Prepaid Top Up cards are now 6% more expensive, or is it?

4:21:00 AM Dickwyn Y 0 Comments

umobile-prepaid-card-with-gst

All this week the hot topic was all about the arrival of the Galaxy S6 and S6 edge in Malaysia implementation of the Goods and Services Tax (GST) in Malaysia. GST has already caused customers to flip tables over the price hike of smartphones and electronic devices.

GST on Prepaid reload cards?

The thing about GST is that customers are still unsure of what is supposed to be exempted from GST and everyone is still trying to take in that prices for certain products have evidently increased. Well, an ongoing debate this week is the exemption of GST for prepaid reload cards.

When GST started on April 1st, one of the first complaints to grabbed a mass audience is the increased price for a prepaid Top Up card which does include the 6% GST charges on top of the value of the Top Up card. A few hours after that, MCMC came up and said that telecos should not charge customers with GST for Top Up cards.

"prices advertised should be inclusive of GST"
After that concluded, MCMC said that customers who purchased the Top Up card with GST included will be able to claim back the included GST they paid from the store they purchased the Top Up card from.


This then continued on with the Communications and Multimedia Consumer Forum of Malaysia (CFM) running a full investigation and asking customer not to purchase reload cards until the problem is resolved. After some talks with teleco companies, they all agreed that GST will indeed be imposed to prepaid reload coupons but teleco companies will need to reimburse customers in forms of added text messages or voice minutes.

PRESS STATEMENT
FOR IMMEDIATE RELEASE
THURSDAY 2 APRIL 2015

IMPLEMENTATION OF GST ON GOODS & SERVICES IN THE TELECOMMUNICATIONS SECTOR
Clarification On 6% GST For Prepaid Top Ups
KUALA LUMPUR – A meeting was held between the telco industry and the Customs Department today to clarify on GST implementation for prepaid services. During the meeting, the following was agreed:
1. Reload for prepaid is subjected to GST upon activation.
2. The value of the reload is identical to pre-GST, the only difference is that GST is added to the reload amount.
3. The industry is in compliance with the GST Act 2014, and therefore has added GST to the current value of reload (so for example, RM10 reload value will now cost RM10.60), which is agreeable to Customs since the underlying value of the reload is unchanged.
4. The industry agrees with Customs that many customers feel the burden of GST for some items, including prepaid. Therefore, as a transitional measure, the industry will give to all customers who reload RM5 and above a value which is higher than the GST addition, in forms of free minutes and SMS. For example, customers will get 5 voice minutes and 5 SMS for every top up of RM10. While for reloads of RM20, the customer will receive 10 voice minutes and 10 SMS. This will apply for three months, starting tomorrow, 3 April 2015.
5. The Customs and the industry will continue to work together on the implementation of GST.
Mobile communications services (excluding International Roaming) is a standard rated item under the GST Act 2014, and since mobile communications services are neither GST exempt nor zero rated items, the industry is required by law to charge 6% GST. International Roaming charges are zero rated.
The GST paid by customers will be collected by telcos and remitted to Customs, in accordance with the GST Law and guidelines for all goods and services consumed.

My opinion


Well, now on to my part of the story. Personally i am using retaining both a prepaid and postpaid account on UMobile which gives me a good perspective on the implementation of GST for prepaid users.

First off, something to note is that previously before GST came into action, the standard prepaid reload card is inclusive of the 6% Sales and Services Tax (SST). Technically speaking, SST does replace GST and the prices for the reload coupons should've remained unchanged after April 1st.

For UMobile, they made a very good choice in my opinion by reloading the exact amount (inclusive of GST) you paid for the Top Up card. So for say i bought an RM 30 Top Up card today, the credited amount in my account will be RM 31.80. This however will only hold true for UMobile and other telecos will provide different returns for the added 6%.

But, this only applies for UMobile and other teleco companies might reimburse their prepaid customers with extra airtime and messages. That for me is not so practical compared to directly crediting extra money to my account as i don't make much outgoing calls.

So, today i attempted to purchase a Top Up card from my favorite place but the cashier initially told me to get them somewhere else. Despite that i still insisted on buying the Top Up card there. Then i asked him about the sales of Top Up card for the past few days and he told me that i was the first person to buy the Top Up card from there this month and prior to my purchase he would ask others to get the Top Up card from somewhere else.

After all this, my conclusion is that the added 6% feels like a beat around the bush for customers. They will not only need to pay more than a single paper bill for their reload card now but also the added bonus due to GST will greatly depend on what the teleco company plans to give.

If UMobile was able to credit the exact RM 31.80 to my account for the RM 30 Top Up card, i don't see why they can't just retain the RM 30 flat price which is inclusive of GST. As i said earlier, the added GST towards prepaid Top Up cards is just making life that little harder for prepaid users.

Maybe if this price ends up staying for the long term, teleco companies should start considering revising the prices of their prepaid mobile plans. Anyways, below here are the prices of the reload Top Up cards inclusive of GST for your perusal.

Prepaid reload Top Up card prices with GST

  • RM 5 = RM 5.30
  • RM 10 = RM 10.60
  • RM 30 = RM 31.80
  • RM 50 = RM 53.00 
  • RM 100 =  RM 106.00

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