The expansion of Malaysia's service tax (SST) regime to private healthcare services has been one of the most significant changes introduced under the 2025 expansion of the service tax scope.
Since its introduction on 1 July 2025, the Royal Malaysian Customs Department (RMCD) has issued various policies, guides and clarifications to address practical issues arising within the healthcare industry. These developments have affected private hospitals, clinics, traditional and complementary medicine practitioners, allied health professionals, medical screening providers and healthcare intermediaries.
Table of contents
Overview of the SST treatment
From 1 July 2025, healthcare services provided by private healthcare facilities, private traditional and complementary medicine practitioners and private allied health service providers became taxable services under Group I of the First Schedule to the Service Tax Regulations 2018. The applicable service tax rate is 6%. Registration is generally required when the value of taxable services exceeds RM1.5 million over a 12-month period.
However, the tax does not apply universally. Healthcare services provided to Malaysian citizens remain exempt. As a result, the tax primarily affects healthcare services rendered to non-Malaysian citizens, including expatriates, foreign workers, medical tourists and other foreign patients.
Key exemptions and relief measures
Since the introduction of service tax on private healthcare services, the RMCD has issued a series of exemptions and administrative concessions to address practical concerns raised by the healthcare industry.
One of the most significant exemptions relates to consultation fees charged by professional doctors at registered private healthcare facilities, as well as practitioners of traditional and complementary medicine and allied health services. The exemption applies only where the consultation fee is separately itemised in the invoice. If it is not separately identified, service tax may be imposed on the entire invoice amount.
The RMCD has also provided an exemption for health screening services for non-citizen workers carried out through approved health screening management service providers, such as FOMEMA. In addition, service providers operating these health screening programmes have been granted specific relief under the relevant policy guidelines.
Another important exemption concerns newborns who have not yet obtained citizenship status. Service tax is not imposed on healthcare services provided to newborn babies who have not yet received their citizenship status, provided the prescribed conditions are satisfied.
In addition, healthcare services provided to foreign diplomats, international organisations and their dependants may qualify for exemption, subject to documentary requirements such as verification from the Ministry of Foreign Affairs.
The RMCD has also granted historical relief to registered private healthcare providers that supplied accommodation or food and beverage services between 1 September 2018 and 30 June 2025. While this relief removes service tax exposure for the affected period, it does not allow refunds where service tax had already been charged and remitted.
Key takeaways
- Private healthcare services became subject to 6% service tax from 1 July 2025.
- The tax generally applies to healthcare services provided to non-Malaysian citizens.
- Consultation fees charged by doctors and certain healthcare practitioners are exempt if separately itemised on the invoice.
- Healthcare services provided to newborns who have not yet obtained citizenship status may qualify for exemption, subject to the prescribed conditions.
- Health screening services for foreign workers provided through approved screening management service providers are exempt.
- Diplomatic missions, international organisations and their dependants may qualify for exemption, subject to documentary requirements.
- No general B2B exemption is available for healthcare services, making inter-company healthcare transactions particularly complex.
- The scope of taxable medical aids and ancillary healthcare-related services has expanded through subsequent RMCD guidance, increasing the need for healthcare providers to review their SST treatment of healthcare-related supplies and services.
Conclusion
The introduction of service tax on private healthcare services marks a significant shift in Malaysia's SST landscape, particularly for healthcare services provided to non-citizens. While the Government has introduced several exemptions and administrative relief measures to address industry concerns, the evolving guidance issued by the RMCD highlights the complexity of applying SST within the healthcare sector.