MAB awaits directive on SST


Malaysia Airlines Bhd (MAB) is not expecting any Sales and Services Tax (SST) to be imposed on its products and services, however, it awaits directives from the government on the issue, said group CEO Captain Izham Ismail.

Izham said the position of the SST on the national carrier remains unclear as it seeks further clarification from the government on the scope of the impending tax.

“We are still waiting for guidance from the ministry, specifically the Royal Malaysian Customs Department. We want to know what the actual parameters of the SST are, whether it is 6% on services or 10% on products,” he told reporters after a signing ceremony between MAB and four umrah tour operators in Petaling Jaya yesterday.

Domestic air fares were exempted from the old SST, but were subsequently subjected to the 6% Goods and Services Tax (GST), confirmed Izham.

”All these years, we have never had SST. We were exempted. There was no impact on consumers.”

The SST, set to replace the unpopular 6% GST, will be re-enforced on Sept 1.

The government had listed several items that will be exempted from the SST, such as spectacle frames, motorcycles below 250cc, baby formula, sardines, fees for doctors in private hospitals, movies, theme park tickets, personal healthcare insurance, bank transaction fees and management services.

Air flight tickets are nowhere to be found on the list.

Customs deputy director for its GST division Nur Hanisah Dukes Abdullah was previously quoted by local newspapers as saying that domestic air fares will be subjected to the SST.

Nur Hanisah said domestic flight tickets will be subjected to a 6% service tax, as well as charges related to the ticket such as upgrades or excess baggage. Rural air services, a fully subsidised air operation that connects rural areas in Sabah and Sarawak, however, will be exempted.

Despite her comments, it remains unclear whether the government will follow through with the plan. Other proposals made by the Customs, such as exempting big ticket items from the SST, have received mixed feedback from the government.

Prime Minister Tun Dr Mahathir Mohamad is in agreement with the suggestion. The Finance Ministry, however, views the matter otherwise.

On a separate note, MAB is aiming for a 50% market share in chartering flights for local Muslim pilgrims to Saudi Arabia. The airline is expected to work with 10 to 12 umrah operators to charter service flights for the upcoming pilgrimage period.

The umrah season, spanning from Oct 31, 2018, to June 9, 2019, is expected to see 290,000 pilgrims travelling from Kuala Lumpur to Jeddah and Madinah, nearly 15% more from last year’s figure.

MAB signed a one-year agreement with four tour operators yesterday which will involve some 70,000 pilgrims from Malaysia and Indonesia.

The four umrah operators comprise KRS Travel Sdn Bhd, ATS Global Travel & Charter Sdn Bhd, Ecoriths Travel & Tour Sdn Bhd and Rayhar Travels Sdn Bhd. The event was witnessed by Deputy Transport Minister Datuk Kamarudin Jaffar.