Malaysian trade responds to zero-rated GST

GST

An industry hopeful of the benefits that Malaysia’s latest tax changes will bring is reacting in different ways, as the zero-rated goods and services tax (GST) policy kicks into place starting today until August 31, after which it will be replaced by the sales and services tax (SST) from September 1.

Some inbound agents are proactively working to reflect the new zero-rated GST in their contract rates, and others still awaiting more concrete details about the upcoming SST.

Hotels are in the midst of preparing new contract rates due to the zero-rated GST

Ally Bhoonee, executive director of World Avenues, said: “A majority of hotels have not given us new contract rates. Not all hotels are revising rates as some hotels had been absorbing the six per cent GST and giving us nett contract rates since the introduction of the GST in 2015.

“Another headache is that hotels that impose the six per cent GST have their own formula for calculating it. It is not a standard formula.”

Updating rates has been a “labour intensive” process at World Avenues, Ally said. The agency has hired two workers to contact hotels individually for the new contract rates and update its online booking system manually, in addition to processing GST refunds to partners overseas for hotel and tour bookings made from June 1 to August 31.

“We have also inserted a clause on our quotations for bookings made from September 1 onwards that rates are subject to change as the SST rate has yet to be determined by the government,” said Ally.

Another inbound agent, Nanda Kumar, managing director at Hidden Asia Travel & Tours, said he is maintaining the current contract rate pricing for group and incentive quotations. “Once bookings are finalised, we will rectify the rate.”

When contacted, Malaysian Association of Hotel Owners executive director Shaharuddin Saaid, said the Royal Malaysian Customs Department has not engaged them or given any official letters about the zero-rated GST.

Malaysian prime minister Mahathir Mohamad said that the government is looking into whether or not to levy the SST to the old rate of 10 per cent, according to a news report by The Malay Mail, although the system is expected to be a “somewhat updated version”.

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