Starting 1 July, Malaysians using basic banking services like savings and current accounts will not be affected by the new 8% service tax. This exemption applies to both conventional and Islamic banking, according to a joint statement by three major financial associations.

The Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Malaysian Investment Banking Association (MIBA) confirmed that everyday banking services will remain tax-free under the revised rules.

In practice, this means account holders can continue using core banking services without incurring additional tax charges on routine transactions.

What Will Be Taxed?

However, not all financial services are exempt. The 8% service tax will be imposed on services that involve fees or commissions. This includes non-essential services such as financial advisory, investment-related transactions, and certain types of fund transfers.

The tax will not apply to all services at once. Instead, the banking industry will roll out the charges gradually. The phased approach is meant to ease the transition and will follow the official Guidelines on Financial Services issued by the Royal Malaysian Customs Department.

Each bank may handle the rollout slightly differently depending on the services they offer. Customers may notice changes in fees depending on the type of service and the provider.

Customers Urged to Stay Informed

With different services affected in different ways, the banking associations have advised the public to keep an eye out for updates from their banks. Notices will be shared through official channels such as websites, mobile apps, emails, and customer service counters.

Banks are expected to explain which services are impacted and when the new charges will come into effect. Customers are encouraged to review any fee notices or service updates they receive in the coming weeks.

Certain Financial Areas Remain Exempt

Earlier this month, the Ministry of Finance clarified that several key areas will continue to remain tax-free under the revised service tax. In addition to basic banking, this includes Islamic financing products, foreign exchange gains, and capital market services.

This means that individuals and businesses engaging in foreign currency transactions or investing in regulated capital markets should not see any changes in service tax for those activities.

A Push for Higher Revenue

The revised tax policy is part of the government’s broader effort to improve national revenue. From July to December 2025, the expanded service tax is expected to generate an additional RM5 billion. For the full year 2026, the government estimates it will bring in RM10 billion.

Authorities have said that the additional income will help support national development goals and reduce the country’s fiscal deficit.

While the changes may lead to some added costs for users of certain services, officials have stated that the most essential financial services will remain affordable and accessible to the public.

(Source: The Edge)

• TAGS:
• Association of Banks in Malaysia
• Association of Islamic Banking and Financial Institutions Malaysia
• Banking Services
• basic banking exemption
• Malaysian Investment Banking Association
• Ministry of Finance
• service tax Malaysia
• SST
• Tax