Can Telcos Charge GST Or Not?


The Customs Department and the Malaysian Communications and Multimedia Commission (MCMC) are at odds over reverting prepaid reloads to the rates before the Goods and Services Tax (GST) by May 1.

This follows a directive issued by Customs director-general Datuk Seri Khazali Ahmad to inform telecommunication companies (telcos) to revert to pre-GST rates by May 1.

However, in a statement on the same day, Datuk Sri Dr Halim Shafie, chairman of the Malaysian Communications and Multimedia Commission (MCMC) said it will be impossible to bring down prices of prepaid reloads to pre-GST prices immediately, due to the significant logistics and reconfiguration costs, as well as time-duration involved.

In spite of these objections, Khazali insists that telcos must comply with the directive and revert their prices to the “tax inclusive” system that was used pre-GST.

Prior to GST, prepaid card users were paying a 6% Sales and Services Tax (SST), which meant that a RM10 prepaid card, for example, comprised a RM9.43 reload value. However, telcos gave users additional talktime to make up for the 6% SST, meaning the consumers got the full RM10 reload value.

However, after GST came into force on April 1, consumers were required to pay RM10.60 (RM10 prepaid value, plus 6% GST). This has caused an uproar among users, many of whom were youngsters.


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