CABINET TO DISCUSS MAINTAINING 6 PCT SERVICE TAX ON DOMESTIC FLIGHTS THIS WEEK - LOKE

SEPANG, March 4 (Bernama) -- The proposal to retain the six per cent service tax for domestic flights will be discussed in this week's Cabinet meeting, said Transport Minister Anthony Loke.

He said the Ministry of Transport will discuss with the Ministry of Finance (MoF) regarding the matter since the tax issue falls under the MoF's jurisdiction

“Service tax is applicable to air tickets. I will discuss with the MoF to see whether we can maintain that tax at six per cent for domestic travels," he told the media after launching AirAsia fixed fares in conjunction with Hari Raya Aidilfitri here today.

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Loke said the matter will be brought up for discussion in the Cabinet meeting expected to be held this Friday.

Service tax was increased to eight per cent effective March 1 compared to the previous six per cent.

However the new rates do not include services for food and beverages, telecommunications and parking.

The increase in the new service tax rate to eight per cent was announced in the tabling of Budget 2024 last October which is part of the government's efforts to increase the country's financial resilience while reducing the budget deficit.

Meanwhile, Capital A chief executive officer (CEO) Tan Sri Tony Fernandes said maintaining the service tax at six per cent for domestic travels should be considered as the industry has just recovered post COVID-19 and also tourism plays a big part in the country's economy.

He said the government should also look at maintenance, repair and overhaul (MRO) organisations as it would become a huge business.

He hoped the government would support the local MRO organisations in their efforts to catch up with Singapore.

"MRO can be a very big job creator in this part of the world. We hope that apart from the service tax, the government will look at MRO organisations that are big employers and contributors to the gross domestic product," he said.

In conjunction with Hari Raya Aidilfitri, AirAsia is offering more than 22,000 seats at fixed low fares for late night flights between the peninsula and Sabah and Sarawak.

The fare is fixed at RM298 one way to Sarawak while to Sabah is RM348 one way.

The promotional fare can be booked from today until April 17 on the airasia.com website and the AirAsia MOVE app.

-- BERNAMA