Mr Mackay bowed to political pressure that had built up against the controversial recommendation made in the Barclay Review into business rates conducted for the Scottish Government.
Opponents of the plan – nicknamed the “swim tax” – had argued the business rates hikes would add millions of pounds to tax bills and mean the closure of swimming pools, leisure centres, libraries, museums and parks in cities such as Edinburgh.
The Scottish Government review into business rates proposed that Arms Length External Organisations (ALEOs), which run facilities for councils, should no longer be eligible for charitable trust business rates relief.
But Mr Mackay announced he would not go ahead with the proposal on the eve of a Holyrood debate, which would have seen the SNP defeated on the issue had the government argued for the proposal.
Mr Mackay said: “I can confirm that the rates relief will remain in place.”