Malaysia proposes lower service tax and fee-based relief for elderly care

A separate service category

Appendix 34 proposes removing elderly care from the Wellness Centres category in Group C and introducing a new item in Group I of the First Schedule to the Service Tax Regulations 2018. The RM500,000 registration threshold would remain. The intended start is 1 January 2027; the announcement is a proposal, not evidence that new rates or exemptions can already be applied.^[1]

The proposed exemption covers annual care fees up to RM96,000 per person for elderly-care-centre providers registered under the Care Centres Act 1993 or Private Aged Healthcare Facilities and Services Act 2018. The table places fees exceeding that amount in the 6% category. It does not describe a marginal calculation under which the first RM96,000 is necessarily exempt for a higher-fee arrangement.^[1]

The provider-registration threshold and the per-person annual fee band therefore perform different functions. They should not be substituted for each other when modelling the proposal. The Budget describes an existing 8% rate and Group C classification; that is its stated comparison, not an independent certification of every current approval or exemption.^[1]

Read the category amendments together

Regulation 3 of the original Service Tax Regulations 2018 ties taxable persons, services and values to the First Schedule. Its original Group C included health or wellness centres and a RM500,000 threshold. That historical text is not a complete current classification for every care facility.^[3]

The 2025 amendment, P.U. (A) 172/2025, replaced the Group C operator entry and distinguished specified private healthcare, traditional medicine and allied-health services. P.U. (A) 201/2025 then deleted the wellness-centre definition introduced by that amendment. The deleted definition should not be quoted as if it remained the operative test for elderly-care services.^[4][5]

For groups investing in or operating care facilities, the practical analysis separates the relevant operating entity and service category from its resident-level fee arrangements. A facility’s commercial description alone does not answer both questions. The original regulations’ category-and-value structure explains why changing a rate is only one part of the proposed treatment.^[3]