PETALING JAYA: All insurance premiums, except for life insurance, will be subjected to the 6% goods and services tax (GST), which comes into effect in April, said Deputy Finance Minister Datuk Chua Tee Yong.

He said, however, the GST on insurance premiums was not an issue as consumers had been subjected to the sales and service tax (SST).

“With the exception of life insurance, any insurance premiums will be subjected to the GST,” he told reporters after attending a briefing with retailers in Petaling Jaya yesterday.

“If I’m not mistaken, the SST is levied on insurance.”

Organised by the Customs Department, the briefing included the launching of a booklet with lists of items that are subjected to GST and those exempted from it, aimed at guiding the retail sector.

Chua said the booklet, listing 1,800 taxable items, will be emailed to all registered retailers.

Putrajaya is set to roll out the broad-based consumption tax effective April 1, pegged at 6%, despite protests that it will further burden Malaysians already grappling with the rising cost of living and price hikes of goods and services as a result of the fuel subsidy removal.

Prime Minister Datuk Seri Najib Razak, when announcing the implementation of the GST in his Budget 2014 speech, said the 6% rate would be among the lowest among Asean countries. Indonesia, Vietnam, Cambodia, the Philippines and Laos fix their rate at 10% and Singapore at 7%.

Opposition leader Datuk Seri Anwar Ibrahim had previously criticised the move, describing it as a regressive tax, which would contribute to income inequality and widen the gap between the rich and the poor.

“GST can be the main cause of inflation,” he said, citing a study by CIMB Research that the implementation of the consumption tax would contribute to a 5% increase in inflation because of a lack of stringent enforcement laws. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on January 8, 2015.