PETALING JAYA: The Finance Ministry said that service tax on paid television (TV) broadcasting services will contribute some RM150mil per annum to Government revenue.

The Government announced its plan to introduce a service of 6% on paid TV broadcasting services under Budget 2011 last Friday.

The proposed service tax on paid TV was part of the announcement to increase the overall service tax rate from 5% to 6% in line with its aim to grow its revenue base.

"The service tax is not only confined to Astro (Astro All Asia Networks). It is charged on all paid TV broadcasting services except internet based TV services. Essentially, internet services are exempt of services tax to promote ICT," the ministry said in an e-mail response to questions sent by StarBiz.

Currently, paid TV broadcasting services are not subject to service tax. But effective January 1 2011, the service tax of 6% is charged on the monthly subscription fees on TV broadcasting services.

This means a subscriber paying RM100 per month for subscription fees will pay an additional RM6 per month as service tax.

Analysts contacted by StarBiz on Monday said that a possible reason for service tax being imposed on Astro consumers was due to Astro's substantial penetration rate.

According to the Economic Report 2010/2011, Astro has three million subscribers, which works out to a household penetration rate of 49.2% as at end June this year compared with 2.8 million subscribers and penetration rate of 44.9% a year ago.

- The Star Online