Friday 29 Mar 2024
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KUALA LUMPUR: Top-ups for prepaid mobile services will be subject to the goods and services tax (GST) upon activation, the Communications and Multimedia Consumer Forum (CFM) declared yesterday amid confusion over who bears the tax. 

But CFM said that an as a transitional measure, the telecommunications industry will provide customers who reload RM5 and above, a value which is higher than the GST addition, in the form of free minutes and short message service (SMS).

“For example, customers will get five voice minutes and five SMS for every top-up of RM10. While for reloads of RM20, the customer will receive 10 voice minutes and 10 SMS,” read CFM’s statement yesterday.

It said this will apply for three months starting today.

The clarification from CFM followed a meeting between the telecommunications industry and the Customs Department yesterday to seek clarity on the implementation of the GST for prepaid services.

“It was agreed during the meeting that reload for prepaid is subject to GST upon activation, and that the value of the reload is identical to pre-GST, the only difference is that GST is added to the reload amount,” said CFM.

It added that mobile communications services, excluding international roaming, are a standard rated item under the GST Act 2014, and since mobile communications services are neither a GST-exempt nor a zero-rated item, the industry is required by law to charge 6%. International roaming charges on the other hand are zero-rated.

The GST paid by customers will be collected by telecommunications operators and remitted to Customs, in accordance with the GST law.

There was some confusion on the matter as Deputy Finance Minister Datuk Ahmad Maslan was reported as saying that there would be no changes to the prices of reload coupons, as the 6% GST would merely replace the sales and service tax, also at 6%.

He had also said that telecommunications operators such as Maxis Bhd, Celcom Axiata Bhd, DiGi.Com Bhd and U Mobile Sdn Bhd could be hauled to court if they insist on passing the higher charge to the consumers.

Previously, telcos absorbed the 6% service tax on prepaid mobile users. 

The CFM is a platform for the industry and consumers to make coherent and constructive contributions to service improvements and policy developments. It was established and designated by the MCMC in 2001.

 

This article first appeared in The Edge Financial Daily, on April 3, 2015.

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