PETALING JAYA: All insurance premiums, except for life insurance, will be subjected to the 6% goods and services tax (GST), which comes into effect in April, said Deputy Finance Minister Datuk Chua Tee Yong here the other day.
He said, however, GST on insurance premiums was not an issue as consumers have all along been subjected to sales and service tax (SST).
“With the exception of life insurance, any insurance premiums will be subjected to GST,” he told reporters after attending a briefing with retailers in Petaling Jaya here the other day. “If I’m not mistaken, SST is levied at insurance.”
Organised by the Customs Department, the briefing included a booklet with lists of items that are subjected and not subjected to tax, aimed at guiding the retail sector. Chua said the booklet listed 1,800 taxable items. The list will be emailed to all registered retailers.
Putrajaya is set to roll out the broad-based consumption tax effective April 1, pegged at 6%, despite the opposition’s protests that it will further burden Malaysians already grappling with the rising cost of living and price hikes of goods and services as a result of subsidy removal.
Prime Minister Datuk Seri Najib Razak, when announcing the implementation of the GST in his Budget 2014 speech, had said the 6% rate would be among the lowest among Asean countries, with Indonesia, Vietnam, Cambodia, the Philippines and Laos capping theirs at 10% and Singapore at 7%.
Opposition leader Datuk Seri Anwar Ibrahim had previously criticised the move, describing it as a regressive tax which would contribute to income inequality and widen the gap between the rich and the poor.
“GST can be the main cause of inflation,” he had said, citing a study by CIMB Research that the implementation of the consumption tax would contribute to a 5% increase in inflation because of a lack of stringent enforcement laws.
Putrajaya has defended its move to peg the GST at 6%, saying several measures were put in place to help the lower-income group.
The GST was first announced during Budget 2005 and was originally scheduled to be implemented in 2007 but was deferred.
It was then tabled in Parliament for the first reading in 2009, for implementation the same year, but was shelved after the move was resisted by Malaysians.
GST, known as value-added tax (VAT) in some countries, is imposed on goods or services at each stage of the production and distribution chain.
