Consumers to pay GST for prepaid phone cards but get extra airtime

Prepaid phone card users will now have to pay an extra 6% as goods and services tax (GST), but will get to enjoy the same value for calls and text messages as a temporary solution to consumer complaints and implementation problems with the new tax.

The Customs Department said telcos had agreed to top up the extra value as a interim solution for the next three months until a final decision is made, the department's GST director Datuk T. Subramanian said today.

He told reporters at a press conference that a RM10 prepaid card would now cost 60 sen more for the GST, but that telcos had agreed to add more than 6% to the stored value in prepaid cards for the benefit of consumers.

As an example, he said a RM10 prepaid card would have an added value of RM1.

"The value added on to top-ups will be more than 6%.

"We have discussed with all the telcos and they agreed to this temporary solution," he said.

The bulk of complaints about the GST on its first day of implementation yesterday were on purchases of prepaid phone reload cards.

The Finance Ministry and Customs initially said that the GST would be included in the price of a reload card, as the new consumption tax was meant to replace the previous service tax of 6%. In effect, there was to be no change in the price of reload cards.

But complaints poured in from consumers that prepaid top-up prices had increased by 6%, and Subromaniam yesterday had said telcos who had charged higher prices would be investigated.

The Star today reported that Maxis and DiGi had confirmed increasing their prepaid reloads from RM10 to RM10.60 because they had not included the 6% service tax in prepaid reloads previously.

Subromaniam's announcement today on the interim solution for consumers and telcos highlights the complications surrounding implementation of the consumption tax.

He said the Customs hotline today received fewer complaints than yesterday, but added that companies were experiencing glitches in rolling out their GST computing systems.

He said many of them did not attend training programmes held by Customs earlier and had not made preparations.

"The accounting software was not tested properly. These people did last minute preparations so we give them three days to fix the system, failing which, action will be taken.

"One of the issues here is that we have been training these companies under our handholding programme, but not all companies took part, so some of the companies that did not take part are now making mistakes," he said.

More than 1,000 additional companies registered to implement GST with the department yesterday, and Subromaniam said there were more who had not and would be compounded.

Companies with an annual turnover of RM500,000 and above are required to register for GST to facilitate the collection of the consumption tax for the government. – April 2, 2015.