GST enforced under the Goods and Services Tax (GST) Act, 2014 will be replacing the Sales and Services Tax (SST). The current rate of GST imposed is 6%.
Anyone carrying out a business in Malaysia with an annual turnover of RM500,000 and above is required to be GST registered.
A person who is registered under the GST Act is known as a GST registered person. A GST registered person can charge GST on his supply of goods and services. All general insurance companies who are members of PIAM are GST registered persons.
All general insurance policies are subject to GST, unless the risk insured is outside Malaysia. Examples of insurance contracts covering risks outside Malaysia are Travel Personal Accident and Marine policies.
Policyholders who currently hold valid insurance policies with member companies of PIAM and are subject to GST, have been notified of the GST implementation through a GST clause which has been incorporated in all general insurance renewal notices and policy schedules.
As all general insurance policies are subject to GST, there may be an increase in the cost of insurance for a non-registered GST person. However, if you are a GST registered person, you will be able to claim Input Tax Credit on the GST paid by you on your policy from the Royal Malaysian Customs Department (RMCD).
For the imposition of GST on a general insurance policy, your insurance company will issue you a tax invoice for the amount of premium to be charged and the appropriate GST on this premium. The GST registration number of the insurance company will appear on the tax invoice.