Service Tax For Credit Cards

Hear this credit card users or charge card users. You will have to pay service tax for your card starting from next year (January 2010). I am sure you have heard this in Budget 2010 but most people are confused of the implementation.

A RM50 is charged up front for new users. As for existing users, you will be charged RM50 during the card anniversary. For example if your card anniversary is in January, you will have to pay the service tax in January.

RM50 service tax is applicable for principal cards only, whereas supplementary cards would be RM25.

This clarification definitely helps everyone to understand better since the announcement of this new tax through Budget 2010. People who have multiple cards are thinking of terminating a few cards but of course we need to know how the tax is being charged to avoid confusion.

While this service tax seems to be bad for some people, look out for banks that are willing to absorb the service tax if you swipe certain amount within a time frame.

According to Deputy Finance Minister Datuk Chor Chee Heung, it is sufficient to hold only two credit cards. He advised credit card users to plan accordingly to avoid problems in the future.

Are you a credit card user? What do you think of this new service tax for credit and charge cards?

Update: Maybank will not absorb the RM50 service tax. According to Maybank’s CEO, “doing so would run counter to the objective of the measure’s introduction under  Budget 2010″. [source]

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Author's bio: Sarah Lam is a freelance writer, a virtual assistant and a sole proprietor. She writes regularly at her blog Writing Consultation and contributes articles to a host of other websites. You can reach her at sarah[at]writingconsultation.com