Malaysia’s ‘disputed’ tourism tax takes effect

Domestic tourists are exempted from the tax. Source: xabi_kls/Shutterstock

MALAYSIA’S new tourism tax is implemented across the country today, but various parties have been at loggerheads over the details since it was proposed in April. 

The Bill would allow the government to charge tourists a nightly rate for staying in a hotel and the fee would be determined based on the hotel rating.

However, last week, Malaysia’s Tourism and Culture Minister Nazri Aziz revised it to a flat rate of RM10 (US$2.34) per room per night.

He he was quoted as saying in Parliament:

“We will impose a RM10 flat rate from five-star to zero-star hotels for foreign tourists.”

The fee will not apply to premises with five rooms or less, homestays, and village stays.

On top of that, domestic tourists will be exempted from the tax following calls the tax would discourage interstate travel.

Malaysian Association of Hotels (MAH) president Cheah Swee Hee told TTG Asia in April: “This will not encourage domestic tourism, which is just as important for the economy.”

In other developments, the east Malaysian state of Sarawak has rejected Putrajaya’s offer of 10 percent of tax collections. Chief Minister Amar Abang Johari Openg argued Prime Minister Najib Razak had promised Sarawak and Sabah an equal share of the collections when the tax was proposed.

Overall, the tax has been received with mixed reactions from hoteliers. The MAH executive marketing and communications officer Hazzriq Shah told Travel Wire Asia: “It’s a relief locals are not being taxed, but we’re still against the idea of hotels as a tax collector.”

According to Nazri, the collected tax – which could amount to RM654.62 million (US$147.47 million) if the overall occupancy rate for the 11 million “room nights” in the country is 60 percent – will be used to develop the country’s tourism industry.