Service Tax (ST) FAQ

The Government announced that service tax will commence on 1 September by substituting the prevailing Goods and Services Tax (“GST”). Unlike GST which taxes all goods and services unless exemption is provided, service tax is only charged on certain prescribed services made by prescribed taxable persons.

The framework is similar that it is a single staged tax by a service provider. However, there are changes to the prescribed services that are taxable based on the proposed taxable services list.

For service tax, only service tax registrants can charge and collect the service tax. Both Allianz Life Insurance Malaysia Berhad (“Allianz Life”) and Allianz General Insurance Company (Malaysia) Berhad (“Allianz General”) are service tax registrants and hence will charged service tax on taxable services.

The company must be a service tax registrant to charge service tax. The service tax registration number should be displayed on any invoice issued for taxable services.

Both Allianz Life and Allianz General are registered for service tax and hence will charge service tax on taxable services.

Service tax is only chargeable on the premium paid for certain insurance products listed below. Any fees / charges in relation to the insurance product will not be taxable under service tax law.

A service tax registrant must issue an invoice with the prescribed particulars to be listed in the Service Tax Regulations. One of the proposed particulars is that the service tax amount must be shown as a separate line item in the invoice.

Please refer to General Insurance or Life Insurance section below on the implication to policies that spans post 1 September 2018.

Companies in the Free Trade Zone are exempted from charging any service tax for services within or between the other Special Areas (Free Zone, Licensed Warehouse, Licensed Manufacturing Warehouse, and Joint Development Area). Service tax is applicable for taxable services between principal customs areas and Free Trade Zone and Special Areas.

The provision of all types of general insurance contract or general takaful certificate to cover any risks incurred in Malaysia to an individual or business organisation is a taxable service and subject to service tax except: -

• Medical insurance contracts to cover against any risks incurred to an individual.
• The insuring or takaful coverage of risks relating to the transport of passengers or goods:
• from a place outside Malaysia to another place outside Malaysia;
• from the last exit point in Malaysia to any place in other country; or
• from a place outside Malaysia to the first entry point in Malaysia.
• The insuring or takaful coverage on educational institution and religious organization registered under any written law.
• Provision of all types of insurance contract, takaful certificate, to cover against any risks incurred in the making of advances or the granting of credit directly relating to the export of goods, services or investments outside Malaysia.
• Provision of insurance contract or takaful certificate to cover risks outside Malaysia.

No, general insurance providers are service tax registered person, premium of the taxable service provided is subject to 6% service tax as laid out in the Service Tax Regulations 2018. Thus, the pricing of the insurance policy will not be affected by channel or mode of purchase.

You may renew your motor insurance before 1 September 2018. However, the insurance coverage with effective date from October 2018 onwards will be subject to 6% service tax on premium. A premium debit note will be issue to charge on the 6% service tax from October 2018 onwards.

Yes, you may renew your motor insurance before 1 September 2018. The insurance coverage from 1 September 2018 onwards will be subject to 6% service tax on premium. A premium debit note will be issue to charge on the 6% service tax from 1 September 2018 onwards.

The fire insurance policy will be subject to 6% service tax starting from 1 September 2018 onwards. Your policy will be subjected to 6% ST.

A premium debit note will be issued to charge the premium of the policy at service tax 6% for period from 1 September 2018 until 31 July 2019. While the premium allocated to the period from 1 August 2018 to 31 August 2018 is subject to GST at 0%.

Yes, the premium is subject to service tax, as local travel insurance is under the category of general insurance and is not specifically excluded from service tax.

No, overseas travel insurance falls under the category of coverage of risks for transport of passengers outside Malaysia as mentioned in the answer for 'What general insurance products will be subject to service tax' above.

No, if you have made full advance payment for the total premium amount inclusive of 6% GST, there will not be any service tax charged for the period from 1 September 2018 onwards.

No, if you have made full advance payment for the total premium amount inclusive of 6% GST, there will not be any service tax charged for the period from 1 September 2018 onwards.

All Business to Business (B2B) life insurance policy sold to business will be subject to service tax (i.e. where policy owner or assignee is a business organization).

If you have made full payment for the total premium including GST, you will not be charged for service tax for the insurance coverage period from 1 September 2018 to 31 December 2018.

No, all life insurance sold to business will be subject to service tax.

All life insurance policy sold to business will be subject to service tax. We will apportion your policy and will charge service tax on the period from 1 September 2018 until 31 July 2019. The premium allocated to the period from 1 August 2018 to 31 August 2018 will not be subject to service tax.

Investment-linked products for life insurance are not taxable under service tax law. The Cost of insurance (“COI”) and charges deducted from the investment-linked funds are not taxable under service tax law.  These include the Monthly COI Charges for Hospital & Surgical cover, Personal Accident, Critical Illness Covers, Managed Care Fees, Monthly Service Charge and Switching Fees. 

There is no action needed on your part as a customer as Allianz Life has since 1 June 2018 set the GST rate to 0% and service tax is not applicable beginning 1 September 2018.

As in the case of investment- linked products, the basic cover under universal life basic plans will not be taxable under service tax. Rider premiums (e.g. waiver of premium riders) and policy fee will also not be taxable under service tax.

In the case of investment-linked policies and universal life policies, please refer to the answer to question 1 and 2 above regarding the impact on the premium, COI and fees.

For other types of medical related policies, such as standalone medical and health insurance which were subject to GST previously, they are no longer taxable under service tax law. See FAQ 6 on General Information for more details.

Based on the current proposed list of taxable services in the Service Tax Regulation 2018 issued 29 August 2018 by RMCD, agency services are not listed as a taxable service. Therefore, insurance agents are not required to register for service tax.

There will be no change to the current commission payment as the amount paid by Allianz is currently at 0% GST for GST registered agents or without GST for non-GST registered agents. The amount of commission after 1 September 2018 will remain the same.

For GST registered agents, Allianz will no longer issue any self-billed invoice for commission payments in relation to services performed after 1 September 2018.     

When the GST Act 2014 (“Act”) is repealed, you are automatically ceased to be a GST registered person. You are not required to apply for deregistration. However, you are required to submit the final GST return within 120 days from the Act being repealed.