Tourism sector awaits clarity on Malaysia’s sales and services tax rollout

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The travel trade is eager awaiting details on Malaysia’s Sales and Services Tax (SST) rate, which is set to be reintroduced on September 1 after the bill is passed in the current parliament session.

Malaysian finance minister Lim Guan Eng had announced that the provision of services has been set at six per cent, while the sales of goods will incur a 10 per cent tax.

Tourism stakeholders voice various concerns as Malaysia plans to reintroduce sales and services tax; Kuala Lumpur skyline pictured

These are the same rates imposed under the old SST structure before it was replaced by the Goods and Services Tax (GST) on April 1, 2015.

While Malaysian consumers are currently enjoying the tax holiday after the GST has been reduced to zero since June 1 this year, travel industry leaders are waiting and seeing how the new tax laws will affect the sector.

When contacted, Malaysian Association of Hotel Owners executive director Shaharuddin Saaid said the association is currently waiting for official communication from the government on the SST implementation.

He said: ”We don’t know the mechanism yet, but we hope it won’t be like the old GST system where we have to pay tax of six per cent on the service charge of 10 per cent as that is not fair for hotels.”

Nigel Wong, director of Urban Rhythms Tour Adventures and Travel, said he hopes the SST will not be extended to include services covered in tours and travels, as it had not in the past.

“We hope it remains status quo as far as the travel industry is concerned,” Wong said.

Ally Bhoonee, executive director of World Avenues, shared: “We have to wait for more information from the government on the SST mechanism. At this point, we don’t know how it will affect contract rates with hotels – will the hotels maintain nett rates or revise their rates?”

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