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Service tax charge on financial services effective 1 July 2025

Service tax charge

Service tax charge on financial services effective 1 July 2025

Please be informed that an 8% service tax will be imposed on fee and commission-based financial services starting 1 July 2025, as announced by the Ministry of Finance on 9 June 2025, and the joint media statement published by the Association of Banks Malaysia, the Association of Islamic Banking and Financial Institutions Malaysia and the Malaysian Investment Banking Association on 25 June 2025.

In compliance with the Royal Malaysian Customs Department (RMCD) requirement, Standard Chartered Bank Malaysia Group of Companies (‘SCB’ or ‘the Bank’) will be charging service tax in a phased approach commencing from 1 July 2025, as per the legislation and guidelines issued by the Malaysian Government.

For further details, please refer our FAQ or visit RMCD’s website.

*Standard Chartered Bank Malaysia Group of Companies includes Standard Chartered Bank Malaysia Berhad, Standard Chartered Saadiq Berhad, Standard Chartered Bank Offshore Labuan and SCBMB Trustee Berhad.

Service tax charge

Service tax is a consumption tax levied on services which are prescribed as taxable services by the RMCD.

Service tax is not a new tax in Malaysia. It was re-introduced in September 2018 to replace the Goods and Services Tax (GST).

Prior to 1 July 2025, the service tax was limited to credit card and certain financial services.

However, effective 1 July 2025, the scope is expanded to cover all financial fee-based activities, as announced by the Malaysian Government in National Budget 2025.

  1. RM25 for credit card (existing charge)
  2. 8% for financial fee-based activities (expanded scope starting 1 July 2025)

SCB is a service tax registrant for financial services. Therefore, where applicable, the Bank reserves the right to charge and collect service tax on behalf of the RMCD.

The service tax will take effect in phases starting 1 July 2025, mainly for Corporate Banking clients (refer Appendix A).

In subsequent phases, other financial services provided by SCB will be subject to the 8% service tax, unless specifically exempted.

No, as an individual client, you will not be impacted by the service tax under Phase 1: 1 July 2025.

The service tax will not be imposed on financial services performed before the effective date.

No, the following financial services are not subject to service tax:

a) Basic banking services relating to the operation of savings accounts, current accounts (CASA) or similar accounts:

  • savings, withdrawal, payment or transfer of money;
  • issuance of debit card;
  • basic transaction at the counter;
  • basic transaction at the automatic teller machine; or
  • printing of account statement.

b) Interest and profit in relation to credit facilities spread and margin.

c) Spread i.e. returns through the difference between the selling price and the purchase price.

d) Payment that is punitive in nature such as:

  • Late payment penalties/late payment compensation.
  • Compensation for dishonoured cheques.
  • Overdraft excess fees.

e) Services relating to goods, land or matter outside Malaysia (including importation of goods).

f) Services directly related to goods delivered from last exit point within Malaysia to other place outside Malaysia (i.e. exportation of goods)

g) Inward remittance transaction services received into Malaysia i.e. charges imposed on remittance agent located outside Malaysia.

An 8% service tax will be multiplied with the fee value charged to client.

E.g:

Fees excluding service tax RM 1,000.00
Service tax RM 80.00
Total fee including service tax RM 1,080.00

Service tax for credit card is maintained at RM25 and no further service tax will be imposed on credit card annual fees.

Profit on Islamic financing is not subject to service tax.

Other fees for Islamic product are subject to service tax.

Yes, unless the fees are specifically excluded (refer question 8).

No.

The recovery of expenses without value-add service from the Bank is not subject to service tax.

If applicable, the service tax will be reflected in your current invoice or statement from the Bank.

No, the service tax is payable to RMCD.

No, the service tax is payable to RMCD.

The service tax will be charged per transaction.

As SCB is required to remit the service to Customs in MYR, the service tax will be converted into MYR.

The disbursement of loans/financing, as well as interest/profit charged, are not subject to service tax.

However, other fees charged by SCB will be subject to service tax, as the service or loan/financing relates to finance of property in Malaysia.

The bank guarantee is regarded as an export service as it is issued to guarantee land or goods outside Malaysia.

Hence, no service tax will be charged on the commission on bank guarantee.

Service tax guide on financial services extract (dated 9 June 2025)

List of financial services subject to service tax starting 1 July 2025:

Conventional and Islamic Banking Services (including Development Financial Institutions)

1. Treasury Services
1.1 Credit Facility
1.1.1 Facility fee for arranging and marking limit

2. Corporate Banking Advisory Services
2.1 Global Markets and Corporate Banking Advisory Services
2.1.1 Structuring of securities fee
2.1.2 Processing fee
2.1.3 Participation in deals fee
2.1.4 Pass-through deal fee (with markup)
2.1.5 Upfront fee
2.1.6 Administrative charges
2.1.7 Letter of undertaking/Support/Credit Advice charges
2.1.8 Annual review of facilities fee
2.1.9 Restructuring/rescheduling fee
2.1.10 Extension fee

Investment Banking Service

1. Debt Markets
1.1 Arranger/Facility Agent Services
1.1.1 Arranger fee
1.1.2 Facility agent service fee
1.1.3 Agency fee
1.1.4 Administrative charges

2. Equity Markets
2.1 Services in relation to IPO/Offer for Sale/Divestments/Placements/Special Issues/Related Issues/Merger & Acquisitions/Takeovers/Restructuring/Capital Reduction/Share Split/Share Consolidation/Bonus Issues/ESOS/Share Grant/other similar products as follows:
2.1.1 Structuring of securities fee
2.1.2 Introductory fee for introducing clients
2.1.3 Success fee for successful deal
2.1.4 Performance fee for successful deal
2.1.5 Incentive fee – Discretional amount by issuer