Service Tax Policy Favours Rich Undervalues Smes Bersatu Youth

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Bersatu Youth today took the Finance Ministry to task over its recent statement justifying service tax exemptions for ship and jet rentals, lamenting that in doing so, the government is effectively undervaluing small and medium enterprises (SMEs).
In a statement today, Bersatu Youth exco Na’im Brundage said that the ministry’s explanation “completely failed” to address the fundamental issue.
“Why did the government grant special treatment to large aviation and shipping companies, whilst allowing ordinary citizens and other industries to continue being squeezed by the sales and service tax (SST)?
“The ministry’s reasoning that the aviation and maritime industries are important in supply chains, tourism, and the national economy, clearly undervalues the contributions of thousands of SMEs, which have long been the backbone of the country’s economy.
“Daily rental items such as motorcycles, cars, vans, lorries, and buses continue to be taxed, whilst ship and aircraft rentals - which can only be afforded by large companies and the elite - are granted special privileges,” he said.
‘Where is luxury tax?’
Na’im said that the government has misplaced its priorities and that such a “pattern of injustice” has occurred repeatedly.
For example, he said the government had hastily implemented the Low-Value Goods Tax, which burdens citizens purchasing cheap goods from abroad, yet postponed the High-Value Goods Tax, which affects luxury items for the ultra-wealthy.
“Bersatu Youth emphasises that such policies are not only biased, but also prove the government has failed to defend the interests of the majority of citizens.
“As long as the government continues to shield large companies and the affluent from tax burdens, that burden will continue to be borne by ordinary citizens,” Na’im added.
On Aug 16, the Finance Ministry said in a statement that the service tax exemption on ship and aircraft leasing was aimed at maintaining local industry competitiveness, Bernama reported.
The ministry reportedly said that enforcing such a tax would have encouraged local ship and aircraft owners to register abroad, resulting in diminished economic activity and tourism in Malaysia.
It also said that neighbouring countries do not impose a similar tax.
“Without the exemption, customers may turn to foreign shipping or aviation services,” it added.
It stressed that an official notification on the service tax exemption on the leasing of ships and aircraft was made on July 24, 2025, when it was uploaded on the MySST portal of the Royal Malaysian Customs Department.
The government imposed the eight percent service tax on rental and leasing services with effect from July 1. However, this only applies to companies earning more than RM1 million a year. - Mkini

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