What is the Government Service Tax (GST) on credit cards?

How much is the service tax?

When will the service tax be charged into my account?

Which cards are the service taxes not applicable to?

Will I get charged for service tax if I get a replacement card?

Will I get charged for service tax if I upgrade or downgrade my cards?

Will I still be charged service tax if my card is free-for-life?

If I cancel my credit card before the card anniversary date, would I be charged the service tax?

Can the service tax be waived?

What is the Government Service Tax (GST) on credit cards?

• In line with the guidelines on the imposition of a service tax on credit cards issued by the Ministry of Finance, and announced during the 2010 National Budget, which states that service tax will be collected by banks from credit cardholders and paid to the Director General of Customs and Excise.
• This comes to effect from 1 January 2010.

How much is the service tax?

When will the service tax be charged into my account?

Service tax becomes chargeable at the time when the credit card is issued, on the anniversary date or upon renewal. The following are examples on when service tax would be chargeable:–

Example 1: Case of a new credit card issued which is valid for 4 years
A credit card is issued to a new cardholder on 8 March 2010 with a validity period of 4 years expiring on 7 March 2014.

• A service tax of RM50 would be chargeable on 8 March 2010, the date of issue of the card and on every subsequent anniversary date, i.e. 8 March 2011, 8 March 2012, 8 March 2013.

Example 2: Case of existing credit card which is valid for 5 years
An existing cardholder has a card that was issued to him on 18 May 2008 with a validity period of 4 years expiring on 17 May 2012.

• No service tax would be chargeable on its anniversary date i.e.18 May 2009 in view of the fact that imposition of service tax will only be effective 1 January 2010.
• A service tax of RM50 will however be chargeable respectively on 18 May 2010, 18 May 2011.

Which cards are the service taxes not applicable to?

The following cards do not fall under the purview of the imposition of service tax:–

1. Debit Cards
2. Petrol Cards (cards issued by petrol companies such as FleetCard and SmartPay)
3. Closed Community Charge Cards used at work places, schools and clubs only
4. Loyalty Cards (Bonus Link)
5. E-Money (such as Touch n' Go)

Will I get charged for service tax if I get a replacement card?

Service tax will not be charged for replacement cards arising from lost or spoilt cards or fraud.

Will I get charged for service tax if I upgrade or downgrade my cards?

In the event a credit card or charge card being upgraded (such as in the case of a Classic card to a Gold card) or downgraded (such as in the case of a Gold card to a Classic card) or converted (such as in the case of an Islamic card to a conventional card, or a co-branded card to a generic card, or vice versa) or reinstated (such as in the case of a cancelled card), service tax will be charged in respect of the new cards issued unless the anniversary dates of the previous and the new cards are the same.

Will I still be charged service tax if my card is free-for-life?

Yes, the service tax is still chargeable.

If I cancel my credit card before the card anniversary date, would I be charged the service tax?

• The service tax will not be imposed on card cancelled before the card's anniversary date.
• However, it is encouraged that you cancel the card at least 2 weeks before the card's anniversary date to ensure that the service tax will not be billed to your card account.

Can the service tax be waived?

Just like any other service tax imposed by and payable to the Malaysian Government, we are unable to waive this amount.