FAQs for 0% Goods and Services Tax (GST) effective 1st June 2018

FAQs for 6% Service Tax effective 1 September 2018



Timeline

GST 6%
From 1 April 2015
 

GST 0%
1 June 2018– 31 Aug 2018

Sales & 6% Service Tax
From 1 September 2018

As you are aware, the Government has announced that effective 1 Sept 2018, the 6% Service Tax is replacing the Goods and Services Tax (GST) which was at zero percent (0%). Essentially, all provision of telecommunication services by telcos to customers are subjected to the 6% Service Tax. These include IDD calls, telex, video conference, roaming, fax, VoIP, lease lines, bandwidth service, maintenance of facilities, installation, etc.

Here are some frequently asked questions on how the 6% Service Tax will be applied on your telecommunication usages moving forward and some key points on the transition.

GENERAL

  1. How will the 6% Service Tax be applied for telecommunication services and related goods and services effective 1 Sept 2018?
    Below is how the 6% Service Tax will be applied:

    Telecommunication usages
    Roaming usages, which were previously non-taxable under GST, is now taxable under 6% Service Tax effective 1 Sept 2018 onwards.

    Devices (Smartphones, Modems, Phone accessories)
    Telecommunication devices, such as smartphones and modems, are subjected to 5% Sales Tax. The Sales Tax is a single stage tax levied on imported and locally manufactured goods, either at the time of importation or at the time the goods are sold or otherwise disposed of by the manufacturer.
    However, we will not charge the Sales Tax for any devices purchased at Maxis stores. This is because as a single stage tax, the Government only collects sales tax during importation from the manufacturer or importer.

    Content Services
    Content services subscription, such as caller ringtones, music videos and sports content, which were subjected to GST, are also subjected to the 6% Service Tax.

    Charge to Bill
    Charge to Bill are your purchases or subscription with other content or application service providers such as Google Play Store, Apple App Store and others. If you have selected to make these payments through Maxis, your purchase or subscription will be charged to your Maxis bill on a monthly basis or as a one-off charge.
    Charge to Bill is not subjected to the 6% Service Tax in your Maxis bill – however, your subscription may be subjected to the 6% Service Tax by your service or application provider.
  2. What are the telecommunication services that are subjected to the 6% Service Tax and are there any exemptions?
    According to the Sales & Service Tax Act 2018, customers are subjected to the 6% Service Tax for ALL telecommunication services provided by telcos. These include IDD calls, telex, video conferencing, roaming, fax, VoIP, lease lines, bandwidth services, maintenance of facilities, installation, etc.
  3. As a foreigner who is staying or working in Malaysia, are my Maxis bill charges subjected to 6% Service Tax as well?
    Yes. The 6% Service Tax is applicable to anyone who uses telecommunication services in Malaysia.
  4. I am residing in a designated area or duty-free zone (Langkawi, Labuan and Tioman). Are my telecommunication usages subject to the 6% Service Tax?
    Your telecommunication usages at designated areas or duty-free zones are subjected to the 6% Service Tax as prescribed by the Government.
  5. Is the Mobile SIM replacement fee subjected to the 6% Service Tax?
    Yes, the SIM replacement fee is subjected to the 6% Service Tax.

POSTPAID (MOBILE, BROADBAND, FIXED)

  1. Will my usages like calls, SMS or data browsing be subjected to the 6% Service Tax?
    As prescribed by the Royal Malaysian Customs Department (RMC), all provision of telecommunication services by telcos are subjected to 6% Service Tax. These include IDD calls, telex, video conferencing, roaming, fax, VoIP, lease lines, bandwidth services, maintenance of facilities, installation, etc.
  1. Transition
  1. My Maxis bill is dated 14th of every month. Since the 6% Service Tax takes effect on 1 Sept 2018, how will it be applied in my September bill?
    As per your account’s bill cycle, you will be billed with 0% GST for any usage before 1 Sept 2018 while for any usage after 1 Sept 2018, it will be subjected to the 6% Service Tax.
  2. How will I know which items are subjected to the 6% Service Tax and which are not if I refer to my Maxis bill?
    There is a 6% Service Tax column in your bill and all items that are subjected to the Service Tax will be indicated as 'Y'; while items that are exempted or non-taxable will be indicated as 'N'.
  3. I am charged RM10 Reconnection Fee to reconnect my suspended line. Is it subjected to the 6% Service Tax?
    This is a service fee, therefore subjected to the 6% Service Tax.
  1. Device-related
  1. How will the 6% Service Tax impact my purchase or sign up for a new device contract e.g. Normal Device Contract, Zerolution, and Zerolution360 after 1 Sept 2018?
    The key components of your charges for device-related sign-ups are:
    • Device Price – upfront or installment
    • Device Advance Payment 
    • Safe Device, Basic & Premium Protection
    • Monthly upgrade fee
    • Device Remaining Balance
    • Damage fee

    Device Price – upfront or installment
    Your device payment for normal device contracts, Zerolution and Zerolution360 installments are not subjected to the 6% Service Tax.

    Device Advance Payment 
    Advance payment is a form of commitment for your device contract and it is not subjected to the 6% Service Tax.

    Safe Device, Basic and Premium of Zerolution360
    These are protection or insurance which you subscribe to cover any damages to your phone and it is not subjected to the 6% Service Tax.

    Remaining Balance Penalty
    In case you wish to redeem your Zerolution or Zerolution360 prematurely, the Remaining Balance Penalty payable by you is not subjected to the 6% Service Tax as it is a payment for device.
  2. If I terminate my device contract within the contract period, is the Early Termination charge subjected to the 6% Service Tax?
    No. Early Termination Charges are not subjected to the 6% Service Tax

PREPAID (Malaysian users)

  1. The Government has just announced that effective 6 September 2018, prepaid services are tax exempted for Malaysians. What will happen now?
    This means when Malaysian customers top up a certain amount, they will get the same amount of credit. For example if you top up RM10, you will get RM10 credit.
  2. What is the price of a Hotlink prepaid SIM pack?
    The price of a Hotlink SIM pack remains at RM10. Upon activation of the SIM, you will receive a credit of RM5.
  3. From 1 Sept 2018 onwards, how much do I have to pay when I register for a new prepaid SIM pack?
    You will not have to pay anything as there is no registration fee.

PREPAID (Foreigners)

  1. The Government has just announced that effective 6 September 2018, prepaid services are tax exempted for Malaysians. What about foreigners?
    This exemption is not applicable to foreigners. Foreigners will continue to pay the 6% Service Tax.
  2. What is the price of a Hotlink prepaid SIM pack?
    The price of a Hotlink SIM pack remains at RM10. Upon activation of the SIM, you will receive a credit of RM5.
  3. What are the prepaid products and services that are subjected to the 6% Service Tax?
    All provision of telecommunication services by telcos for foreigners are subjected to the 6% Service Tax.
  4. Will my calls, SMS and Internet passes be more expensive from 1 Sept 2018 when the 6% Service Tax becomes effective?
    For prepaid, the 6% Service Tax is charged upon activation of each top-up and all top-ups sold will be inclusive of the 6% Service Tax from 1 Sept 2018 onwards. The price remains the same for calls, SMS or when you buy Mobile Internet passes.
  5. If I purchase the top-up ticket before 1 Sept 2018 and only activate the top-up ticket after 1 Sept 2018, how much credit will I get?
    The 6% Service Tax is charged at the point of top-up ticket activation. For example, a RM10 top-up ticket purchased before 1 Sept and activated after 1 Sept 2018, will come with a credit amount of RM9.43.
  6. Will I get a receipt or tax invoice issued for purchasing top-ups at retailers?
    Receipt for a top-up ticket will be issued by the retailer. Effective 1 Sept 2018, the 6% Service Tax is applicable on top-up at activation and it will be reflected in your Hotlink or Ookyo e-Statement. There will be no tax invoice issued upon purchase of top-up tickets.
  7. From 1 Sept 2018 onwards, how much do I have to pay when I register for a new prepaid SIM pack?
    You will not have to pay anything as there is no registration fee.

ENTERPRISE

  1. Are the charges for Relocation, Bandwidth Upgrades, Bandwidth Downgrades, Ad hoc Engineering Services, subjected to the 6% Service Tax?
    Effective 1 Sept 2018, all provision of telecommunication services by telcos are subjected to the 6% Service Tax. These include IDD calls, telex, video conference, roaming, fax, VoIP, lease lines, MVNO, bandwidth services, billing and collection services, maintenance of facilities, installation, etc.
  2. What is the tax treatment for my Company’s telecommunications services which are bundled with equipment and maintenance support (for example, Business Voice Enhanced services bundled with IP Phone and maintenance support; and Business Voice SIP Trunk service bundled with Media Gateway)?
    The entire service bundle (inclusive of telco services, equipment & maintenance) is subjected to the 6% Service Tax.
  3. My company subscribes to Business Voice Enhanced and we bought an IP phone separately. Is the equipment in this case taxable? (Note: IP Phone bought as outright purchase)
    Your voice subscription is subjected to the 6% Service Tax and the equipment is not taxable.
  4. Is managed service (e.g. Managed IP Telephony service) which is part of a bundled service with equipment (e.g. IP Phone), subjected to the 6% Service Tax?
    Yes, the managed service is subjected to the 6% Service Tax.
  5. What is the tax treatment for telecommunication services rendered outside of Malaysia but billed to a Malaysian company? Is the service subjected to the 6% Service Tax?
    Services rendered outside are considered as exported services and are not subjected to the 6% Service Tax.
  6. Are telecommunication services rendered at international sites subjected to the 6% Service Tax?
    No. Telecommunication services rendered at international sites are not subjected to the 6% Service Tax.
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