Joint media statement by The Association of Banks in Malaysia (ABM), Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) and Malaysian Investment Banking Association (MIBA)

Kuala Lumpur, Thursday, 26 June 2025 – The Association of Banks in Malaysia (ABM), Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and Malaysian Investment Banking Association (MIBA) wish to reassure the public that the upcoming expansion of the service tax scope, effective 1 July 2025, will not affect basic banking services commonly used by the general public.

Unaffected Financial Services

Basic banking services that involve fees or commissions—such as those related to current accounts (cheque accounts), savings accounts, or similar accounts, including e-wallets—are not subject to service tax. These services include:

• Fees imposed on cash deposits, withdrawals, payments, or local fund transfers;
• Issuance of debit cards and subsequent annual fees;
• Basic transactions done at bank branches or ATMs (e.g. bill payments,
  printing of current or savings account statements);

These are considered essential banking services and remain out of scope for service tax purposes.

In addition, annual fee imposed on credit/charge card will also be excluded from service tax. Interest/profit and penalties or other punitive charges will not be subject to service tax.

The above exclusions are intended to ensure that day-to-day banking activities for individual consumers remain unaffected by the service tax expansion.

Affected financial services

The expanded service tax scope for financial services will generally apply to fund management, investment and merchant banking related services, and trade financing related services. Under Phase 1 of the expanded service tax scope which comes into effect on 1 July 2025, service tax will apply only to selected treasury, corporate and investment banking services as set out in Appendix A of the Service Tax Guide on Financial Services.

All banks under ABM, AIBIM and MIBA are committed to being transparent. Where service tax applies, charges will be clearly shown, and customers will be clearly informed.

If customers are unsure on impact of this expanded tax scope and need further clarification, please contact your bank directly. Customer service teams are ready to provide the requisite explanations and support where needed.

We appreciate the public’s attention to this matter, and we remain committed to open communication with customers. The banking industry will continue working with relevant authorities to ensure this transition is handled clearly and responsibly.