Kuala lumpur: The service tax exemption on ship and aircraft leasing was not implemented discreetly, according to the Ministry of Finance (MOF), which has clarified that the exemption aims to maintain competitiveness within the local industry.

According to BERNAMA News Agency, the MOF highlighted that imposing such a tax could have led local ship and aircraft owners to register their vessels abroad, thereby diminishing economic activity and tourism in Malaysia. The Ministry emphasized that the exemption serves two main purposes: preventing the overseas registration of ships and aircraft, and averting a potential decline in local economic and tourism activities.

The MOF further noted that neighboring countries do not impose similar taxes, suggesting that without the exemption, customers might opt for foreign shipping or aviation services. The Ministry underscored that the service tax exemption on the leasing of ships and aircraft was not conducted in secrecy. Official notification regarding the exemption was made public on July 24, 2025, when it was uploaded on the MySST portal of the Royal Malaysian Customs Department.