Change in Service Tax Rate – Frequently Asked Questions (FAQs)

The following provides answers to some of the frequently asked questions (“FAQ”) about change in service tax rate and its impact to Manulife Insurance Berhad and Manulife Insurance Labuan Limited policyholders. This FAQ is subject to change and will be updated as and when there are changes/ updates from the Royal Malaysian Customs Department.

1. What is the change of tax rate for service tax?

In the 2024 Budget tabled on 13 October 2023, Malaysia’s Minister of Finance announced that the service tax rate would be raised from 6% to 8%.

2. When will the new rate be effective?

The new service tax rate of 8% is proposed to be effective from 1st March 2024 onwards.

3. Are there any changes to the scope of taxable services?

There are no changes to the scope of taxable services for insurance products.

4. Who will be affected?

It will affect Manulife customers who purchase any taxable insurance policy coverage from us.

5. How will the new rate impact an existing insurance policy certificate?

Generally, service tax shall become due on the date that such taxable service is provided or performed.

For existing insurance policy, the new service tax rate of 8% is only levied on the portion of premium/contribution attributable to the period of insurance coverage after the effective date of the new service tax rate. The portion of premium/contribution attributable to the period of insurance coverage before the effective date of the new service tax rate will be levied at the old service tax rate of 6%.

However, there will be no clawback on the additional 2% if payment has been received before 1st March 2024 for the portion of premium/contribution attributable to the period of insurance coverage on or after 1st March 2024.

Example:

If an insurance policy coverage period spans across 1st March 2024 (e.g. 1st December 2023 until 30th November 2024), the service tax rate will be levied as follows:

6. What do I need to do if my premium amount is affected?

a. For payments via Standing Instruction: please contact your Bank to update the payment amount.

b. For payments via Autobilling (Credit Card/Debit Card/FPX/Autodebit): no action is required, we will collect the updated premium amount.

c. For payments via other methods: please ensure that you are paying the correct, updated amount.