KUALA LUMPUR (June 25): Basic banking services for the rakyat, including current and savings account-related charges, will be exempted under the scope of the expanded service tax that will take effect on July 1, according to several banking associations.

Such services, both conventional and Islamic banking services, will remain free from service tax, according to a joint statement from the Association of Banks in Malaysia (ABM), Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) and Malaysian Investment Banking Association (MIBA).

The 8% service tax will be imposed on fee- and commission-based financial services, they said. 

The associations will commence the charging of this tax on the relevant financial services in a phased approach, they said, in accordance with the Guidelines on Financial Services issued by the Royal Malaysian Customs Department.

They advised the public to look out for communications from their respective banks that will be published via the banks' official channels for further details.

Earlier this month, the Ministry of Finance said financial services based on fees or commissions will be taxed at 8%, but basic banking and shariah-compliant financing, foreign exchange gains, and capital market services remain exempted.

The government is anticipating the expanded SST to generate an additional RM5 billion for the nation's coffer from July to December this year, with RM10 billion expected next year.
 
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