The exemption aims to maintain the competitiveness of Malaysia’s local industries.
Without the exemption, local ship and aircraft owners might register their assets abroad, reducing economic activity in Malaysia.
The MOF stated that taxation could drive owners to relocate registrations overseas, negatively impacting tourism and business.
“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.
Neighbouring countries do not impose similar taxes, making the exemption necessary to retain business.
“Without the exemption, customers may turn to foreign shipping or aviation services,” the MOF added.
The exemption was officially announced on July 24, 2025, via the MySST portal of the Royal Malaysian Customs Department. – Bernama
Reference : Service tax exemption on ship and aircraft leasing clarified by MOF