FAQ MECHANISM FOR GST IMPLEMENTATION FOR PREPAID 2016
28 Dec 2015,
FAQ: MECHANISM FOR GST IMPLEMENTATION FOR PREPAID SERVICES FOR YEAR 2016
1. What is the new mechanism of GST Implementation for Prepaid Services beginning 1st January 2016?
Under the new mechanism of GST Implementation for Prepaid Services, the consumer will receive a rebate for GST paid on prepaid services, hence the consumer will get the same airtime value as prepaid voucher price. For example, when the consumer reloads his/her prepaid account with RM10 prepaid voucher, he/she will get RM9.43 airtime and RM0.57 (6%) is deducted as GST. Subsequently, the consumer will receive RM0.57 refund as a rebate within 24 hours.
2. Who are entitled to get the GST rebate for Prepaid Services?
Only Malaysian consumers who are registered using MyKad or army/police identity card may enjoy the 1 year GST rebate.
3. How is the GST being charged to the consumer using the new mechanism?
GST will be charged to the consumer once the consumer reloads the airtime. Within 24 hours, the same GST amount charged will be reimbursed to the consumer’s prepaid account as a GST rebate. For example, when the consumer reloads his/her prepaid account with RM10 prepaid voucher, he/she will get RM9.43 airtime and RM0.57 (6%) is deducted as GST.
Subsequently, the consumer will receive RM0.57 refund as a rebate within 24 hours.
4. When is the date of the new mechanism made effective?
The new mechanism will be made effective from 1st January 2016 until 31st December 2016.
5. Is the GST rebate for the Prepaid Users given every year?
As per the announcement made by the YAB Prime Minister during the 2016 Budget presentation, the GST rebate only will be given for 2016. Any decision to extend the GST rebate will be made known from time to time.
6. Why are only Prepaid Users eligible to receive the GST rebates, and not Postpaid Users as well?
The main reason the GST rebate is given to the Prepaid Users is the Government wants to assist the rakyat in need, such as students and the B40 group as per defined under the “Rancangan Malaysia Kesebelas” (RMK11).
The B40 group are Malaysians with an average monthly income of below RM2,537 and the number of Malaysiansclassified under this category account for a total of 2.7 million Malaysians. Furthermore, based on the Hand Phone User Survey 2014 by the Malaysian Communications and Multimedia Commission (MCMC), dependents (e.g. housewives, retirees, students and unemployed) recorded the highest number at 30.7%, followed by people with an income level of below RM1,000 at 17.4% and people with an income level at RM1,000-RM3,000 at 36.6%.
7. Do I have to register to get the GST rebate for my prepaid reload?
Consumers do not have to re-register to get the rebate because this rebate will be automatically credited into the entitled Malaysian consumers list based on registration data provided during the purchase of the prepaid package.
Thus, consumers are advised to verify the accuracy of their own registration details with the service provider (SP) prior to 1st January 2016 to ensure eligibility to enjoy the said rebate.
It is also important for new consumers to use a valid MyKad or army/police identity card during the prepaid registration exercise.
8. When I register a new prepaid SIM pack, will I be charged for GST and how much will it be?
You will not be charged GST when you register for a new prepaid number, as there is no registration fee. However, a 6% GST will be charged on purchase of the new SIM pack, which is included in the SIM pack price (tax-inclusive).
For example:- Starter pack inclusive of GST as below
9. How much will a prepaid SIM pack cost, now that I am charged for GST?
There are many SIM packs in the market and the prices vary between operators. However, all prepaid SIM packs are sold inclusive of GST.
10. What are the prepaid products and services that are subjected to GST?
All telecommunication charges are subject to GST, except for roaming charges which are zero-rated services. Since GST is deducted upon reload, for roaming charges, GST will be refunded to the customer accordingly. For Malaysian consumers, the GST will be refunded upon activation for GST rebate. For non-Malaysian consumers, they will get the refund after using the international roaming services.
11. What about the Value Added Services (VAS); will GST be charged to me if I subscribe to the VAS?
All telecommunication charges including VAS are subject to GST except for roaming charges which are zero-rated services.
12. Starting from 1st April to 31st December 2015, prepaid reloads are sold inclusive of GST (RM10.60). How about the treatment for prepaid reloads starting from 1st January 2016? Can the old prepaid reload stock be sold at the price inclusive of GST (RM10.60)?
Starting from 1st January 2016, prepaid reload vouchers will be sold at the original price (e.g. RM10) which means that consumers will get RM10 value of airtime for prepaid voucher purchased at RM10 at the point of sale. GST will be charged to the consumers once the consumer reload the airtime.
Within 24 hours, the same GST amount charged will be reimbursed to the consumer’s prepaid account as GST rebate. After 1st January 2016, the old prepaid reload stock must be sold at the original price (e.g. RM 10). SPs are given 15 days to ensure that all their dealers and agents comply with the direction.
13. FAQ GST
What is GST?
GST stands for Goods and Services Tax, and it is an indirect, broad-based consumption tax. It is charged on all taxable goods and services that are supplied in Malaysia except those specifically exempted.
Is it a new tax to the consumer?
GST is a new tax that is introduced to replace the current sales tax and service tax.
Why do the Telcos implement GST on their products and services now?
The introduction of GST is part of the Government’s tax reform programme to enhance the efficiency and effectiveness of the existing taxation system. As telecommunication services are treated as supply of services, GST shall be imposed on the provision of such prepaid services.
What are the telecommunication products and services that will be charged with GST?
With the exception of international roaming and other zero rated services under GST, other telecommunication services are standard rated services and are subject to GST at 6%. These services include voice, SMS, data, IDD calls, starter packs, prepaid top-up tickets, Value Added service, Air Cash service, and mobile content.