Sales and Service Tax (“SST”)

SST refers to the Sales and Service Tax, a consumption tax imposed by the Malaysian government. For financial services, the Service Tax applies at a rate of 8% to selected fee-based services and RM25 per year to credit card services. It is administered by RMCD. For more information regarding SST, please refer here.

The expanded scope of SST on financial services will take effect from 1^st July 2025 onwards, in two (2) phases:

• Phase 1 (Effective 1^st July 2025): The SST will apply to fees and charges on selected financial services (please refer to Appendix A for details).
• Phase 2 (Effective 1^st September 2025): The SST scope will be fully extended to cover all remaining fees and charges that are not listed in Appendix A. Further details on Phase 2 will be shared at a closer implementation date.

Note: This phased implementation follows the guidelines issued by the Royal Malaysian Customs Department (RMCD) on 9 June 2025 for financial services.

No. The following financial services are NOT subject to SST:

• Interest or profit charges
• Returns in the form of a spread
• Fees or charges that are punitive in nature
  1. Late payment charges on loans/facility;
  2. Charges for early withdrawal of fixed deposits;
  3. Compensation charge for dishonoured cheque;
  4. Overdraft excess fee; and
  5. Cancellation fees for terminating a contract before its expiry.
• Any basic banking services that incur fees or commission related to the operation of savings accounts, current accounts or similar accounts such as e-wallet.
  1. Deposit, withdrawal, payment or fund transfer;
  2. Issuance of debit card;
  3. Basic transaction over-the-counter;
  4. Basic transaction via Automatic Teller Machine (ATM); or
  5. Printing of account statements.
• Provision of financial services in connection with goods, land or matters outside Malaysia, but excluding outward remittance services where charges are imposed on customers located in Malaysia.
• Brokerage or underwriting services related to medical insurance or medical takaful covered by an individual.
• Fees related to Credit line facility services or shariah compliant financing through the activation of a primary credit card, primary charge card, additional credit card or additional charge card.
• Wakalah fee associated with Islamic financial services and this fee shall be an integral part of the Islamic financial services provided by financial services provider to the recipient and cannot be offered separately or optionally.
• Provision of financial services to the Federal Government or State Government.
• Provision of financial services to local authorities (PBT) for the period of 1 July 2025 to 30 September 2025, after which they will no longer be SST exempt.
• Provision of financial services to another registered financial service provider for the furtherance of:
  • taxable financial services;
  • services related to export of goods; or
  • services related to goods, land or subject matter outside Malaysia, by the latter.

The following Alliance entities are SST registrants and will charge 8% SST on relevant financial services:

1. Alliance Bank Malaysia Berhad – SST Registration No.:W10-1808-32000842
2. Alliance Islamic Bank Berhad – Registration No.:W10-2203-32000079
3. Alliance DBS Research Sdn Bhd – Registration No.:W10-1808-32000931

The following Alliance entities are NOT SST registrants and will NOT charge 8% SST on relevant financial services:

4. Alliance Direct Marketing Sdn Bhd – NA
5. Alliance Group Nominees (Tempatan) Sdn Bhd – NA
6. Alliance Group Nominees (Asing) Sdn Bhd – NA

For fees subject to SST, the tax will be calculated at the rate of 8% on the applicable fee amount. For example:

Note: SST will be rounded to the nearest two decimal places, where applicable.

Before the implementation of the service tax scope expansion (i.e. before 1 July 2025), the following financial services were already subject to Service Tax:

• Insurance and takaful
• Credit or charge card
• Financial management services
• Financial consultancy/advisory services, including Corporate Advisory, Debt Capital Markets, and Equity Capital Markets
• Brokerage and underwriting services
• Digital financial services (currently granted an exemption by the Minister until 31 July 2025)

Only selected fee-based services will be subject to SST, as directed by the Royal Malaysian Customs Department (RMCD). This includes, but is not limited to:

• Loan and financing processing fees
• Card issuance or renewal fees
• Remittance charges
• Banker’s cheque issuance fees

For the full list of services subject to SST effective 1 July 2025 under Phase 1, please refer to the detailed schedule provided in Appendix A of the RMCD’s guidelines here.

No. The SST on credit cards remains fixed at RM25.00 per year, per card. No additional 8% SST will be applied to the annual fee.

No. Stamp Duty is a regulatory fee collected and remitted to Lembaga Hasil Dalam Negeri Malaysia (“LHDN”). As it is not considered a taxable service, it is not subject to SST.

Yes, SST is charged based on the actual amount payable after any promotional discounts. If a fee is reduced under a promotion, the 8% SST will apply to the discounted amount.

SST applies to digital banking services only if they involve chargeable fees, excluding those related to current / savings accounts or equivalent. For example, if a loan/facility processing fee is charged through digital channels, SST will apply.

SST will be shown as a separate line item following the applicable fee, ensuring transparency on the SST charged.

If the underlying fee is reversed or refunded, the corresponding SST will also be reversed accordingly

As a registered person under the Service Tax Act 2018, Alliance Bank is required to collect and remit the applicable tax to RMCD.

Yes. Services provided by the Labuan branch are subject to SST, as the branch is not regulated under the Labuan Financial Services Authority (“LFSA”).

Yes, if the taxable service is rendered in Malaysia and charged by a Malaysian-registered entity, SST may still apply even if you are located overseas.

You can view the complete list of SST-applicable services and fees effective 1 July 2025 in Appendix A, prepared based on RMCD’s guidelines issued on 9 June 2025.

Further additional SST-applicable services and fees for later phases will be issued in due course.

Yes, Alliance Bank will continue to monitor RMCD guidelines and industry developments. Any updates to SST-applicable services or rates will be communicated accordingly.