According to Lim, the measure is expected to benefit 4.4m policyholders
by NUR HAZIQAH A MALEK /pic by ISMAIL CHE RUS
The Ministry of Finance (MoF) has granted a 6% service tax exemption to 4.42 million policyholders who purchased and renewed their policies during the tax holiday from June 1 to Aug 31.
MoF Minister Lim Guan Eng said at the implementation of the Sales and Services Tax (SST) on Sept 1, there was a question raised on whether a 6% service tax was required to be collected from the 4.42 million policyholders, which implicated a tax of RM132 million.
“However, the MoF today announced an approval to grant an exemption from service tax on all individual policyholders who purchased or renewed their insurance or takaful policies for motor insurance, fire and personal accident during the tax holiday,” Lim said in a statement yesterday.
“In this case, if an insurance or takaful company has imposed a service tax to a policyholder, they are requested to refund the service tax to the policyholder,” he added.
According to Lim, the measure is expected to benefit 4.42 million policyholders and will save them a total tax payment worth RM132 million.
The Service Tax Act 2018 requires insurance and takaful companies to charge service tax for the period covered by insurance or takaful policies from Sept 1, 2018.
SST came into effect to replace the Goods and Services Tax that was introduced in April 2015. The General Insurance Association of Malaysia (PIAM) had reportedly said the 4.42 million general insurance policyholders who purchased their policies during the tax holiday period would be affected.
It was stated that when policyholders purchased or renewed their policies, they made a lumpsum payment for 12 months, which means they would still have to pay SST for the remaining nine months.
PIAM then appealed to the MoF for a tax waiver and should have been passed an endorsement to collect the chargeable tax from affected policyholders.