Effective 1 September 2017, foreign nationals who stay at an accommodation premise in Malaysia are subject to a tourism tax of RM10 per room per night. Malaysians and permanent residents of Malaysia are exempted from paying the tourism tax.
While it seems like the implementation of tourism tax only affects foreigners in the country, with more and more Malaysians listing their property as Airbnb hosts or as budget accommodation, here’s how tourism tax could affect both Malaysians and foreign tourists in the country.
If you operate an accommodation premise
If you operate an accommodation premise, you have a duty to register with the Director General of Customs and Excise and collect the tourism tax from the foreign tourist. Under the Tourism Industry Act 1992, a person is deemed to operate an accommodation premise if the person holds out any building as offering lodging or sleeping accommodation to tourists, for hire or any other form of reward.
However, the operator is exempted from collecting the tourism tax and registration if:
- the operator operates a homestay under the Pengalaman Homestay Malaysia Programme;
- the operator operates a kampungstay under the Visit My Kampung Programme;
- you are an employer operating the accommodation premise as facility to your employees;
- the Government or local authority or private higher educational institutions operates the premise as a facility for educational, training or welfare purposes;
- a religious or welfare body operates the premise for the purpose of religious or welfare activities; or
- if the operator operates less than five accommodation rooms. Please note that the quantity is measured on the rooms and not on the premises that the operator operates.
If you operate 2 premises which are 2 houses, each house having 2 rooms to let, you are not required to register as you operate 4 accommodations rooms in total.
If you operate 1 accommodation premise which has 6 rooms but you only let out 1 room, you are also not required to register as you only operate 1 room.
If you operate 2 premises which are 2 houses, each house having 3 rooms to let, you are liable to be registered as you operate 6 accommodation rooms.
If my guests made a booking but did not turn up, do I still have to remit tourism tax to the Director General?
No, tourism tax is only imposed when the foreign tourist has stayed at the accommodation.
If 2 foreign tourists made the booking but only 1 turned up and stayed at the premise, how do I charge the tourism tax?
The tourism tax of RM10 is imposed on a per room per night basis, regardless of the number of the tourists staying in the room.
Do I still have to charge tourism tax if I already imposed heritage charge?
Yes, the tourism tax is chargeable on the room rate and is separate from GST, service charge and heritage charge.
Wait, what about Airbnb?
The Tourism and Culture Minister has said that the Airbnb accommodation is not exempted from the tourism tax. It has also been reported that Airbnb will work with the Malaysian government to collect the tourism tax and streamline the tax collection process.
A search on Airbnb shows that there is no tourism tax collected by the Airbnb on behalf of the hosts in Malaysia at the time of writing. It remains to be seen how the imposition of tourism tax will affect Airbnb hosts in Malaysia. Compliance with this tourism tax will likely result in hosts having to take additional steps to identify guests who are foreigners, register themselves, impose and remit the tourism tax accordingly.
What if a Malaysian citizen checked in to the same room with a foreign tourist? Is tourism tax still chargeable?
As long as a foreign tourist checks in to the room, the tourism tax will be chargeable. Just a gentle reminder for fellow Malaysians to bring along your NRIC when checking into hotels or accommodation within Malaysia as proof of citizenship, failing which hotels may just require you to pay the tourism tax.
I’m a foreigner who comes to Malaysia to study in a Private Higher Education Institution, do I have to pay tourism tax for my stay here?
If you stay at a premise operated by the Institution, you do not have to pay tourism tax. However, if you stay in an accommodation premise which is operated by a third party supplier, you are required to pay tourism tax.
I’m a foreigner who comes to Malaysia for work purpose, do I have to pay tourism tax for my stay here?
If you have a work permit or employment pass, tourism tax does not apply if you stay in accommodation premise which is located at your place of employment as stated in your work permit or employment pass provided that your purpose of stay is related to your work purpose.
This article was written by Shawn Ho and Ee Lyne Chong from our corporate, property and tax practice group. Our corporate team advises on legal compliance, corporate governance, shareholder and founder arrangements, joint venture and partnership structures and corporate tax matters. Have a query? Please contact us.