KUALA LUMPUR, Aug 16 — The service tax exemption on ship and aircraft leasing was not done discreetly, with the exemption aimed at maintaining local industry competitiveness, said the Finance Ministry (MOF).
The MOF emphasised that the imposition of such a tax could have encouraged local ship/aircraft owners to register abroad, which would subsequently reduce economic activity and tourism in Malaysia.
“This exemption is granted for two main reasons — to prevent the registration of ships and aircraft abroad, and because taxation could drive local owners to register overseas, thereby reducing economic and tourism activities in Malaysia,” the ministry said in a media statement today.
The MOF also noted that neighbouring countries do not impose similar taxes. “Without the exemption, customers may turn to foreign shipping or aviation services,” it added.
It stressed that the service tax exemption on the leasing of ships and aircraft was not done discreetly, and that official notification was made on July 24, when it was uploaded on the MySST portal of the Royal Malaysian Customs Department.
