SST Exemption on Brokerage Fees: The 2025 Rule Change Malaysian Investors Missed
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TL;DR: The October 2025 SST expansion changed the rules. Bursa shares remain exempt (0% SST), but REITs, ETFs, and Warrants now face 8% tax on brokerage and clearing fees. Here's the updated cost breakdown Malaysian investors must know.
Current Status: Partial Exemption Since October 2025
The old rules are gone. As of 1 October 2025, Service Tax Policy No. 1/2025 (Amendment) mandates that brokerage and clearing fees for certain securities are now taxable at 8%. The blanket exemption from 2022 has been replaced with a product-specific approach.
What is Exempt vs. Taxable (The 2026 Reality)
The exemption is now surgical, not broad. Here's the exact breakdown based on current Customs Department policy:
| Security Type | Brokerage Fee SST | Clearing Fee SST | Stamp Duty |
|---|---|---|---|
| Ordinary Shares | 0% (Exempt) | 0% (Exempt) | RM1/RM1,000 (Cap RM1,000) |
| REITs | 8% | 8% | RM1/RM1,000 (Cap RM200) |
| ETFs | 8% | 8% | Exempt until 31 Dec 2028 |
| Warrants | 8% | 8% | Exempt |
| Foreign Stocks (via MY broker) | 8% | 8% | Depends on market |
Key correction: ETFs enjoy a stamp duty exemption until 31 December 2028 and have a lower RM200 stamp duty cap. This makes them slightly more attractive than REITs despite the 8% SST.
Why the Exemption Was Modified in 2025
The government didn't randomly change the rules. The 2025 SST expansion aimed to:
- Broaden the tax base: Capture revenue from passive investment vehicles that were previously undertaxed compared to direct equity ownership
- Level the playing field: Unit trusts and mutual funds already faced indirect taxes; ETFs and REITs needed parity
- Maintain direct equity incentives: Keeping ordinary shares exempt preserves the policy goal of encouraging retail participation in Bursa Malaysia
The result: RM1,000 invested in Maybank shares costs exactly RM1,000 + brokerage. The same RM1,000 in a Malaysian REIT ETF costs RM1,000 + (brokerage × 1.08) + (clearing × 1.08). The 8% difference directly impacts your breakeven price.
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Real Trading Cost Breakdown (Updated for 2026)
Let's compare two identical RM10,000 trades to see the real impact:
| Component | Ordinary Shares (Exempt) | REITs/ETFs (Taxable) |
|---|---|---|
| Trade Value | RM10,000 | RM10,000 |
| Brokerage (0.08%) | RM8.00 | RM8.00 |
| SST on Brokerage | RM0.00 | RM0.64 |
| Clearing Fee (0.03%) | RM3.00 | RM3.00 |
| SST on Clearing | RM0.00 | RM0.24 |
| Trading Fee | RM0.80 | RM0.80 |
| Stamp Duty | RM10.00 | RM10.00 |
| TOTAL COST | RM21.80 | RM22.68 |
How Brokers Are Implementing This (Real Examples)
Major brokers have published official notices:
- Rakuten Trade (Sep 2025): "Implementation of 8% SST on brokerage and clearing fees for ETFs, REITs and Warrants effective 1 Oct 2025"
- UOB Kay Hian (Sep 2025): Confirmed ordinary shares remain exempt while non-exempt securities will show SST as separate line item
- Kenanga Investors (Sep 2025): Applied similar treatment to their platform fees
If your broker hasn't communicated this, check your October 2025 contract notes. You should see two line items for taxable securities: "Brokerage Fee" and "Service Tax (8%)".
Foreign Market Trades: Still Taxable
The article's point on foreign stocks is accurate but needs clarification. When you trade US, HK, or SG stocks through a Malaysian broker, 8% SST applies to brokerage fees because the exemption is strictly for Bursa-listed securities.
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💡 Pro Tip: Use our Brokerage Fee Calculator to calculate the estimated brokerage fees.
Common Misconceptions
- Myth: "All brokerage fees are taxed at 8%." Fact: Only REITs, ETFs, Warrants, and foreign stocks through Malaysian brokers face SST. Bursa ordinary shares remain exempt.
- Myth: "The exemption is temporary and ends in 2026." Fact: The Bursa share exemption is indefinite. Only the ETF stamp duty exemption has a sunset date (31 Dec 2028).
- Myth: "If I use a foreign broker, I'll pay Malaysian SST." Fact: SST only applies when the Malaysian broker supplies the service locally. Foreign brokers follow their own country's tax rules.
⚠️ IMPORTANT DISCLAIMER
Tax treatment based on current regulations as of January 2026.
- Tax rules can change with future government budgets or Royal Malaysian Customs Department policy amendments
- SST treatment is specific to Malaysian brokers and Bursa Malaysia listings
- Foreign brokerage and market-specific taxes (US, HK, SG, China) follow their respective jurisdictions' laws
- Investors trading through foreign brokers should verify their broker's tax treatment independently
- Always verify current rates with your broker's fee schedule before trading
- Consult a licensed tax advisor or accountant for personalized tax planning advice
Duitwise takes no responsibility for investment decisions, tax liabilities, or losses resulting from this information. Tax regulations are subject to change without notice.
References (January 2026)
- Royal Malaysian Customs Department: Service Tax Policy No. 1/2025 (Amendment No. 2)
- Rakuten Trade: Implementation of 8% SST on brokerage and clearing fees (Sep 2025)
- UOB Kay Hian: Notice on SST Implementation (Sep 2025)
- Bursa Malaysia: Trading and settlement procedures
- Securities Commission Malaysia: Financial services tax guidelines