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New taxes to help fund tourism investments in Malaysia

New taxes to help fund tourism investments in Malaysia

KUALA LUMPUR: Infrastructure and tourism-related programmes will be among the beneficiaries of a new levy on hotel stays that Malaysia’s government is imposing to help fund expansion of the country’s tourism offering. Approved by Parliament in early April, the bill came into effect on August 1, having been postponed from its initial start date of July 1. Revenue from the tax – which will apply only to stays by foreign tourists – will be reinvested back into the industry and its supporting infrastructure, according to Nazri Aziz, the minister of tourism and culture. The levy will be imposed on a sliding scale: guests at five-star hotels pay a surcharge of RM20 ($4.66) per room per night, falling to RM10 ($2.33) for four-star establishments, RM5 ($1.17) for one- to three-star ones, and RM2.5 ($0.58) for budget or unrated accommodations.    Exemptions are made for homestays and kampung (village) accommodations registered with the Ministry of Tourism, as well as for properties run by schools, universities, training institutes or religious institutions, provided there are no plans to use the site for commercial purposes.

Government figures predict the new levy will generate revenues of RM654.6m ($152.8m) in its first full year if hotel occupancy rates reach 60%, rising to RM872.8m ($203.7m) if they hit 80%.  Reaching the latter figure could prove ambitious, with last year’s hotel occupancy rate up 2 percentage points at 65%, according HVS, an industry consultancy. Yet the absolute revenue figure could also rise in the coming years thanks to capacity increases, given the number of new hotels set to come on the market. If all current projects are completed, more than 25,500 new rooms will be added to the country’s hotel stocks by 2021, for a total of almost 350,000, according to HVS.