Service Tax on Credit Cards

There had been so much talks about the Credit Cards when the Government announced in the 2010 budget speech an annual service tax of RM50 for each principal credit card and RM25 for each supplementary card. Banks received so many cards cancellation especially those card members holding multiple numbers of cards.

Whilst most bank are charging the yearly charges, certain banks offered ‘Free For Life’ where yearly charges are waived.

The Service Charge for new cardmembers will be charged in their first month statement whilst the existing cardmembers will be charged on the anniversary date of their credit card. Example: A credit card was issued on 18 March 2009. The service tax will be charged on 18 March 2010. The credit card service tax will be charged automatically in your statement. Once you have made payment, the specific service tax amount will be automatically remitted to the government.

The service tax is applicable and imposed to all cardmembers by card. If you currently hold 3 cards with ang bank, you will be charged for each card held. Example: If you currently possess 2 principal cards and a supplementary card, the total tax applicable to you would be RM125. (RM50 x 2 principal cards + RM25 x 1 supplementary card).