Hopes high as Malaysian trade awaits details on zero-rated GST

While the GST removal is good news, stakeholders in Malaysia are seeking

details on the new SST in order to price their tours

With the Harapan Coalition now in power, Malaysia’s travel trade is looking forward to the promised reduction of the Goods and Services Tax (GST) to a zero rate beginning June 1, down from the current six per cent, effectively scrapping the consumer tax implemented on April 1, 2015.

The GST will be replaced by the Sales and Services Tax (SST), which will only kick in after the government makes a decision on it, likely after the zero-rated GST is effected in June.

While welcoming the zero-rated GST, the Malaysian Association of Tour and Travel Agents (MATTA) and Malaysian Association of Hotel Owners (MAHO) are currently seeking clarification from the Royal Malaysian Customs Department on details of the GST removal and implementation of the new SST system.

MATTA president, KL Tan, said: “It is not entirely clear whether GST needs to be charged for tours sold before June 1, 2018 but with a travel date on or after June 1, 2018.

Still, he expects the removal of the GST to ultimately grant a “discount” on the price of local tour and travel, which is likely to in turn boost the domestic travel industry.

Tan added: “The ‘zero per cent GST’ is bound to promote spending by both locals and tourist especially on Malaysian shopping and F&B, including tourist attractions, thus potentially increasing the price appeal of Malaysia as a travel destination and encourage more tourist spending.”

Likewise, MAHO’s executive director Shaharuddin Saaid expects the lower price of hotel rooms and services to buoy domestic and inbound tourism, in addition to spurring non-room spending in hotels in the interim period between June 1 and the introduction of the SST.

MATTA’s Tan added that the policy shift will also bring consistency in GST treatment between Designated Areas – Labuan, Langkawi and Tioman, which are tax free destinations, with the rest of Malaysian travel locations.

Meanwhile, Diethelm Travel Malaysia managing director, Manfred Kurz, expressed concern over the lack of information about the SST.

He said: “Contracts for 2019 have to be finalised by end of May because many tour operators in Europe start printing their brochures in July and selling in September. We cannot give them details about the SST such as how many per cent it will be because at this point – no one knows. What will it include – transportation, entrance fees to attractions? We don’t know at this time.

“Our strategy is to be very open with our partners. We have informed them that the GST will be zero-rated from June 1 and that the SST will be reintroduced at some point in the near future. We will keep them updated when we get more information, and advise them not to publish lower rates in their new brochures.”

-TTG Asia.