MOF: Jet, ship rentals exempted from service tax to secure local economy

Putrajaya said today that its decision to exempt aircraft and ship rentals from service tax was made to safeguard the local economy and tourism.

In a statement, the Finance Ministry said the tax exemption was given to prevent local owners from registering their ships and aircraft in other countries.

"Imposing tax can push local aircraft and ship owners to register overseas, and this would reduce the economic and tourism activities in Malaysia.

"Secondly, it is to secure local industry competitiveness. As the neighbouring countries do not impose such tax, not giving this exemption might cause customers to choose shipping or flight services from overseas," it said.

According to the ministry, the exemption was given especially for the maritime and aviation industries as they play important roles in the country's supply chain, tourism and economy.

"It does not apply to other vehicle leasing services such as car and bus rentals, or lease of business premises, which have different functions."

No secret

The ministry also denied allegations that the government was trying to keep the decision a secret by implementing it quietly.

It said the move was announced through the Customs Department's MySST portal on July 24.

Earlier this week, former BN strategic communications deputy director Eric See-To took to Facebook to criticise the government over the tax exemption move.

He compared the decision with other rental services that are still subject to eight percent service tax, such as rentals for shops, photostat machines, and cars and buses.

"Ordinary citizens who rent cars, buses or shoplots have to pay tax, but those who rent ships and jets, they are exempted," he said.

Malaysiakini wants to hear from you

Bung warns against rakyat bearing brunt of expanded SST

Ahmad Maslan: Govt won't bear financial implications of MLFF toll system

Minister: M'sia competitive for medical tourism despite SST