This article first appeared in The Edge Financial Daily, on December 29, 2015.

KUALA LUMPUR: Mobile phone prepaid users will start to receive rebates of goods and services tax (GST) charges for their prepaid reloads this Friday.

In a statement yesterday, the Communications and Multimedia Consumer Forum of Malaysia (CFM) said the rebates will be offered for one year until Dec 31, 2016, in line with Prime Minister Datuk Seri Najib Razak’s announcement during the tabling of Budget 2016 on Oct 23.

“This means a customer who tops up RM10 will initially get an airtime of RM9.43 as the 6% GST will be deducted from the top-up,” CFM said.

“The customer will receive a rebate of 57 sen within 24 hours,” it added.

CFM said only Malaysian nationals qualify for the rebates. The GST paid by the customers will be collected and remitted to the Royal Malaysian Customs Department, in accordance with the GST Act 2014 and guidelines.

“Telcos (Telecommunication companies) have worked hard to ensure that there will be a smooth transition so that customers will have a seamless experience when topping up.

“Telcos have also been continuously investing in modernising the country’s network to ensure quality customer experience,” it added.

The rebates follow public outcry after mobile phone prepaid reloads were subject to GST charges on April 1, despite an assurance from Deputy Finance Minister Datuk Ahmad Maslan that there would be no changes to the prices of reload coupons as the 6% GST would merely replace the 6% sales and services tax.

Former communications and multimedia minister Datuk Seri Ahmad Shabery Cheek was reported as saying on May 2 that the government would lose RM800 million in annual tax revenue if it did not collect GST on prepaid reloads as a significant amount of foreigners used prepaid lines.

Previously, telcos had absorbed the 6% service charge imposed on prepaid mobile users.

The Malaysian Communications and Multimedia Commission and CFM later clarified that consumers would have to bear the GST cost on prepaid reloads as communication services were not exempted from the tax nor zero-rated.

Under Budget 2016, Najib then announced that rebates of GST will be offered to prepaid mobile phone users and that the government was willing to “let go” of some earnings from the broad-based consumption tax to lighten the burden of consumers.