Sufficient Time for Smooth Implementation of Service Tax on Credit Cards

Kuala Lumpur, 5 November 2009 – The Association of Banks in Malaysia (ABM) would like to assuage all cardholders that commercial banks are prepared to assist the relevant tax authorities as best they can in the smooth implementation of the imposition of service tax on cards announced in the 2010 Budget Speech. Given that the imposition as announced will only be effective 1 January 2010, there should be sufficient time for parties involved to work together to formulate the mechanics of the roll-out and to put the same into effect.

Whilst details of how the service tax will be imposed and collected are being finalized, cardholders should continue to handle and use their credit/charge cards wisely to enjoy the many benefits that the cards have to offer as a payment instrument. Cardholders are thus advised to avoid making any hasty decisions in the meantime. Banks will inform their respective customers as soon as details are available and communicated to the banks.

It is understandable that the imposition of the RM50 service tax a year on each principal credit card and charge card as well as the RM25 service tax a year on each supplementary card has raised many concerns of affordability on the part of cardholders. In the short time following from the announcement of the same, commercial banks, together with the other card issuers, have acted swiftly to assess the thrust of the measure with the aim of better pre-empting any issue which may arise in connection to its roll-out and apprising the tax authorities.

Further, so as to complement the Government’s objective of promoting prudent spending with the imposition of the service tax, ABM will work with its members and other card issuers going forward to enhance and promote its consumer education programmes designed to inculcate stronger personal financial management skills amongst cardholders.

About The Association of Banks in Malaysia

The Association of Banks in Malaysia was formed in November 1973 with the primary objective of establishing and promoting a sound banking system in Malaysia in cooperation and consultation with Bank Negara Malaysia. Its members comprise the 22 commercial banks that currently operate in Malaysia.

ABM aims to facilitate, and create a conducive banking environment while promoting orderliness, and ethical banking practices. ABM also pursues wide-ranging issues to assist the industry in its efforts to remain competitive. Policies affecting banking infrastructure, interest rates and clearing system, as well as areas on consumer education, risk management, and human resource development are part of the ABM platform. Member banks’ contributions to socio-economic planning and development of the country are some of the issues that form ABM’s agenda. The public can also call a toll-free service called ABMConnect at 1-300-88-9980 for information on banking issues in the country. For more information, visit www.abm.org.my.

Back to top