General products hit by 6% service tax in Malaysia

The General Insurance Association of Malaysia has stated that general insurance products will be subject to an additional six percent service tax charge. This tax would not be applicable to medical policies. The move follows the recent passing of the Service Tax Bill in Parliament.

“Consumers who purchase or renew their general insurance policies on or after September 1, 2018 will be charged a service tax at 6 percent on their premium.

“Policies bought prior to that span the tax holiday period, that is from June to August and continuing after September will need to have service tax imposed on a pro-rated basis,” it said in a statement.

PIAM clarified those individuals who purchased their insurance policies before June would be exempted from the tax because they had already paid the six per cent Goods and Services Tax (GST), which had been accounted for and paid to the Customs Department, according to The Star.

PIAM also noted that one time travel insurance policies purchased for travel overseas are not taxable.

However, annual travel policies would be taxable as the destinations are not specified under the policy.