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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.

To minimise interruption to your banking experience, SCB will enhance its system in phases to ensure service tax is being collected based on the taxable service list provided by RMCD. The system enhancement will be progressively rolled out by the Bank, with targeted completion in Q1 2025.

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 stipulated under Service Tax (Amendment) Regulations 2025 issued by Ministry of Finance in June 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.

Please refer below the service tax registration numbers of SCB entities:

No. Name Service tax registration number
1. Standard Chartered Bank Malaysia Berhad W10-1808-32001199
2. Standard Chartered Saadiq Berhad W10-1903-32000157
3. Standard Chartered Bank Offshore Labuan E10-2508-32000003
4. SCBMB Trustee Berhad W10-2508-32000996

The service tax took effect in phases, starting 1 July 2025 (Phase 1).

Yes, as an individual client, you will be impacted by the service tax with effect from 1 October 2025 (Phase 2).

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

There is no comprehensive list of fees that are subject to service tax. Unless it is specifically excluded, all financial services that are charged with fees or commissions are subject to service tax.

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

Annual service tax for credit card is maintained at RM25 and an 8% service tax applies to other credit card fees and commission-based financial services.

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.

No, the service tax charge will be displayed in your existing statements. However, the Service Tax may be charged in the same month as the related fee, or in the following month after the related fee.

The service tax will be charged per transaction.

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

In the event of insufficient account balance, the Service Tax will be paid/settled first, followed by the related fee.

Service tax on fees and commission applies to all clients regardless the residency status, unless it is specifically excluded.

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 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.

Early settlement charge is punitive in nature, thus it is not subject to service tax.

All our fees and commissions are subject to service tax. If you are eligible for service tax exemption as specifically granted by the Government, please provide the letter of undertaking (LoU) to your point of contact in SCB, so that the accurate service tax treatment can be applied to you.

Please refer to the service tax guide on financial services issued by RMCD dated 9 June 2025 for the content of LoU.

Yes, invoice/statement for the undercharged service tax will be issued to client accordingly.

You many refer to the official Sales & Service Tax website of the Royal Malaysian Customs Department.

Dear valued clients,

With reference to the submission of your summary listing to Standard Chartered Malaysia (SCBMY) for your Export Invoice Financing and/or Import Invoice Financing transaction with us, clients are required to provide additional data points that correspond with your channel of submission (shipment/delivery from and to), for the implementation of service tax on financial services under the Second Phase.

The failure to submit these additional data points will impact the turnaround time for financing, as we will not be able to determine if the underlying trade is a domestic, export or import transaction for applicable service tax treatment.

Please ignore this communication if you have already provided the required data points in your existing submission to SCBMY.

For further guidance, reach out to our Client Services Group via:

Email: Client Services Group MY at straight2bank.my@sc.com.

Contact number: 1-300-82-339