Under SST, will AirAsia enjoy more tax exemptions than Malaysia Airlines?

Azril Annuar
Low-cost carrier AirAsia X and AirAsia Bhd may enjoy more favourable terms over the national flag carrier Malaysia Airlines Berhad (MAB) under the SST regime. — Reuters pic

KUALA LUMPUR, Aug 30 — Low-cost carrier AirAsia X and AirAsia Bhd may enjoy more favourable terms over the national flag carrier Malaysia Airlines Berhad (MAB) under the Sales and Services Tax (SST) regime.

Based on the Customs Department tax exemptions in the new Sales Tax (Persons Exempted from Payment of Tax) Order 2018, which the federal government gazetted on August 28, the former seems to receive more exemptions than the latter.

The document showed that MAB is exempted from “All goods and equipment used directly in aircraft”, while AirAsia X Sdn Bhd and AirAsia Bhd enjoys an exemption on “All goods including intoxicating liquor, tobacco and cigarettes”.

As part of the exemption, MAB must also meet the condition that goods must be imported or purchased from a registered manufacturer to be solely used by and in aircraft of the company or to be supplied to any designated international airline.

The two low-cost carriers, on the other hand, must meet the conditions that the goods are imported or purchased from a registered manufacturer solely to be used by or for sale by and in aircraft in its international flights.

However, all domestic carriers will enjoy tax exemptions on ground equipment and instructional materials, training aid, spare parts, equipment for aircraft, and store for aircraft under the condition that it is used to establish and maintain international and domestic services.

The domestic carriers enjoying these privileges include: MAB, Maswings Sdn Bhd, Firefly Sdn Bhd, AirAsia X Sdn Bhd, MAB Kargo Sdn Bhd, Aero Darat Sdn Bhd, Malindo Airways Sdn Bhd and AirAsia Bhd.

International carriers, who are entitled under the provisions of an Air Services Agreement with the government to be exempted from customs duty on goods imported for the use of the airline, will also be exempted from spare parts, regular equipment and stores for aircraft.

On a related note, during a media briefing yesterday, it was reported that Finance Minister Lim Guan Eng has also admitted that the list of taxable items under the SST on the Customs Department webpage is not finalised.

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