The Director General of Customs (“Director General”), Royal Malaysian Customs Department, issued Public Ruling No. 1/2026 - Determination of the Selling Exchange Rate of Foreign Currency for Service Tax Invoice and Sales Tax Invoice (“PR1/2026”) which took effect on the date of its issuance, namely 31 March 2026.
 
The objective of PR1/2026 is to explain the determination of the selling rate of foreign currency to be applied in Malaysia by a registered person under the Service Tax Act 2018 (“registered person”) and a registered manufacturer under the Sales Tax Act 2018 (“registered manufacturer”) where the amount of services or sales in an invoice is stated in a foreign currency.
 
The salient points in PR1/2026 are as follows:
 
Paragraph 3.1: Where a registered person or registered manufacturer issues an invoice and the amount of services or sales in the invoice is stated in a currency other than ringgit, that registered person or registered manufacturer is required to state the amount of the services or sales in ringgit at the selling exchange rate of the foreign currency applied in Malaysia at the time the taxable services are provided or the taxable goods are sold.
 
Paragraph 3.2: The selling exchange rate of the foreign currency applied in Malaysia by a registered person or a registered manufacturer shall be the exchange rate published by any of the following bodies: 

Paragraph 3.3: The selling exchange rate of the foreign currency in paragraph 3.2 shall be used consistently in business reporting and accounting for at least one year from the end of an accounting period.
 
Paragraph 3.4: Any application to use a selling exchange rate of a foreign currency other than those stated in paragraph 3.2 shall be submitted in writing to the Service Tax Policy Branch or Sales Tax Policy Branch, Royal Malaysian Customs Department Headquarters for the approval of the Director General.
 
Paragraph 3.5: The rate of exchange for foreign currency to ringgit for calculating customs duty, excise duty and sales tax on the importation of taxable goods shall be the selling exchange rate of the foreign currency determined by the Director General at the time of importation.
 
Paragraph 3.6: The conversion rate of foreign currency to ringgit for imported taxable service shall be the selling exchange rate of the foreign currency applied in Malaysia at the time the service occurs.
 
Comment
 
As PR1/2026 is issued pursuant to section 41 of the Service Tax Act 2018 and section 42 of the Sales Tax Act 2018, it should deal with matters coming within the ambit of these laws. Accordingly, the statement in paragraph 3.5 of PR1/2026 as to the applicable selling exchange rate for foreign currency for determining customs duty and excise duty should be dealt with under the Customs Act 1967 and Excise Act 1976, rather than in a public ruling issued under the Service Tax Act 2018 and the Sales Tax Act 2018. Nevertheless, the views relating to the exchange rate applicable to customs duty and excise duty set out in paragraph 3.5 may reflect the practice adopted in relation to the calculation of such duties.
 
PR1/2026 (available only in Bahasa Malaysia) can be accessed here.
 
 
Alert by Joey Tiw (Senior Associate) of the Tax Practice of Skrine.