No GST on mobile prepaid reloads, but be prepared to be taxed for every call and SMS
"Today the Cabinet decided to agree with the ministry's suggestion so that prepaid mobile reloads sold at RM10 will receive RM10 upon activation, the GST tax for the prepaid value will be charged on the usage or usage-based," Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek said in a press conference today.
"The government views this as a fair way as the government does not collect taxes before the service is used."
5 May: Datuk Seri Ahmad Shabery Cheek will call CEOs from telcos himself to give people what they want
Ahmad Shabery said he was not satisfied with existing solutions for prepaid top-ups.
“So the choice was to whether pay RM10.60 for RM10 worth of credit or to get RM9.43 upon paying RM10. To me, this is not relevant, because there is no third choice then,” said Ahmad Shabery on the Suara Kita Hak Kita programme over Radio Televisyen Malaysia (RTM) on Monday.
“Because this is what Malaysians want, I will follow. That means if you purchase RM10, you get RM10 worth of airtime. I believe this can happen, it is not impossible,” he said.
“I will call the CEOs from telcos, we will find a mechanism so what when people buy RM10, they get RM10. We must give the people what they want,” the minister stressed.
On 1 May, PM Najib Razak called on Datuk Seri Ahmad Shabery Cheek to handle the matter personally on Twitter, stating that any future announcements in regards to the ongoing issue can only be made by the minister himself
The Prime Minister's tweet was made following conflicting announcements from the Customs Department and Malaysian Communications and Multimedia Commission (MCMC).
The Customs Department had declared that prepaid reload coupons will revert to pre-GST levels by 1 May while MCMC stated that they will still be sold with GST added on to the airtime credit price.
On April 29, the Customs Department director-general Datuk Seri Khazali Ahmad said telcos must revert the prices for prepaid reload coupons to pre-GST levels by May 1, which means a RM10 top-up card would be sold at a GST-inclusive price RM10 with lesser airtime credit .
But just hours later, the Malaysian Communications and Multimedia Commission (MCMC) said prepaid reload coupons will still be sold with GST added on to the price, meaning Malaysians will buy a top-up coupon valued at an airtime credit of RM10 for RM10.60.
MCMC said telcos had yet to complete their customer surveys on the prepaid reload coupons, also stating that it would be almost impossible for the telcos to change the prices at such a short notice, as the firms would have to print and distribute new cards, among other things.
But on April 30, the Customs Department announced that it was postponing its directive to telcos, following the MCMC’s statement that the telcos would not be able to reconfigure their systems within the short period given.
29 April: Starting from 1 May, prepaid reloads will go back to its pre-GST rates
3 April: Mobile prepaid users have to pay GST for top-ups but they will get extra credit for free
Following the confusion and complaints over the implementation of GST on prepaid top-ups, the Customs Department confirmed that users will continue to pay more for reload top-ups, but will be offered extra prepaid value as well
Customs Department (Customs) GST Division director Datuk T. Subromaniam said the decision was the result of discussions between the chief executives of telcos, Customs and the Domestic Trade, Cooperatives and Consumerism Ministry Thursday morning.astroawani.com
He told reporters at a press conference that a RM10 prepaid card would now cost 60 sen more for the GST, but that telcos had agreed to add more than 6% to the stored value in prepaid cards for the benefit of consumers.
As an example, he said a RM10 prepaid card would have an added value of RM1.
However, this arrangement - currently in effect - is only a temporary solution for the next three months until a final and long-term decision can be made
2 April: The dreaded goods and services tax (GST) finally came into effect yesterday (1 April) and as expected, Day One was met with no small amount of confusion and frustration from some Malaysians
7-Eleven in particular received a flood of complaints on its Facebook page for imposing a 6% tax on newspapers, which were supposed to be zero-rated and exempt from GST
Some of the posts were accompanied by photos of receipts as photographic evidence
For reference, items that are subject to GST are indicated as "SR" or "S" (standard-rated), while GST-free items are indicated as "ZR" or "Z" (zero-rated) on the receipt
Amidst the uproar, the 24-hour convenience store later released an apology statement on its official Facebook page, stating that the pricing error was due to a technical glitch in their point-of-sale system (POS) and that affected items have been withdrawn from sale
7-Eleven was not the only retail chain to have committed the error. GST was also charged on newspapers bought from KK Super Mart, another chain of convenience stores in Klang Valley.
KK Super Mart responded a lot faster than 7-Eleven did, asking its customers to claim refunds from the outlets they'd purchased incorrectly taxed items from in a Facebook statement posted by 12.00PM
On another hand, the attention on 7-Eleven and GST being imposed on newspapers has also brought another issue to light - whether or not GST is implemented for mobile prepaid reloads.
Consumers who have topped up their mobile credits in 7-Eleven pointed out discrepancies in GST implementation from different telcos. For example, Maxis and Celcom below:
Note that mobile prepaid reload for Maxis was subject to a 6% charge, whereas Celcom's was not.
So, what's the real deal here?
An official statement from Customs Chief Director Dato' Subromaniam A/L Tholasy reveals that telcos should NOT be charging an additional 6% on reload coupons, as GST will be replacing the old sales and service tax (SST)
The Communications and Multimedia Consumer Forum of Malaysia (CFM) also stated that postpaid and prepaid telco services will remain unchanged due to GST replacing the old sales and service tax (SST). Hence, there shouldn't be an increase in price for prepaid top-ups.
The Communications and Multimedia Consumer Forum of Malaysia (CFM) said the 6% GST replaces the old service tax, which was also charged at 6% on prepaid services. For prepaid services, the prices and corresponding airtime for SIM packs, starter packs and reload coupons were also maintained, it said.themalaysianinsider.com
However, according to the FAQ on Maxis' official website, prepaid top-ups have never included the 6% SST, hence the price increase upon the implementation of GST.
A DiGi spokesperson also said that SST was not included in prepaid products prior to GST. A look into DiGi's FAQ in its official website shows that the recommended retail price for prepaid starter packs have also increased due to GST.
“Since prepaid is neither zero-rated nor GST-exempt, we are required by law to levy and collect 6% GST,” said a DiGi spokesman in a report carried by The Star Online. “In the past, the prices of prepaid products did not include SST.”
It is understood the companies absorbed sales and services tax in a bid to increase the adoption of their prepaid plans.
By right, based on statements from the Customs Department and CFM, DiGi should not be increasing the prices of prepaid reload coupons.
Yet, according to the Customs Department, telcos have been instructed to not increase their prices after GST. Those found to have gone against those instructions will be investigated.
Customs GST director Datuk Subromaniam Tholasy said several telecommunication companies were being investigated for increasing the price of prepaid top-up cards by 6%, going against instructions from the Customs Department.
"For a top-up card that costs RM10, the 6% tax is already absorbed so it should not be increased to RM10.60. We have sent letters to all telcos informing them not to increase their prices after GST. However, one or two telcos have gone against our instructions, so these companies will be investigated,” he added.
Meanwhile, 7-Eleven has apparently stopped charging 6% GST on top-ups today (2 April)
As we continue to struggle in figuring out this whole GST thing, some retailers and car brands try to make things easier for us: