Redemption points can be used to pay for credit card service tax

PETALING JAYA: Banks and card issuers are allowed to enter into arrangements with card holders to use redemption/reward points or rebates they earn through using their cards for the payment of the RM50 service tax, the Association of Banks in Malaysia (ABM) said on Monday.

The association also said in a statement that debit and petrol cards do not fall under the purview of the RM50 service tax imposed on credit or charge cards.

“The other cards (exempted) include closed community charge cards used at work places, schools and clubs as well as loyalty cards and e-money such as Touch ‘n Go,” it added.

The ABM also said that the service tax would be collected by banks and other card issuers from credit or charge card holders and paid to the Customs and Excise director-general.

“In this respect, the amount of service tax payable will be set out in the card holders’ monthly statement separately,” it said.

The association added that the tax becomes chargeable at the time when the credit or charge card is issued, on the anniversary date or upon renewal.

The tax will not be charged for replacement cards issued due to lost or spoilt cards or fraud.

In Budget 2010, it was announced that starting from Jan 1, a service tax of RM50 a year would be imposed on each principal credit or charge card and RM25 a year on each supplementary card.

For enquiries on the service tax on credit and charge cards, call the ABM toll-free hotline 1-300-88-9980 from Monday to Friday or e-mail banks@abm.org.my

From The Star