Minister: Putrajaya would lose RM800m if GST for prepaid cards scrapped

KUALA LUMPUR, May 2 ― Putrajaya stands to lose RM800 million in tax revenue annually if it does not collect the Goods and Services Tax (GST) on prepaid reloads, Communication and Multimedia Minister Datuk Seri Ahmad Shabery Cheek has said.

Shabery attributed the potential loss to the high number of foreigners using prepaid phone services.

“As many as two-thirds of the prepaid phone users are foreigners that are mostly from Myanmar, Indonesia and Bangladesh.

“If you ask, I don’t want our money to be paid to subsidise their prepaid cards,” he was quoted saying yesterday by local daily Utusan Malaysia, confirming that a final decision on the prices will be made after consumer surveys are completed.

Telcos had in the past absorbed the now-abolished sales and service tax of six per cent for prepaid cards, which is now replaced by the GST that is also at a rate of six per cent but passed on to consumers.

On April 30, Shabery confirmed that GST will be imposed on prepaid coupons as they are not classified as a zero-rated item or a tax-exempt item.

He said surveys that are expected to be completed this week and tabled at the next Cabinet meeting will show if consumers are willing to pay the original price and receive less airtime credit or to pay more but receive the original amount of airtime credit.

This would mean either a prepaid card sold at RM10.60 for an airtime value of RM10, or a GST-inclusive rate of RM10 for an airtime value of RM9.43.

There was a public backlash on the very first day of GST implementation on April 1, with complaints of higher cost of reload coupons despite an earlier assurance by deputy Finance Minister Datuk Ahmad Maslan that there would be no price increases for prepaid users.

On April 29, the Customs Department and the Malaysian Communications and Multimedia Commission (MCMC) issued conflicting statements within hours apart, with the former saying telcos must revert prepaid card prices to pre-GST levels by May 1 while the latter said GST will be added on to the total price.

On April 30, the Customs Department announced that it was postponing its directive following MCMC’s statement that the telcos would not be able to reconfigure their systems within the short period given.

Yesterday, Prime Minister Datuk Seri Najib Razak announced on Twitter that Shabery will be the only authorised government spokesman on the new price scheme.