Finance minister Lim Guan Eng clarified the issue surrounding SST charges on prepaid top ups. Saying that prepaid services are exempt from taxes; giving consumers the full amount of credit for which they paid.
Telcos had been uncertain as to where prepaid top ups lay in the scheme of the newly implemented SST. At first deduction the 6% tax from the value of the top up, and then only retracting the charges when consumers began to complain.
According to the government, prepaid services are exempt from certain taxes the Section 34(3)(a) of the Service Tax Act 2018; which will be enforced from September 6.
The exemption is meant to help telcos which are having issues adapting their prepaid systems to the new tax structure.
This announcement should put to rest questions about the validity of taxing prepaid cards, and whether doing so actually devalues the amount paid for the top up.
