KOTA KINABALU: Air transport service in Sabah and Sarawak will be exempted from Sales and Service Tax system as it is a critical and important mode of transportation for the people in both the states, said Finance Minister Lim Guan Eng.
He said the tax exemption was a privilege given to the two states by taking into account their size.
“Sabah and Sarawak are so vast and large. The air transport system is very critical and important. That is why the tax (for air transportation) is exempted,” he added.
The move, he said, would be shocking as air transport was taxed under the implementation of the Goods and Services Tax (GST) system by the previous government.
He told reporters this after attending a briefing on the implementation of the SST, organised by the Royal Customs Department here Sunday.
Also present was Customs director-general Datuk Seri T. Subromaniam.