What’s Going To Happen To Prepaid Users With The SST?

There was a massive nationwide uproar by mobile prepaid users as soon as the Sales and Services Tax (SST) rolled out on the September 1. The Sales and Services Tax Act 2018 subjects all telco customers of telecommunication services to a 6% tax. These services include but not limited to IDD calls, roaming, bandwidth services, installation, maintenance and such.

Postpaid and broadband users, on the other hand, will be charged according to their end-of-the-month billing, prepaid users are forced to pay the 6% up front.

This has caused quite a stir among prepaid users in Malaysia, because they feel like they are getting less value for the money they are paying. For example, if users top up RM10, they are left with RM9.40 after the 6% SST deduction.

Postpaid and broadband customers will also be experiencing a surge in their monthly bills, as per the 6% service tax.

This shouldn’t be happening, says Lim Guan Eng

However, according to Minister of Finance Lim Guan Eng, prepaid users should be getting the full credit of the amount they are paying for. The minister said that the 6% SST should not be shouldered by the customers. Customers who are getting less than what they paid for are most probably experiencing a technical issue from their providers – and he called for the latter to fix the problem. The finance minister also said he will be meeting with the telcos soon to iron out this matter.

On another note, Lim Guan Eng also called out the opposition members for turning this into a political issue.

“If there are opposition parties that use this issue as political material, tell them that prepaid card buyers who purchase RM10 vouchers will get RM10 of mobile credit.”

Wait, why was this not an issue before?

In fact, it was. The previous administration actually spent months deciding on what to do with prepaid users. First applying GST on top of prepaid top up costs, then deciding that it should be charged on the cost of calls, and finally deciding that it wasn’t worth the trouble by implementing a complicated rebate scheme.

All that means that prepaid users got exactly what they paid for, without any service charges or deductions. Before GST was introduced, telcos were actually absorbing the 6% SST, which they don’t really want to do anymore.

So what’s going to happen now?

While the finance minister has assured us that users should get full value of credit as what they pay for, we cannot really see how it’s going to be done. Some telcos have resorted to giving out freebies like extra talktime and data to compensate for the 6% SST. Aside from that, the government can probably do what the previous government did with GST – exempt prepaid cards from SST charges – which seems unlikely to happen in this case.

Do you think that prepaid cards should be exempted from SST charges? If yes, then should the same be applied to postpaid and broadband users as well? What’s your take on this?