PUTRAJAYA: The 10-year income tax exemption and lower stamp duty on ship financing are expected to encourage more vessel registrations and investment in Malaysia's shipping industry.
Transport Minister Anthony Loke said shipping companies previously had to reapply for income tax exemptions every two years, making it difficult for them to plan long-term investments.
Loke said the extended exemption, from 2027 to 2036, would give companies greater certainty to invest in new vessels and register them under the Malaysian flag.
"Many shipping companies lack the assurance and confidence to make long-term investments, such as buying ships or registering their vessels under the Malaysian flag.
"This has led shipping companies to register their vessels elsewhere, in countries offering better tax incentives, including our neighbouring countries," he told a press conference today.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced the extension of the full income tax exemption for Malaysian shipping companies until the year of assessment 2036 when tabling 2027 Budget in the Dewan Rakyat on Friday.
The government also introduced fixed stamp duty rates on loans for the purchase or construction of Malaysian vessels, at RM2,000 for loans of up to RM100 million and RM5,000 for loans exceeding RM100 million.
On the fixed stamp duty rates, Loke said the move would significantly reduce the cost of financing and building new vessels.
He said stamp duty was previously charged at 0.5 per cent of a vessel's value under the financing agreement.
"For a vessel worth RM100 million, the stamp duty would amount to RM500,000.
"Under the new rate, the government has set it at just RM2,000, saving shipping companies RM498,000.
"This is a substantial saving that makes it much more attractive for shipping companies," he said.
Loke said the measures would benefit not only shipping companies but also the wider maritime industry, including shipbuilding businesses in Sarawak, particularly in Sibu.
"We hope this will spur more investment in vessels and lead to more new ships being built, allowing the shipping industry to grow more rapidly," he said.
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