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Industry Guide:

Aviation Industry

 
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FREQUENTLY ASKED QUESTIONS 

1. What is the GST treatment for the sales of air containers?

Sales of air containers are subject to GST at a standard rate.


2. What is the GST implication if the air containers are leased?

The supply of air containers by way of leased, is zero-rated under item 24, Second Schedule, Goods and Services Tax (Zero-Rated Supply) Order 2014 provided that the containers must:
(a) be used for transporting goods; and
(b) conform to the standards for Aircraft Unit Load Devices defined by the International Air Transportation Association or any other equivalent organization.


3. Does repair and maintenance service of air containers qualify for zero rated treatment?

No. It is subject to GST at a standard rate.


4. What is the GST treatment for Passenger Service Charge (airport tax)?

Passenger service charge imposed by an airport operator is subject to GST at a standard rate irrespective of whether it is for domestic or international travels.


5. Does cargo handling services include clearance of goods from customs control?

Yes. The forwarding agent will charge owners of the goods GST at a standard rate for services supplied in clearing the goods from customs control.


6. What if the clearance of goods from customs control is done by an airport operator?

If the airport operator clears goods on behalf of the owner/consignee of goods, the handling service is a zero-rated supply.

7. Fumigation is a process which is required to be done on most cargos before exportation or after importation. What is the GST treatment for fumigation?

The supply of fumigation services is subject to a zero rate if the service provided by airport operator or by the same supplier under item 5, Second Schedule, Goods and Services Tax (Zero-Rated Supply) Order 2014.

8. What is the GST treatment for aviation training services provided by entities other than DCA?

Aviation training services provided by entities other than DCA is subject to GST at a standard rate.

9. What is the GST treatment for excess baggage charges by airline operator?

GST treatment on excess baggage will follow the GST treatment of the journey.

10. Haneem wants to change her flight ticket. Is there any GST imposed by the airline operator?

The airline operator will charge administrative charges for changing of the airfare ticket and it is subject to GST at a standard rate. The difference of the domestic airfare ticket is subject to GST at standard rate. However, it is zero-rated if it is an international airfare ticket.

11. What is the GST treatment for penalty charged by airline operator?

If the penalty is a form of compensation and no service is provided then it is not a supply and not subject to GST. In the case that the penalty is charged as administrative fee, it is subject to GST at standard rate.
For example:
  • ticket reissue penalty – administrative fee (subject to GST at standard rate)
  • cancellation penalty – compensation (not subject to GST)
  • refund penalty – compensation (not subject to GST)
  • no show penalty – compensation (not subject to GST)
  • reroute penalty – administrative fee (subject to GST at standard rate)


12. Airline operator provides free meals to passengers due to flight delay or transiting flight more than 4 hours, is the supply of meals to the passengers subject to GST?

The supply of free meal vouchers to the passengers is not subject to GST. However, if the voucher is redeemed at a restaurant run by a GST registered person, the restaurant needs to charge GST at standard rated upon redemption of the voucher.

 
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ICT Automation (M) Sdn Bhd
www.ict.com.my
 
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