RM25 service tax to be charged for new credit cards

Ida Lim
Finance Minister Lim Guan Eng through his powers under the Service Tax Act 2018 announced the service tax amounting to RM25. — Reuters pic

KUALA LUMPUR, Aug 30 — A service tax of RM25 will be imposed on either new credit card users or those who renew their credit cards from September 1 onwards, the finance minister has ordered.

In an order that was made just days before the revived Sales and Services Tax (SST) regime kicked in on September 1, Finance Minister Lim Guan Eng through his powers under the Service Tax Act 2018 announced the service tax amounting to RM25.

Under the Service Tax (Rate of Tax) Order 2018, Lim said RM25 will be charged for each principal credit card or charge card on the date it is activated or the date it is renewed, and every time the card is renewed.

According to the order, the same RM25 service tax will be charged under the same situations for supplementary credit cards or supplementary charge cards.

The ministerial order made on August 28 was gazetted on the same day.

According to a list of frequently asked questions (FAQ) on the service tax that was posted in July on the Royal Malaysian Customs Department’s SST portal, those with existing credit or charge cards will not be subject to the RM25 service tax until the next annual renewal.

Under the previous Goods and Services Tax (GST) regime, which was recently scrapped, those with credit cards had to pay a 6 per cent tax on their annual renewal fee.

With the implementation of the GST regime in April 2015, the government had then abolished a government service tax of RM50 on principal credit cards and RM25 on supplementary cards.

The SST regime — which replaced GST — will see service tax being imposed at 6 per cent, and sales tax being imposed at a range of 5 per cent to 10 per cent.

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