If you've been worried about getting taxed for withdrawing cash or using your e-wallet, rest easy—basic banking services will not be affected by the expanded Sales and Service Tax (SST). That's the official word from Malaysia's key banking associations, who issued a joint clarification on 26 June 2025 to clear up confusion surrounding the SST expansion.

Let's break down what you need to know.

SST Expansion Is Coming—But Not for Essential Banking

Starting 1 July 2025, Malaysia will roll out the first phase of its SST expansion, a move expected to contribute RM5 billion annually to the government's revenue. But despite this broadening scope, essential financial services are staying tax-free.

In a joint statement, the Association of Banks in Malaysia (ABM), Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), and the Malaysian Investment Banking Association (MIBA) confirmed that service tax will not be imposed on:

These services are considered essential to the public and therefore remain outside the scope of the 8% service tax.

So, What Is Getting Taxed?

The new SST phase is more targeted than some feared. According to the statement, only selected services within corporate, investment, and treasury banking will be subjected to the tax. These typically involve more complex financial transactions and services used by businesses rather than individuals.

So, for everyday consumers, nothing changes—at least not when it comes to using your bank card, checking account, or making transfers.

Transparency Is Key

To avoid confusion, banks are assuring the public that any taxable services will be clearly labelled. Customers will be informed ahead of time, so there won't be any surprise charges.

"If you're unsure whether SST applies to a particular banking transaction," the associations said, "don't hesitate to reach out to your bank. We are committed to clear, open communication and helping customers through this transition."

The Bigger Picture: What the SST Expansion Means

The expanded SST framework, first announced during Budget 2024, officially begins in July 2025, with full enforcement starting in January 2026. It's aimed at non-essential sectors like logistics, imports, and retail, while still keeping essentials like basic banking, healthcare products, and education materials zero-rated or exempt.

The new structure imposes 5% or 10% sales tax, depending on the category of goods or services. While businesses will need to adapt their systems before the enforcement date, the government is trying to ensure that essential consumer-facing services stay unaffected.

Final Thoughts: Your Everyday Banking Is Safe

In short, your day-to-day transactions—whether through ATM, online banking, or your favourite e-wallet—will not be taxed under the SST expansion. The move focuses on more specialised financial services and sectors seen as less essential, leaving basic banking accessible and untaxed.

Still unsure? Just give your bank a call. They're on standby to walk you through it.