No SST for local prepaid users


Malaysians will not be charged the Sales and Services Tax (SST) on prepaid services provided by telecommunication companies (telcos), the Finance Ministry said.

In a statement yesterday, Finance Minister Lim Guan Eng announced that all prepaid services provided by telcos to Malaysian subscribers must be exempted from the SST.

He said the move is necessary to overcome the difficulties faced by telcos in changing their systems immediately.

“Other methods will be announced later for telcos so that the government does not lose out in its efforts to ensure that customers receive the full value for payment made,” he said.

The exemption is based on Section 34(3)(a) of the Service Tax Act 2018 and is effective beginning Sept 6, 2018.

Under the exemption, users of prepaid telco services will receive the full credit value when making top-ups and will no longer be charged the service tax.

The ministry also urged all telcos to take the necessary steps immediately in order to comply with the service tax exemption.

The announcement comes following dissatisfaction expressed on social media by several customers after the final value of their prepaid mobile reloads was reduced as a result of the SST, which was reintroduced beginning Sept 1 this year.

Lim had on Sunday said the 6% charge should not be passed on to telco customers, while Communications and Multimedia Minister Gobind Singh Deo then said the ministry has taken note of consumer complaints regarding the SST charges levied on mobile prepaid reloads and would issue an official statement soon.

Meanwhile, Celcom Axiata Bhd, a major telco in the country, said it “welcomes the government’s decision of exempting the SST on its prepaid services effective Sept 6”.

It said the decision will make a positive impact on many Malaysian prepaid mobile users, as mobile communications have become an integral part of daily life.

“Celcom has already provided tax rebates to Malaysian customers who have purchased prepaid plans from Sept 1 to Sept 5, 2018, in the form of on-net call freebies as stated on our website,” Celcom CEO Mohamad Idham Nawawi said in a statement yesterday.

He added that the 6% SST charge still applies for non-Malaysians and other Celcom services.