With a new government, Malaysian hotels urge review of tourism tax

Hotel associations had opposed the tax leading up to its implementation,

saying it impinges on the destination’s price competitiveness

With the Malaysian cabinet set for a refresh following Mahathir Mohamad’s landmark election victory and return to the post of prime minister, the country’s three main hotel associations are taking the chance to resurface their objections surrounding a tourism tax that came into effect in September 2017.

Diminished competitivenessespecially in the budget hotel sector and hotels’ unwillingness to be made “collecting agents” for the tax are among the issues highlighted by the Malaysian Association of Hotel Owners’ (MAHO), Malaysian Association of Hotels (MAH), and Malaysia Budget Hotel Association (MyBHA).

This comes as the government announces a reduction of a goods and services tax introduced in 2015 to zero.

MAHO executive director, Shaharuddin M Saaid, shared with TTG Asiathat the association will push for an overall review of the tourism tax so that it does not hurt inbound arrivals.

Shaharuddin said: “A RM10 (US$2.50) tourism tax per room per night at a budget hotel that costs RM50 to RM80 per room per night is too much for guests to pay. The budget hotels complain that they are losing business because of this tax.”

The association hopes to recommend putting a new mechanism in place to free hotels of the tax collection role they have reluctantly assumed.

In addition, the three hotel associations had last year proposed that the government introduce an exit tax that should be collected at the airports and borders and imposed on foreign tourists. Shaharuddin said: “We will most likely bring up this proposal again.”

Under the system, foreign tourists are charged a flat rate of RM10 per night and per room and Malaysian citizens and permanent residents are exempted from paying the tax.

-TTG Asia.