New Rules on Foreign Currency Exchange Rates for SST Invoices in Malaysia

Effective 31 March 2026, the Royal Malaysian Customs Department has issued binding guidance on which exchange rates businesses may use when invoicing in foreign currencies — with consistency requirements that could reshape how companies manage their tax reporting.

What this ruling is about

When a Malaysian business issues a service tax invoice or sales tax invoice in a foreign currency — say, US dollars or Singapore dollars — it has always been required to also state the Ringgit equivalent. What was previously unclear is which exchange rate should be used, and whether businesses could switch rates freely from year to year.

General Ruling No. 01/2026 closes that gap. Issued under the authority of the Director General of Customs pursuant to Section 41 of the Service Tax Act 2018 and Section 42 of the Sales Tax Act 2018, it sets out the approved sources for foreign currency selling rates and establishes a minimum consistency period for whichever rate a business selects.

Key requirement in plain language: If your invoice is in a foreign currency, you must convert it to Ringgit using a selling rate from an approved source — and you must stick to that same source consistently for at least one full accounting year

Approved exchange rate sources

The ruling recognises four categories of acceptable exchange rate providers. Businesses must choose one and apply it consistently.

Central bank Bank Negara Malaysia The primary and most authoritative source for domestic compliance purposes

Commercial bank Any BNM-registered bank Rates published by licensed commercial or other banks registered under BNM

Data provider Bloomberg / Reuters / Oanda International news agencies with published FX rate data widely used in business

Foreign central bank ECB / NY Fed European Central Bank or Federal Reserve Bank of New York

Important

Any exchange rate source not on this list requires prior written approval from either the Service Tax Policy Branch or Sales Tax Policy Branch at JKDM Headquarters. Do not use an unapproved source and seek approval retroactively — this exposes the business to compliance risk.

The consistency requirement — what it means in practice

Perhaps the most operationally significant aspect of this ruling is paragraph 3.3: the chosen exchange rate source must be applied consistently in business reporting and accounting for a minimum of one year from the last date of the accounting period.

"You cannot pick BNM rates in Q1, switch to Bloomberg in Q2, and revert mid-year because rates look more favourable."

This has direct implications for finance teams. The exchange rate source should be documented in internal policy, embedded in invoice templates and accounting systems, and reviewed only at the point of annual period-end — not on a transaction-by-transaction basis.

Practical implications for businesses

1. Invoicing in USD, SGD, or other foreign currencies? Every such invoice must show both the foreign currency amount and the Ringgit equivalent, using a selling rate from an approved source at the time of supply or sale.

2. Document your rate source now. Finance and tax teams should formalise the chosen FX source in their SOP or tax policy document. If this has not been done, the start of a new accounting period is the ideal time to establish it.

3. System-level configuration matters. Accounting software (e.g. SQL, AutoCount, Xero) should be configured to pull rates from the designated source automatically. Ad-hoc or manual rate entry carries audit risk.

4. Import transactions follow a different rule. For goods imported into Malaysia, the FX rate for calculating customs duty, excise duty, and sales tax is determined by the Director General of Customs at the point of importation — businesses do not use their own chosen rate for this purpose.

5. Imported taxable services use the selling rate applicable in Malaysia at the time the service is rendered — consistent with the general principle, but worth noting separately for businesses receiving cross-border services.

A note on scope and authority

This ruling is issued as a general ruling (ketetapan umum), meaning it carries binding interpretive authority under the relevant Acts. However, JKDM notes that it is a general guide and does not substitute for specific legal advice on individual circumstances. If there are any subsequent amendments to the Service Tax Act 2018 or the Sales Tax Act 2018, the legislative provisions take precedence over this ruling.

The ruling may also be amended or withdrawn at any time through a new publication or formal withdrawal notice — so practitioners should monitor JKDM's official communications for any updates.

Bottom line: If your business invoices clients in foreign currencies under Malaysia's SST framework, this ruling requires a deliberate, documented, and consistent approach to exchange rate selection. The time to get this right is now — before your next accounting period begins.