Latest news with #serviceTax
Free Malaysia Today
26-06-2025
- Business
- Free Malaysia Today
Service tax expansion won't affect everyday services, say banking groups
The tax revision would not affect services such as savings, e-wallets, credit cards or ATM transactions. PETALING JAYA : Three major banking associations have assured Malaysians that everyday banking services will not be affected by the upcoming expansion of the service tax on financial services. The Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Malaysian Investment Banking Association (MIBA) said the revised scope, which will take effect on July 1, would only affect selected corporate, treasury and investment banking services. They said that essential consumer services involving fees or commissions, such as those related to current or savings accounts, e-wallets, or credit cards, would be exempted from the service tax. Services such as cash deposits, withdrawals, payments, local fund transfers, debit card issuance and related annual fees, and ATM or branch transactions like bill payments or statement printing remain exempt from the service tax. 'These are considered essential banking services and remain out of scope for service tax purposes,' the associations said in a joint statement. They also confirmed that interest, profit-based charges, penalties, and credit card annual fees would not be affected. These exemptions, they said, are meant to ensure that routine banking for individual consumers remains untouched by the expanded tax framework. 'All banks under ABM, AIBIM and MIBA are committed to transparency. Where the service tax applies, the charges will be clearly indicated and communicated to customers,' the associations said. Customers unsure of how the expanded tax scope affects them have been urged to contact their banks directly. 'The banking industry will continue working with relevant authorities to ensure this transition is handled clearly and responsibly,' they said.
Malay Mail
25-06-2025
- Business
- Malay Mail
Malaysia's banks to impose 8pc service tax on financial services starting July 1
KUALA LUMPUR, June 25 — Member banks of Malaysia's banking associations will begin implementing the service tax on relevant financial services in phases from July 1, 2025, in accordance with the guidelines issued by the Royal Malaysian Customs Department. This follows the recent gazettement of the service tax legislations concerning the expansion of service tax scope, said the Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Malaysian Investment Banking Association (MIBA). The associations said the imposition of service tax on financial services would be in line with the legislation and relevant guidelines gazetted or issued by the Ministry of Finance and the Customs Department. 'Service tax will be imposed at a rate of eight per cent on fee- and commission-based financial services. 'We assure banking customers that several exemptions and exclusions have been granted — for example, basic banking services for the public, including current and savings account-related charges, will remain exempt from service tax for both conventional and Islamic banking services,' they added. For further details, ABM, AIBIM and MIBA advise the public to refer to communications from their respective banks, which will be published via the banks' official channels. — Bernama
Malay Mail
22-06-2025
- Business
- Malay Mail
MoF: New SST registration opens Aug 1 as tax scope expands in July to include construction, education, beauty services
KUALA LUMPUR, June 22 — The Ministry of Finance (MoF) has announced that new registration applications in relation to the expansion of the service tax scope and the revision of the sales tax rate, effective from July 1, 2025, can be made starting from Aug 1, 2025. For existing registered persons, applications for the addition of new services under the expansion of the service tax scope and tariff codes under the revision of the sales tax rate, which is effective from July 1, 2025, can be submitted beginning June 24, 2025, the ministry said in a post on X today. On June 9, the government announced a targeted review of the sales tax rate and an expansion of the service tax scope, both of which will take effect from July 1. The sales tax rate remains unchanged for essential goods, while a five or 10 per cent rate will be imposed on selected items. Meanwhile, the scope of the service tax will be expanded to include six new services: leasing or rental, construction, finance, private healthcare, education, and beauty services. Treasury secretary-general Datuk Johan Mahmood Merican reportedly said that revenue from the Sales and Service Tax (SST) collection is expected to increase by RM5 billion in 2025 and by RM10 billion in 2026, following the implementation of the SST revised and expanded scope starting next month. — Bernama
Free Malaysia Today
17-06-2025
- Business
- Free Malaysia Today
SST expansion to have minimal impact on SMEs, say economists
Small and medium contractors are not expected to be burdened by the expanded scope of the service tax, thanks to the RM1.5 million threshold. PETALING JAYA : Exemptions for certain services and a higher threshold value will minimise the impact of the sales and service tax's (SST) expansion on small and medium-sized enterprises (SMEs), according to economists. Aimi Zulhazmi Rashid said this allows operators such as clinic owners and small contractors to ensure their businesses remain sustainable, even as the SST's scope expands from July 1. The Universiti Kuala Lumpur academic said customers, mostly from the B40 and M40 groups, will also benefit from the absence of any increase or only minimal increases in the service tax. 'Therefore, SMEs should not take advantage of consumers after July 1. Use this exemption to provide good and affordable services,' he told FMT. Ahmed Razman Abdul Latiff of Putra Business School agreed that the government's move would only impact large companies. 'It is more focussed on large private businesses, and the majority of their customers are not from the B40 group,' he said. Last week, the finance ministry announced that zero tax rates would remain for essential goods, while a rate of 5% to 10% would be imposed on non-essential items from July 1. However, services directly impacting Malaysians such as public and some private healthcare will continue to be exempted from the service tax. Effective July 1, the scope of the service tax will be expanded to cover rental, leasing, construction, financial services, and private healthcare and education services. Under the new tax regime, a 6% service tax will be imposed on construction services for infrastructure, commercial and industrial buildings if the taxable value exceeds RM1.5 million annually. AdChoices ADVERTISING The same rate applies to private healthcare, traditional and complementary medicine, and allied health services provided to foreigners, on service providers exceeding the RM1.5 million threshold. Malaysian citizens are exempt from paying service tax for public and private healthcare services, traditional and complementary medicine practices, homeopathy, chiropractic treatment and osteopathy. Treasury secretary-general Johan Mahmood Merican said the RM1.5 million threshold value will ensure that SMEs such as restaurant operators, contractors and clinics are not affected by the expansion. 'We can assist in terms of administrative management,' he said in an interview with FMT. Johan also emphasised that the SST's expansion is important to strengthen the country's fiscal position by increasing revenue to improve its social safety net without burdening the general public. Class F Bumiputera Contractors Association president Tukiman Radion said although his members are expected to be unaffected by the service tax's expansion, there are still concerns about ripple effects. 'We are worried that building material shops will take the opportunity to raise prices. If that happens, everyone will be affected,' he said. 'So we hope specific monitoring is carried out to prevent this.'
Free Malaysia Today
16-06-2025
- Business
- Free Malaysia Today
Retailers group calls for waiver of 8% tax for rental, leasing services
The Malaysian Retailers Association suggested that if implemented, the 8% service tax should be shared fairly between landlords and tenants. PETALING JAYA : The Malaysian Retailers Association (MRA) has urged the government to allow a complete waiver of the planned 8% service tax on commercial rental and leasing services. MRA said in a statement that the 8% tax on commercial rentals added further pressure on its members, who were already facing a rise in fixed operating costs. 'Rental is among the largest fixed costs for many businesses and this tax will push operating expenses even higher,' it said. MRA also said it was unrealistic to expect retail businesses to absorb the full impact of the 8% tax, and that many might have no choice but to pass these costs on to consumers. It said that retail businesses nationwide were already under immense pressure from a succession of cost increases, including the minimum wage hike to RM1,700, electricity tariff hikes, and the 10% sales tax on low-value imported goods. 'The full scope of burdens faced by retail businesses is much broader, but these alone are already impacting business sustainability and bottom lines,' the association added. MRA said that if the waiver for commercial rentals could not be granted, the government should defer the implementation of the tax until macroeconomic and geopolitical conditions stabilise. It also suggested that if implemented, the 8% service tax should be shared fairly between landlords and tenants, rather than passed entirely to retail businesses. It proposed that service charges and shared area fees be excluded from the tax scope, and that the exemption threshold be raised to RM2 million in annual sales to safeguard small and independent businesses. The 8% service tax on rental and leasing services, expected to be enforced from July 1, applies to all service providers whose rental or lease income exceeds RM500,000. Lessees that are micro, small and medium enterprises with annual sales under RM500,000 are exempted. MRA suggested introducing the service tax for rental and leasing services gradually, starting at 3% and progressively increasing the rate to 8% over five years. It also proposed that Putrajaya defer the 8% tax on rentals until after Visit Malaysia Year 2026 to preserve industry stability and support tourism-linked growth. 'MRA welcomes further discussion with the finance ministry to find a balanced and sustainable approach that supports both businesses and consumers,' it said.
