both parties must be
  registered persons.
- **Using rental B2B for your own use.** Group K requires onward sublet or
  sublease.
- **Assuming healthcare has B2B relief.** It does not.
- **Excluding B2B supplies from the threshold.** Exemption from payment does not
  remove the supply from the threshold test.

## What's next

Map each inbound taxable service against the item you supply onward, and confirm
the counterparty's registration before accepting an invoice without tax. Where
tax was charged and B2B should have applied, correct it by credit note under
regulation 11, adjusted in the SST-02 return for the period the note is issued.

## Sources

- Service Tax (Persons Exempted from Payment of Tax) Order 2018, P.U.(A) 380/2018 — https://mysst.customs.gov.my/wp-content/uploads/2025/03/Service-Tax-Person-Exempted-From-Payment-Of-Tax-Order-2018.pdf (Attorney General's Chambers)
- Service Tax (Persons Exempted from Payment of Tax) (Amendment) Order 2025, P.U.(A) 174/2025 — https://lom.agc.gov.my/act-view.php?type=pua&language=BI&no=P.U.+%28A%29+174%2F2025 (Attorney General's Chambers)
- Service Tax Regulations 2018, P.U.(A) 214/2018 — regulation 10 — https://mysst.customs.gov.my/wp-content/uploads/2025/03/Service-Tax-Regulations-2018.pdf (Attorney General's Chambers)
- Service Tax Policy No. 6/2025 — Private Healthcare Services — https://mysst.customs.gov.my/wp-content/uploads/2025/12/STP-6-2025-Private-Healthcare.pdf (RMCD)

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