16 hours ago
- Business
- New Straits Times
Banking associations: Expansion of service tax not affecting core banking transactions
KUALA LUMPUR: The upcoming expansion of the service tax scope, which comes into effect on July 1, will not affect basic banking services.
In a joint statement, 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 basic banking services involving fees or commissions, such as those linked to current accounts, savings accounts or similar services, including e-wallets, will remain exempt from the service tax.
These services include charges on cash deposits and withdrawals, payments, local fund transfers, issuance of debit cards, annual debit card fees, and basic transactions conducted at bank branches or ATMs.
"In addition, annual fees imposed on credit or charge cards will also be excluded from service tax. Interest or profit, as well as penalties or other punitive charges, will not be subject to service tax," they said.
The associations stated that the expanded tax scope will apply to fund management, investment banking, merchant banking, and trade financing services.
Under Phase 1 of the implementation, they added, the service tax will be applied to selected treasury, corporate and investment banking services, as outlined in Appendix A of the Service Tax Guide on Financial Services.
"All banks under ABM, AIBIM, and MIBA are committed to transparency. Where service tax applies, charges will be clearly shown, and customers will be clearly informed.
"If customers are unsure about the impact of this expanded tax scope and require further clarification, they are encouraged to contact their bank directly," they said.
Member banks of Malaysia's banking associations will begin implementing the service tax on relevant financial services in phases from July 1, in accordance with the guidelines issued by the Customs Department.
This follows the recent gazettement of the service tax legislation concerning the expansion of the service tax scope.
