Malaysia's Banking Associations to Implement Service Tax on Financial Services from July 1, 2025

Strategic Insights -

As of July 1, 2025, member banks of Malaysia's banking associations will begin implementing the service tax on relevant financial services in phases, in accordance with guidelines issued by the Royal Malaysian Customs Department. This development follows the recent gazettment of service tax legislations concerning the expansion of service tax scope. The Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Malaysian Investment Banking Association (MIBA) have assured banking customers that several exemptions and exclusions have been granted, including basic banking services for the public.

Key Takeaways:

  • The service tax will be imposed at a rate of eight per cent on fee- and commission-based financial services.
  • Basic banking services for the public, including current and savings account-related charges, will remain exempt from service tax for both conventional and Islamic banking services.
  • The imposition of service tax on financial services will be in line with the legislation and relevant guidelines gazetted or issued by the Ministry of Finance and the Customs Department.
  • The public is advised to refer to communications from their respective banks for further details, which will be published via the banks' official channels.
  • The service tax implementation is scheduled to begin on July 1, 2025.
  • The Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Malaysian Investment Banking Association (MIBA) are the associations involved in the implementation of the service tax.
  • Basic banking services for the public will remain exempt from service tax, including:

+ Current account-related charges

+ Savings account-related charges

+ Conventional banking services

+ Islamic banking services

Statistics:

  • The service tax rate is eight per cent.
  • The service tax implementation begins July 1, 2025.
  • The legislations concerning the expansion of service tax scope have been gazetted.

Sources:

  • BERNAMA News Agency (2025, June 25)
  • Association of Banks in Malaysia (ABM), Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and Malaysian Investment Banking Association (MIBA)