GST to foreign firms will help level playing field, says Matta president


The Malaysian Association of Tour and Travel Agents (Matta) said the Royal Malaysian Customs Department’s move to collect the Goods and Services Tax (GST) from foreign online travel booking engines will help level the playing field with local operators.

“Today, giant online travel agents (OTAs) operating in cyberspace are raking in billions of ringgit in the country without paying corporate tax or GST,” Matta president Datuk Tan Kok Liang said in a statement last Friday.

Tan said licensed travel agents in Malaysia which are subject to regulations under the tour operating/travel agency business (TOBTAB) also have to comply with various laws introduced by a host of government ministries.

The costs are higher for them, with GST and net profits lowered after paying corporate tax, while online travel agents are having a field day.

“But as long as the Malaysian Communications and Multimedia Commission is not shutting down unlicensed online travel agents, and foreign companies refuse to register with the Companies Commission of Malaysia, no corporate tax would be paid to the Inland Revenue Board by giant OTAs.

“As such, the GST to be collected from them is significant for both the government and travel industry, as it would make the playing field a little bit more even instead of lopsided,” Tan said.

To empower the travel sector, Tan suggested for the government incentives for online marketing and promotions, and double deductions for e-commerce websites for inbound operators would be given, to help local industry players to be more competitive.

He said the profits would be ploughed back to the government in the form of corporate tax, on top of the GST.

The Malaysian Reserve recently reported that the government will table amendments to the GST Act, which will enable authorities to collect “a few billion ringgit” in taxes from foreign digital platforms that are providing services in the country.

Customs DG Datuk Seri Subromaniam Tholasy said the amendments to the GST Act are expected to be tabled during the Dewan Rakyat sitting in October.

“One of the requirements is for our tax laws to have permanent establishment clause,” he told reporters on the sidelines of GST Conference 2017 in Kuala Lumpur last month.

Subromaniam said foreign digital companies with supply base or permanent establishment in Malaysia will be subject to GST after the amendments.