Effective 1 September 2018, under Group I, Item 11, First Schedule of the Service Tax Regulations 2018, the provision of domestic flight under prescribed circumstances is subject to service tax.
The rate of service tax shall be charged at the rate of 6%. In the case of provision of domestic flight which is a prescribed service provided by an air passenger transportation provider who is a registered person, the value of taxable service for the charging of service tax is the actual price minus the passenger service charge (PSC) and MAVCOM fee.
Service tax on domestic flight ticket will be charged at the point of sales of the ticket. For any purchases on board, service tax will be charged on board.
Passenger of international flights are provision of passenger air transport service:
The provision of passenger international passenger flight services are not subject to service tax. Ancillary services relating to international flights are also not subject to service tax.
A passenger purchased a flight ticket from Air Asia (AA) Berhad for route from KLIA to London. The flight ticket is not subject to service tax because it is an international flight.
A passenger purchased a flight ticket from AA Berhad for route from KLIA to Paris. During the flight, the passenger purchased meal on board and wifi-on-board. The flight ticket is not subject to service tax because it is an international flight as well as other ancillary services paid (meal-on-board and wifi-on-board) by the passenger.
The provision of passenger of domestic flight is subject to service tax excluding:
(i) Rural Air Services;
(ii) flights within Sabah by operator licensed under Section 35 of Malaysian
Aviation Commission Act 2015; and
(iii) flights within Sarawak by operator licensed under Section 35 of Malaysian
Aviation Commission Act 2015;
Flights between Sabah and Sarawak will be subjected to service tax.
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