Hotel associations protest ‘unfair’ tourism tax

By IZZAT RATNA

The soon-to-be implemented Tourism Tax Bill 2017 is unfair and creates an uneven playing eld, considering less than 15% of accommodation providers in Malaysia are registered with the Ministry of Tourism and Culture (Motac).

Hotel associations have submitted a joint memorandum to Motac, the Finance Ministry and the Royal Malaysian Customs Department (RMCD) to air their grievances on the tax implication yesterday.

They highlighted that the tax contribution should be evenly shared across all participants, including those who operate outside the current system, and the cost to collect the tax should be kept minimal.

Malaysian Association of Hotels chairman Sam Cheah said the rules governing the tax operation do not clearly address how unregistered accommodation providers — including those operating under Airbnb — would be brought into the system.

It said the current model of the levy unfairly places the burden of collecting the tax on registered hotels, which is not fair and equitable as it does not capture all participants in the market place, nor does it tax equally.

“Under the current model, hotel operators that have been registered with Motac are automatically included in the scope of the tourism tax.

“However, based on data that is available on Motac and what is available from other publicly available sources, we have identified that less than 15% of accommodation providers in Malaysia are registered with Motac,” he said in a statement yesterday.

According to the association, there are 3,126 accommodation providers that are registered with Motac. However, there are 9,578 accommodation providers listed on hotel booking site Agoda.com and a further 11,698 accommodation providers listed on Airbnb.

Cheah further said RMCD currently has the power under the proposed law to register those operators who have registered under Motac.

“However, no such provision exists for those who are not currently registered. Without compulsion or appropriate enforcement, there would be no incentive for these providers to enter into the system.

Furthermore, given the amount of unregistered providers, it would take a significant amount of RMCD’s resources to identify and persuade these providers to register,” he added.

The bill, which was passed in Parliament in April this year, will be enforced beginning Aug 1.

Domestic and international tourists are expected to pay additional charges for their accommodation from as high as RM20 to as low as RM2.50 per room on a daily basis.

Motac has projected the amount of tax to be collected under the tourism tax to be RM654 million if the occupancy rate was 60%, and RM872 million if the occupancy rate was 80%, across all registered hotel operators.

On the contrary, Malaysian Association of Hotel Owners president Tan Sri Teo Chiang Hong believes hotels would face great challenge and cost in order to meet the requirements imposed by the tourism tax, and similarly it would require greater allocation of resources and costs from RMCD in order to enforce the tax.

“In recent years, the industry has only been able to achieve a 35%-40% occupancy. The levy would create an uneven playing field, and could encourage more tourists to book with unregistered and unlicensed hotels due to the lower cost,” he said, adding that this could also encourage hotels to follow suit and change their rating or their operating model.

Meanwhile, Malaysia Budget Hotel Association president PK Leong opposed the application of the tax to local guests.

“There is already a significant number of accommodation providers who are unregistered and unlicensed.

“So even if RMCD are able to encourage some of these providers to register to collect the tourism tax, as they are not rated, they are able to take advantage of a lower rate of tax,” he added.