Tourism sector warns rising taxes could hurt Malaysia’s competitiveness
PETALING JAYA: The tourism industry cannot continue to be viewed as a “convenient source of revenue” whenever fiscal gaps arise, the Malaysian Tourism Federation (MTF) said, urging the government to review tourism-related taxes instead of imposing new levies.
Its president Dr Sri Ganesh Michiel said Malaysia’s overall tourism tax burden is becoming more fragmented compared with many of its regional competitors.
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“While some neighbouring countries impose tourismrelated charges, Malaysia is unique in having multiple layers of taxes and levies collected at different levels of government.”
He said the tourism and hospitality industry is burdened by multiple taxes, levies and charges, on top of licensing fees, compliance requirements and operating costs.
“The continuous introduction of additional taxes and levies while maintaining outdated taxes such as Entertainment Duty places an increasingly heavy burden on consumers, tourism businesses and the broader economy.”
He also said there should be a limit to the number of taxes and charges imposed on the industry before affordability, competitiveness and demand are affected.
Foreign hotel guests pay the federal Tourism Tax while accommodation providers collect Sustainability Fees in Selangor and Pahang, hotel fees in Perak and Penang, as well as a proposed travel charge in Johor.
State-level charges range between RM2 and RM7 per room per night, depending on the state and accommodation.
“If additional tourism-related charges are being introduced by various jurisdictions, then entertainment tax, which has clearly outlived its original purpose, should be abolished,” he said, in support of the Malaysian Association of Theme Parks and Family Attractions’ (Matfa) call made on July 4.
Matfa said the entertainment tax no longer reflects current economic realities and urged the federal and state governments to develop a roadmap for its abolition.
It also proposed interim measures, including lower tax rates, wider exemptions and harmonised implementation.
Sri Ganesh said the federal and state governments should instead focus on revenue leakages involving illegal and unregulated operators.
“Taxation should never become a substitute for regulatory shortcomings and enforcement failures,” he said, adding that it is “fundamentally unfair and unjust” to continue imposing additional taxes and levies on compliant businesses and law-abiding consumers while significant revenue leakages from illegal operators remain inadequately addressed.
He said Malaysia cannot hope to strengthen domestic tourism, attract more international visitors and build globally competitive creative industries while continuing to increase taxes on the sectors driving those ambitions.
