KUALA LUMPUR (Dec 19): Individuals who renewed or purchased their general insurance or takaful policy during the three-month goods and services (GST) tax holiday between June 1 and Aug 30 have been granted an exemption from the sales and service tax (SST).
In announcing this in a statement today, the Ministry of Finance (MoF) said the waiver involves a tax saving of RM132 million for 4.42 million individuals and that insurance companies which have charged the policyholders are required to reimburse the sum.
Under the Service Tax Act 2018, insurance and takaful companies are required to impose a service tax on consumers who purchase or renew their insurance or general takaful policies on or after Sept 1.
"However, most general insurance and takaful policies expired in the period from June 1 to Aug 31. Because SST has not been approved [at the time], and GST has been zero-rated, hence general insurance and takaful policies were not subject to the 6% services tax. Once the SST was approved [to be implemented] on Sept 1, the question arose whether to collect the 6% services tax from the 4.42 million policyholders, which involve a tax implication of RM132 million.
"Nevertheless, the MoF today announces that it has agreed to grant the exemption to all individual policy-holders who renewed or purchased their general insurance or takaful policies, like motor insurance, fire and personal accident, during the zero-rated GST (tax holiday) from June 1 to Aug 30," said Finance Minister Lim Guan Eng.