Better Clarity for Banking Customers on GST Implementation

March 26, 2015
Kuala Lumpur, Thursday, 26 March 2015:- In preparation for the implementation of Goods and Services Tax (GST) effective 1 April 2015, The Association of Banks in Malaysia (ABM) has published a document on its website which lists out the GST treatment by its commercial bank members on over 300 general bank products and services. It is hoped that this list, which was drawn up in consultation with the relevant regulatory authorities and member banks, will provide clarity and assist the banking public to understand what the approach taken for GST will be. Members of the public can view the list together with a set of frequently asked questions and answers on ABM’s website,

“All goods and services supplied in Malaysia would be taxable unless specifically exempted by the tax authorities. Given the wide array of commercial banking products and services, we are of the view that the banking public would be better served with as detailed a list as is possible. That way they will be aware of what types of bank products and services are subject to GST and those which are not,” said Chuah Mei Lin, Executive Director of ABM.

As this list is not exhaustive and merely sets out the GST treatment for the identified types of banking products and services, bank customers are strongly advised to refer to their respective banks for the revised fee payable after the inclusion of GST, where applicable, for each product and service. ABM member banks will be publishing the detailed price listing at their banking premises or, as the case may be, in their respective websites.

Broadly speaking:-
  • Savings and other similar accounts
    • Interest paid by commercial banks to banking customers as a result of deposit taking through various types of accounts (savings, current, fixed deposit or such similar accounts) will not be subject to GST; but
    • Fees and charges imposed by commercial banks for services enjoyed in relation to these accounts, such as fees and charges for electronic funds transfer, encashment, interbank Automated Teller Machine (ATM) withdrawals (i.e. in cases where the ATM is not the ATM of the bank in which the customer’s account resides), other ATM fees if any and phone banking, will attract GST;
  • Loans and advances
    • Interest charged for the provision of loans, advances or credit by a commercial bank to its customers will not be subject to GST; but
    • Fees or charges imposed in the provision of loans, advances or credit such as, where applicable, documentation fee, loan application fee, redemption statement request fee and/or processing fees will attract GST;
    • Transmitting money or remittances
    • The transmission of money or remittances will not be subject to GST; but
    • The commission levied for the issuance of a cashier’s order or a demand draft and tele-transmission charges will attract GST;
  • Issuing Cheques
    • The issuance of a cheque by a drawer for payment is not subject to GST; but
    • The cheque processing fee will be subject to GST. Similarly, the cost of the cheque book (excluding stamp duty) and the service fee for encashment of the cheque over the counter will attract GST;
  • Credit and other payment cards
    • Finance charges in respect of the use of a credit card, debit or charge card are not subject to GST; but
    • The annual subscription fee, if any, charged for a credit card will attract GST in place of the RM50 service tax presently payable. GST is also payable with respect to card fees for debit and charge cards unless such fees are waived.
Additionally, fees and charges which are imposed to compensate for loss, damages or in cases where the customer fails to meet certain requirements or conditions are not subject to GST. Examples of such charges are late payment charges, replacement fee for lost card/book/PIN, and unauthorised overdraft fees.

For further enquiries, please contact ABM via ABMConnect at 1300-88-9980 from Mondays to Fridays (save for public holidays), 9.00am to 5.30pm or post your query via eABMConnect on ABM’s website.
ABMConnect | Toll-free on 1300-88-9980

ABMConnect provides an avenue for consumers to clarify any doubts and verify information on conventional banking issues.