Kuala Lumpur, 26 March 2015 – The Goods and Services Tax (GST) will be implemented effective 1 April 2015. To help policyholders better understand how GST will impact their general insurance policies, the General Insurance Association of Malaysia has listed down some commonly asked questions explaining how GST implementation may affect their general insurance policies.
Your insurance company may issue a tax invoice to charge the pro-rated GST on the applicable insurance premium, and collect this subsequently from you when the GST is enforced.
9Who will remit the GST on my insurance premium to the Customs?It is the responsibility of the insurance company to collect the applicable GST and remit this to the RMCD within the stipulated time frame set by the Government. Therefore consumers are required to pay the GST promptly.10What happens if I do not wish to pay GST on my insurance policy?Payment of GST is governed by the GST Act, 2014 and as a consumer you are duty bound to pay this tax.11Can I be exempted from GST if I renew my policy early which is due on 12 April 2015 and pay the premium before 1 April 2015?If a policy is incepted on or after 1 April 2015, even if the renewal is done earlier, the policyholder will have to pay the full GST of 12 months on the annual premium. Your insurance company may collect this amount from you on or after 1 April 2015.12I understand that GST can only be charged by a GST registered person. What if I purchase my insurance cover from a general insurance agent who is not GST registered. Will I still have to pay GST on my premium?All general insurance policies are subject to GST even if they are sold by a general insurance agent who is not a GST registered person. In this instance, consumers must understand that the supply is provided by the insurance company and the supply (insurance cover) is subject to GST. The general insurance agent is merely acting on behalf of the insurance company.13If I am a GST registered person, and I purchase my insurance cover and pay the GST, what is the benefit for me to be GST registered?If a policyholder is GST registered, he can claim Input Tax Credit for the GST paid by him on his insurance premiums to the insurance company, subject to conditions set by the RMCD.14
How will GST affect my insurance claim settlement?With the implementation of GST, the settlement of claims will depend on whether or not the policyholder is GST registered. If the policyholder is GST registered and entitled to claim Input Tax Credit, an insurance company will exclude GST from the claim amount paid to the policyholder.
If the policyholder is not a GST registered person, the insurance company will pay the claim in full (including GST) up to the sum insured/limit of liability or other limits of insurance cover.
15Who can I contact to get further clarification and information about the impact of GST on general insurance policies?Please contact your registered general insurance agent, insurance company or direct your queries on GST to PIAM at the PIAM Information Centre (PIC) email@example.com or call 03 – 2274 7395 or 03 – 2274 7399.