All telecommunication companies have suspended the imposition of a six percent service tax on their pre-paid SIM card packs and reload pending discussions with the Communications and Multimedia Commission (MCMC).

NONE Information, Communications and Culture Minister Rais Yatim said the agreement was reached at a meeting between the four major telcos in the country and the ministry at Angkasapuri in Kuala Lumpur today.

"The meeting with the managements of Celcom, Maxis, Digi and U Mobile was held in a cordial atmosphere ...they responded positively to the ministry's advice, the government's views and sentiments expressed by Prime Minister Datuk Seri Najib Tun Razak on the matter," he was quoted by Bernama as telling reporters after the meeting which lasted about an hour.

Celcom was represented by its chief executive officer (CEO) Shazalli Ramly, Digi Group by CEO Henrik Clausen, Maxis Group by CEO Sandip

Das and U Mobile by CEO Dr Kaizad Heerjee.

NONE Rais ( right, in songkok ) said the postponement would enable the MCMC to review the matter to determine when would be the best time to implement the tax and the rate.

He said that the cabinet would be updated on today's meeting at its next sitting and hoped the issue would no longer be raised as the telcos concerned had agreed to defer the tax.

On Thursday, the companies said in a joint statement that purchases of prepaid reloads and prepaid starter/SIM packs would be charged a six percent service tax, effective Sept 15.

Prepaid customers were informed through text messages about the move since.

The telcos said the service tax is a consumption tax and chargeable to the customer, as provided for by service tax laws.

NONE The Service Tax Act 1975 requires telecommunication companies to levy service tax at the prevailing rate on telecommunication services, including mobile prepaid services.

This is similar to the service tax levied on food and beverage purchases from restaurants and hotels.

Whilst service tax on prepaids is not new, the telcos have been absorbing it for mobile prepaid services since its introduction in 1998.

Rais said today that in appreciation for the positive response from the telcos, which had paid the government RM6 billion from service tax since 1998 besides playing a major role in providing telco servics to almost 26 million Malaysians, he would recommend to the government to provide them some incentives.

The telcos had been absorbing the six per cent service tax that was to be charged from pre-paid users but collectively decided recently to pass it to customers from Thursday.