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Automobile insurance coverage in Malaysia to value extra from March 1 with 8% service tax – current insurance coverage affected too!


Car insurance in Malaysia to cost more from March 1 with 8% service tax – existing insurance affected too!

As introduced throughout Funds 2024, the federal government is ready to enhance the service tax from the 6% fee at current to eight% as of March 1. There are just a few classes which might be excluded from the brand new fee, together with F&B and telecommunications, however typically, customers are set to pay extra on account of the hike.

It has already been indicated that automobile servicing and repairs don’t fall below exempted classes below the revision, and so automobile upkeep is ready to value extra from March 1. Keep in mind that the service tax on this case is simply utilized to labour prices and never on the components themselves.

In any case, the enjoyable doesn’t actually finish there, as a result of one other space the place motorists are set to pay extra is motor insurance coverage. Nothing has actually been highlighted about this within the information to date, however the section will certainly see the two% enhance being utilized on it, as all business-to-consumer common insurance coverage or takaful, excluding medical insurance coverage or medical takaful is topic to service tax.

Car insurance in Malaysia to cost more from March 1 with 8% service tax – existing insurance affected too!

Will it value you considerably extra? Nicely, not fairly, though it is dependent upon the protection or quite how a lot you truly should fork out for the premium itself. The service tax for motor insurance coverage is charged on the precise premium paid, which implies it’s calculated on the sum after NCD, if any, is utilized.

Taking the resident Honda CR-V’s 2023 insured sum of RM96,200 for example, the service tax is RM102.84 on a premium costing RM1,713.97 (after making use of 55% NCD). That’s at 6%, and should you apply an 8% fee on the premium to get a gauge of how issues form up, the service tax can be RM137.12, which is an additional RM34.27.

One other instance is supplied by Hafriz’s Vary Rover Sport, for which he presently pays RM5,997 (with 38.33% NCD utilized) in insurance coverage. The service tax for that’s RM359.82, and this could enhance to RM479.77 if calculated with an 8% fee, translating to an extra RM119.95.

Car insurance in Malaysia to cost more from March 1 with 8% service tax – existing insurance affected too!

That is the price of the service tax for the Vary Rover Sport.

As it’s with servicing prices, the margin of enhance from a standalone viewpoint isn’t drastic (except labour prices are exorbitant and the automobile you’re insuring is nicely, costly), however like with the enhance within the electrical energy tariff for customers who use between 601 kWh and 1,500 kWh a month, it represents further, unavoidable spend, and it’ll add up.

Concerning the appliance of the brand new service tax fee, right here’s an fascinating bit – customers may very well should pay extra for his or her current motor insurance coverage if protection runs by March 1, if that in an FAQ by Zurich Malaysia is true.

The FAQ notes that the tax will likely be utilized partially on current insurance policies, the place a coverage with a protection interval from July 2023 to June 2024 will see the length of protection from March 1 to the top of the protection interval in June being topic to the service tax enhance.

Car insurance in Malaysia to cost more from March 1 with 8% service tax – existing insurance affected too!Car insurance in Malaysia to cost more from March 1 with 8% service tax – existing insurance affected too!

It isn’t identified whether or not it’s blanket throughout all suppliers, however it it wanting prone to be the case, as an MSIG publish on its Fb web page notes the rise within the service tax in addition to the next remark:

“MSIG reserves the appropriate to gather any undercharged service tax for insurance policies processed earlier than 1 March 2024 the place the insurance coverage interval spans throughout 1 March 2024. You might be obligated to pay any relevant taxes together with however not restricted to service tax and stamp obligation which might be imposed by the Malaysian tax authorities in relation to your coverage.”

Ought to this be the case, the query can be, whereas the calculation will likely be pro-rated, how precisely will coverage holders pay for the adjustment? We now have reached out to PIAM to search out out extra about this, and can replace after we get additional data.

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