Unclear communication of new tourism tax riles Malaysian trade

Kuala Lumpur

Following the recent announcement of a controversial tourism tax coming into effect on July 1, hoteliers and agents in Malaysia say the short notice given, lack of official documentation and confusing information are putting them in a difficult situation.

Anthony Wong, managing director at The Frangipani Langkawi Resort & Spa said: “The messages on implementation are confusing. According to the tourism and culture minister it will start on July 1. However, the Royal Malaysian Customs Department website stated August 1.”

In a report published by Free Malaysia Today dated June 12, Malaysia’s minister of Tourism and Culture Nazri Abdul Aziz was quoted to have said: “The ministry is flexible on the date. If hotel operators cannot make it on July 1, we will defer it to August instead. It depends.”

Kuala Lumpur

The short notice was a common grievance for Wong and others interviewed. Arokia Das, senior manager at Luxury Tours Malaysia, said agent partners in India are expecting the company to absorb the taxes as groups have been confirmed and deposits accepted.

“We are in a Catch-22 situation. If we absorb, we lose money as our mark-ups are slightly higher than the room rates. If we say no, we may lose future business. This tax should not have been sprung on us with less than a month’s notice. It should have been better planned.”

Ally Bhoonee, executive director at World Avenues, shared similar sentiments.

“Without a circular by the Malaysian government and contradictory statements in the press on when this tax will be introduced, we face difficulty in explaining it to our Middle East partners overseas. There is so much confusion now. What happens to the state tourism taxes in Penang, Melaka and Langkawi? Will the new taxes over-ride the existing taxes in these states? Because of this, we lose our credibility and reputation, and we also risk losing these clients,” Ally stressed.

And while the tax has been likened to one introduced in Dubai, at least a year’s notice was given in the latter case.

Wong added there has been no information on the payment procedures. “We need to know before we can upgrade our software, and this will not come cheap.”

Saini Vermeulen, Within Earth Holidays’ executive director, opined that Tourism Malaysia’s overseas offices should take the lead in informing the travel trade on the new tourism tax.

Moreover, he said: “It is also the wrong time to implement this tax as the business environment is soft, and this makes Malaysia less competitive when compared to Indonesia and Thailand.”

The tourism tax rate is fixed at RM20 (US$4.70) per room per night for five-star accommodation; RM10 per room per night on four-star accommodation; RM5 per room per night on one-, two- and three star accommodation; RM2.50 per room per night on one-, two- and three- Orchid as well as non-rated accommodation premises.

According to tourism officials, the tax revenue will be used to develop the industry, such as through enhancing tourism infrastructure and facilities, supporting tourism promotional activities and campaigns, and the protection and preservation of the earth, and Malaysia’s culture and heritage.

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