Service Tax of 6% on Prepaid Lines!!!

Posted by M ws On Friday, September 9, 2011 3 comments
The Star reported that from Sept 15, prepaid mobile phone users will have to fork out 6% more as telcos say they will no longer absorb the service tax which was introduced in 1998.

This service charge will now be imposed on purchases of prepaid reloads and prepaid starter/SIM packs.

In a joint statement, the telcos said the move was to ensure prepaid services remained competitive compared with postpaid, given the high prepaid rates for calls and SMS at its onset.

Since prepaid users make up the majority of customers in all telcos in Malaysia, this move will affect many of us. With this new move, a customer who buys a RM10 prepaid reload will need to pay RM10.60, the extra RM0.60 being the service tax. At the point of writing this post, I have just topped up my pre-paid numbers and got an earful from my husband for spending $$$ just to save $$$. :-(

The Star said that DiGi has approximately 7.7 million prepaid customers, accounting for 83% of its total customer base of 9.3 million, while Celcom has approximately nine million prepaid customers (77% of 11.7 million) and Maxis has 9.5 million prepaid customers (74% of 12.8 million).

The joint statement also said the service tax was a consumption tax and chargeable to the customer, as provided for in the service tax laws. According to the Service Tax Act 1975,  telecommunication companies are required to levy service tax at the prevailing rate on telecommunication services, including mobile prepaid services.

This is similar to the service tax levied on food and beverage purchases from restaurants and hotels. The service tax was raised from 5% to 6% effective January 2011.

So looks like more will be using applications such as  Viber, Tango and Skype from their android phones. Sadly, I have yet to buy an android phone. So, I will have to fork out that extra 6% from 15th September onwards.

The Consumers Association of Penang has also called on the Malaysian Communications and Multimedia Commission (MCMC) to stall the move by the telco companies to impose the 6 percent service tax on mobile prepaid users.

The telco companies claim that they have been for the idea of absorbing the tax since its imposition in 1998, but that due to dwindling revenues, they have now decided to pass it on to the consumers.

Come again, DWINDLING REVENUES???? By how much? Surely they have to provide ample evidence to justify burdening the rakyat!

As we all know, when one does not reload or top up their account within the validity periods, the mobile prepaid user has forfeit the balance in their account  according to the unfair terms and conditions imposed on them by telco companies. Is this fair?

For most TELCOs, topping up a sum of RM30 will give a validity period of 30 days. However, at the expiry of the 30 days, customers are blocked from making calls but incoming calls are valid for another 90 days.

The customers are able to activate the line by topping up the lines credit anytime within the 90 days limit. If the line is not topped up with the 90 days limit the line is cancelled and whatever credit balance that still exists is forfeited and no refund is given. I have lost my credit for one of my pre-paid numbers because I forgot to top up my credit.

Shouldn't our credit have a lifetime validity? If we run out of credit and want to activate the line after the expiry date, we should also be allowed to activate that line again just by topping up the credit.

Calls that are diverted to voice mail boxes are also charged. CAP at its website said that "Consumers can actually get a refund from the telco operators for such charges provided they can present their statements as proof".

CAP said:

However in the case of prepaid users, statements are not provided unless the user requests for the statement. Given the fact that there are several million users and several million calls being made, telco operators can rake in a tidy sum every month from these charges. This is clearly profiteering and action should be taking against the companies for this.

CAP calls on the MCMC to stall every effort made by the telco operators from imposing this service tax and instead address all the shortcomings and unfair terms imposed on mobile phone users.
So will the MCMC step into help consumers?

3 comments to Service Tax of 6% on Prepaid Lines!!!

  1. says:

    Chester Khuan This sounds like a cartel or oligopoly by telcos in Malaysia. I wonder if the Bar Council will sue the telcos for anti-trust on behalf of poor citizens like you and me? Even with applications such as Tango and Skype on Android phones we still need to get connected to internet to use them. That means I still have to bear that 6% tax every time I top-up my prepaid in order to access these applications. I sure Bar Council will sue the telcos on our behalf and do it pro bono too.

  1. says:

    Nick Phillips They're a bunch of blood sucking swindlers. Dwindling revenue, come on, that's the biggest joke I heard today. Maybe we should all just stop using phones and revert to smoke signals instead.

  1. says:

    walla The nitwit of a PM said he hopes the telcos will not impose the service tax. Doesn't that tax come from a directive from the Ministry of Finance of which he is the head?

    Maybe he needs a plate of fried oyster to juice up his cells.


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