TELCOS TO DELIVER ON MINISTER’S DIRECTIVE FOR USAGE-BASED APPLICATION OF GST ON PREPAID

KUALA LUMPUR, 14 MAY 2015 – The telecommunications industry supports the Government’s decision to apply goods and services tax (GST) only upon usage of prepaid services.

The telcos understand the call for a more future-oriented application and welcome the Minister of Communications and Multimedia, Dato’ Sri Ahmad Shabery Cheek’s directive for GST on prepaid services to follow a usage-based principle. This means GST is applied to the individual transactions when customers use their airtime.

This new methodology will form the foundation for application of GST on all electronic payments such as e-wallet and mobile wallet, which has become increasingly ubiquitous in our growing digital economy.

Implementing the new change is a massive effort which is expected to take more than half a year to complete. The decision to change the basis of charging GST from activation to usage is not as simple as an on/off switch. It involves complex reconfiguration of the telcos’ backend systems as well as those of over 30,000 third party retailers, resellers and agents such as financial institutions, electronic payment providers, supermarkets, petrol stations and all other sales agents. However, in line with the new direction announced yesterday, the telcos are committed to do their best in delivering the new implementation in 6 months.

Meanwhile, as announced by the Minister, the 6% GST on value of reload remains; i.e RM10 reload value is sold at RM10.60.

The industry had been in consultation with the Royal Malaysian Customs Department (RMCD) since 2014 to ensure necessary measures are in place for the implementation of GST. It had spent almost a year configuring its backend system in preparation for full compliance to GST implementation on 1 April. The principle of 6% GST on price of products and services, which are not exempted or zero-rated, is a standardapplication across industries and was applied to reload value upon agreement with RMCD.

The telcos have also expressed commitment to enable more affordable services and will look into bringing value-added packages to different segments of the community, so that more Malaysians get connected.

The industry will continue to invest in upgrading the nation’s network and in driving delivery of good quality of service in enabling greater customer experience.
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About CFM

The Communications and Multimedia Consumer Forum of Malaysia (CFM) was established and designated by the Malaysian Communications and Multimedia Commission (MCMC) in 2001. It is a platform for the industry and the consumers/public to make coherent and constructive contributions to service improvements and policy development.

CFM is tasked with, amongst others, to promote growth of Malaysia’s communications and multimedia industry and the protection of consumer interests by fostering the highest standards of business ethics and behavior through industry self-governance. CFM is also a channel for complaints redress on

Communication and Multimedia services.

If you have unresolved complaints about your Communication and Multimedia services, please lodge your complaint by calling CFM’s toll free number 1-800-18-222 or visit CFM’s website at www.cfm.org.my or write in to enquiries@cfm.org.my.

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