Service tax charge on financial services effective 1 July 2025

The service tax has taken effect in phases starting 1 July 2025 (Phase 1).

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:

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 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 relating to the finance of a 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.