Finance Ministry orders telcos to drop SST on prepaid cards, effective tomorrow

Debra Chong
Finance Minister Lim Guan Eng the exemption of all prepaid mobile reload cards is made under Section 34(3)(a) of the Service Tax Act 2018 and will take force from September 6. — Picture by Shafwan Zaidon

KUALA LUMPUR, Sept 5 ― Finance Minister Lim Guan Eng today ordered the exemption of all prepaid mobile reload cards from the 6 per cent service tax.

In a statement, he said the exemption is made under Section 34(3)(a) of the Service Tax Act 2018 and will take force from September 6.

“This is to overcome the problem from telecommunications companies that face difficulties in changing their systems immediately.

“Other measures will be announced later for telecommunications companies so that the Government does not suffer losses in ensuring customers receive the full value of payments made,” he said in a statement.

He said all telecommunications companies are bound by this decision and must take immediate steps to implement the exemption.

The ministerial order comes a day after Lim warned the country’s telecommunications companies that he would intervene if they did not immediately stop charging the 6 per cent service tax on prepaid card reloads.

He said the list of consumer goods and services under the new sales and service tax (SST) introduced on September 1 clearly exempted prepaid card reloads.

In a morning talk show on RTM yesterday, Lim said the government wanted to provide a guarantee to mobile phone users that if they reload RM10, they should get RM10 of credit without any deduction.

Lim noted a number of consumers had complained of being charged the tax when purchasing the reload cards, which meant they received less value than paid for.

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