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Hotels: We need 3 to 6 months to implement tourism tax

 | June 13, 2017

Tax to be collected from July 1, but hotel industry players say they need to reconfigure front office systems and clear up some confusion first.

Cheah-Swee-Hee-1

PETALING JAYA: Hotels in Malaysia will need at least three to six months to reconfigure their front office systems to implement the tourism tax, says the Malaysian Association of Hotels (MAH).

However, MAH president Cheah Swee Hee welcomed the news that the government will be flexible with hotel operators in imposing the tourism tax in their daily transactions from July 1, the date set by the government for the implementation of the controversial tax, which has even led to BN leaders clashing.

Much of the attention on the tax has been surrounding Tourism and Culture Minister Nazri Aziz’s scathing criticism of Sarawak Tourism, Arts, Culture, Youth and Sports Minister Abdul Karim Rahman Hamzah after the latter urged Putrajaya to defer the tax, saying it wasn’t in line with the spirit of the Malaysia Agreement 1963.

But as far as the tax itself is concerned, Cheah – who previously lamented the government’s lack of appropriate consultation with industry players on the tax – said hotels were still against the move to make them collect the tax, despite the government’s assurance of flexibility.

Yesterday, Nazri said that if hotel operators couldn’t implement the tax on July 1, the government can defer it to August, but Cheah said it will actually take a lot more than a month.

“Realistically speaking, it will take some time for hotels to implement the tourism tax as it would require the reconfiguration of our front office systems.”

Cheah said hotels would need a minimum of three to six months to reconfigure their front office systems, provided the mechanism for the tourism tax is clear.

The mechanism for the tax, he said, was still unclear with the ministry saying the tax is included in the room rates while the Tourism Tax Bill 2017 states that it is to be charged separately.

“How can we even start reconfiguring our systems when matters like this are still unclear?” he asked.

Similarly, Malaysia Budget Hotel Association (MyBHA) president PK Leong said he had no idea how the tax would be implemented as they were still in the dark over the mechanism.

Hotel industry counter-proposal

Cheah said he hoped the government would look into the memorandum sent by MAH, MyBHA and the Malaysian Hotel Owners Association (Maho) submitted recently.

In that memorandum, the three organisations raised concerns on the tax rates, their role as tax collectors as well as the scope of the tax.

The tax puts the burden of collecting tax only on registered hotels with more than 10 rooms.

“Those with fewer than 10 rooms won’t have to collect tourism tax and this means AirBnB operators won’t need to impose tourism tax on their customers even though the service is used primarily by the tourist market.

“So, ironically, it seems many tourists will actually escape the tourism tax, while locals who aren’t tourists but stay in hotels when they have to travel for work or to visit their children studying in other states will have to pay.”

He said this made the playing field more uneven than it already was as hotels will now have to adhere to yet another regulation, while AirBnB and illegal hotel operators didn’t have to while enjoying subsidised residential rates for utilities, unlike commercial businesses.

Meanwhile, Leong also said it was unfair that only hotels were made responsible for collecting the tourism tax for the entire tourism industry which is expected to draw some 31.7 million tourists this year.

“Only 25% of a tourist’s expenses goes towards accommodation. So, why are the hotels responsible for collecting for the whole tourism industry?

“What about transport and retail?” questioned Leong.

The tourism tax is fixed and charged on a per-room, per-night basis, with the amount subject to the rating of the hotel.

For non-rated hotels, the tax is RM2.50, two-star (RM5), three-star (RM10), four-star (RM15) and five-star or higher (RM20).

When winding up debate on the Tourism Tax Bill 2017 in the Dewan Rakyat on April 6, Nazri said the tax would be able to generate RM654.62 million in revenue if there was a 60% occupancy rate at more than 11 million hotel rooms in the country.

He had said the tax will be used to improve tourism facilities and promote Malaysia overseas.

According to Nazri, the tourism tax had already been implemented in neighbouring countries like Indonesia, Thailand and Singapore.

* Ivy Chong contributed to this article.

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Nazri: Indonesia, Thailand, Singapore have tourism tax


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