Talks on passing service tax to prepaid users ongoing

KUALA LUMPUR: Mobile operators and the government are still in talks over the possibility of passing the 6 per cent service tax to prepaid mobile users for airtime reloads.

A decision, which must be made by the Ministry of Finance, has yet to be made, said Deputy Minister of Information, Communications and Culture Datuk Joseph Salang.

"The discussion is about whether or not the industry will continue to absorb the portion. But, I don't think there's any decision on that," said the deputy minister after witnessing the signing of a memorandum of understanding (MoU) between Packet One Networks (Malaysia) Sdn Bhd (P1) and China Mobile.

Currently, mobile operators are absorbing the service tax whenever prepaid customers reload airtime.

"This is a large amount of money, comes up to many hundreds of millions a year.

"Of course, the ministry's stand point is that it will like to see the industry absorbing it, continue as it is. In other words, the consumer should not be burdened," said Salang.

P1 chief executive officer Michael Lai said the MoU allows P1 to leverage on China Mobile's expertise on rolling out of Long Term Evolution (LTE) network. At the same time, China Mobile could learn from P1's wireless broadband experience.

"One good instance is the way we manage our monthly average subscriber data consumption of 12 gigabyte," said Lai.

Under the MoU, both P1 and China Mobile Research Institute will work together to promote LTE as a global standard in general and for early adoption in Southeast Asia.