Malaysia revises tourism tax to flat rate of $2 a night – but locals won’t have to pay

Malaysia will be implementing a RM10 tourism tax from August 1 but domestic tourists are exempted.

Planning a trip to Malaysia after August 1? Heads up, you might be hit with a tourism tax of RM10 ($2, S$3) per night – but not if you’re local.

Tourism and Culture Minister Datuk Seri Nazri Aziz told Parliament yesterday (July 26), that the tax would apply to all hotel categories and be charged per room per night.

However, premises with five rooms or less, home and village stays will be exempt and Malaysians will not have to pay across all classifications of hotels.

“The tourism tax… will not have any major (negative) impact on tourist inflows considering the ringgit is low at the moment compared to the US or Singaporean currencies,” Datuk Nazri said a report by The Malay Mail.

He also added that the Attorney-General Chambers and Royal Customs Department are in the final stages preparing the tax collection system.

The tourism tax, passed in Parliament earlier this year, was supposed to be collected from July but has been postponed to take effect from August 1.

But Datuk Nazri also said that Prime Minister Najib Razak will decide whether to push the implementation date back further.

In earlier proposals, the tax was to be levied at staggered rates between RM2.50 to RM20 per night depending on the hotel standard.

In addition, locals were only exempted if they stayed in hotels with ratings of three stars and below.

Key players in the tourism industry concurred that the decision to exempt locals will serve to benefit and enhance domestic tourism.

Tourism Malaysia chairman Datuk Siew Ka Wei saw the tax as essential in funding promotion campaigns to draw more foreign tourists to the country.

Organising chairman of the Malaysian Inbound Tourism Association (MITA), Uzaidi Udanis,  added that the exemption for locals was partly due to feedback the ministry received from industry stakeholders.

“The minister took into account our concerns and made appropriate adjustments to the tax accordingly,” he told The Malay Mail.

“Now we can only hope Malaysians take advantage of the situation and go on more frequent domestic holidays.”

According to Malaysian Association of Tour and Travel Agents (MATTA) president, Datuk Tan Kok Liang, the exemption for domestic tourists would stabilise the local tourism sector.

“Reducing the tax from RM20 for four- and five-star hotels to RM10 will minimise the adverse impact on the high-end industry,” he was quoted as saying in The Star.

He pointed out: “There could be an increase of between 5% and 30% for room rates due to the tax, which would affect long-stay budget travellers.”

According to The Statistics Department, in 2016, Malaysians made a total of 253.9 million trips to local destinations, spending RM74.8 billion in the process, as reported in The Star.

In comparison, there were only 26.8 million foreign tourist arrivals which brought in receipts of RM82.1 billion.