MoF clarifies 8% service tax exemption for ship and aircraft leasing

THE Ministry of Finance (MoF) has refuted claims that the recent exemption of the 8% service tax on ship and aircraft leasing was granted without public disclosure, asserting that the decision was made transparently and for sound economic reasons.

“The exemption was not granted in secret,” the Ministry said in a media statement issued today. “An official announcement was made via Service Tax Policy No. 2/2025 (Amendment No. 1), which was uploaded to the MySST portal of the Royal Malaysian Customs Department on 24 July 2025.”

The MoF explained that the exemption aims to prevent local ship and aircraft owners from registering their assets abroad, which could lead to a decline in domestic economic activity and tourism.

Secondly, the measure was implemented to maintain the competitiveness of Malaysia’s maritime and aviation industries.

“Neighbouring countries do not impose a similar tax. Without this exemption, customers may opt for foreign shipping or aviation services instead,” the Ministry said.

The exemption is strictly limited to the aviation and maritime sectors, which are integral to the national supply chain, tourism, and broader economy. It does not apply to vehicle rentals such as cars or buses, or to business premises, due to the differing nature of their usage.

The Ministry reaffirmed its commitment to ensuring fair and transparent tax policies that support national economic resilience while aligning with global industry standards. - August 16, 2025