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Malaysian banks will start imposing an 8% service tax on certain financial services starting 1 July 2025, under the new expanded sales and service tax (SST)
This rollout will be carried out in phases, in accordance with official guidelines from the Royal Malaysian Customs Department, according to a joint statement by three major banking associations:
- The Association of Banks in Malaysia (ABM)
- The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM)
- The Malaysian Investment Banking Association (MIBA)
What is this tax all about?
The new service tax applies to fee- and commission-based financial services, including certain transaction charges, advisory fees, and services beyond everyday banking.
According to Bernama, the changes follow the recent gazettment of expanded SST laws, which were part of the government's Budget 2024 initiative to increase tax revenue by broadening the tax base.
What services will not be taxed?
Importantly, the associations assured the public that basic banking services would remain exempt from this new service tax. These include:
- Charges related to current and savings accounts
- Conventional and Islamic banking services that fall under "basic" categories
In other words, regular customers will not be taxed for routine services like monthly account maintenance fees or standard ATM withdrawals.
What should you, as a bank customer, do?
The banking associations are urging the public to refer to official communications from their respective banks, as specific charges and rollout timelines may vary.
They also stressed that the phased implementation is designed to minimise disruption, with all banks expected to closely follow the Customs Department's guidelines.
