Here’s a timeline of the tourism tax implementation and how it affects industry players in Malaysia.
Tourism is an important part of Malaysia's economy.
There has been a hue and cry over the recent implementation of the tourism tax. But what is it, really?
Here’s a little background. The Tourism Tax Bill 2017 was passed in April this year at Dewan Rakyat (House of Representatives).
The bill aims to allow for tourism tax to be levied on visitors staying in tourist accommodation in the country.
The government initially proposed to tax both foreigners and Malaysians at the following rates: RM2.50 for non-rated hotels, and RM5, RM10, RM15 and RM20 for two-star, three-star, four-star and five-star hotels respectively.
The plan was amended following opposition from hoteliers and others in the tourism industry as well as the public.
And finally, the tourism tax was enforced on 1 September this year. Malaysians and permanent residents are exempted while only foreign tourists pay the tax, fixed at RM10 per room per night for all types of accommodation except for homestays, kampung stays and premises with fewer than four rooms.
Malaysia Tourism Promotion Board Director General Datuk Seri Mirza Mohammad Taiyab was reported as saying that the monies collected will be a boon for promotional and publicity activities to bring in more tourists to the country.
Within its first month of implementation (September), the government has collected RM610,280 from 4,671 registered lodgings nationwide.
Foreign tourists pay RM10 per room per night in tax rate.
The tourism tax plan was met with unhappiness by industry players, notably the Malaysian Association of Hotel Owners. Its president Tan Sri Teo Chiang Hong said that it will encourage tourists to book with unregistered and unlicensed hotels, resulting in an even lower occupancy rate and lower tax revenues among registered hotels. This, in turn, can possibly cost the government millions of ringgit in revenue each year.
Despite this, there may be a silver lining. The government is expected to collect RM210 million in tourism tax annually. This, coupled with several packages announced in the recent 2018 Budget, will be able to spur the tourism industry to greater heights and create a trickle-down effect in the sector.
During the tabling of the 2018 Budget, Prime Minister Datuk Seri Najib Razak declared the year 2020 as Visit Malaysia Year. He also announced a RM2 billion Small and Medium Enterprise Tourism Fund to provide soft loans to tour operators with an interest subsidy of 2%, and RM500 million to develop and promote tourism through upgrading infrastructure as well as promoting homestay and ecotourism programmes.
He also extended tax incentives for investment in new 4-and 5-star hotels until 31 December 2020 and also extended tax incentives for tour operators to year of assessment 2020.
With such incentives, Malaysia may improve on the United Nations’ World Tourism Organization’s 12th place ranking (2016) in terms of tourist arrivals and increase the country’s tourist dollar spending.
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