Govt urged to review tax on tourism industry

PETALING JAYA: The Malaysian Association of Tour and Travel Agents (MATTA) is urging the government to review the imposition of service tax to tourism management services, which became effective on Friday.

Its president Datuk Tan Kok Liang, in urging the government to revert to the earlier decision where the tours and travel industry was not subjected to the Sales and Service Tax (SST), described the decision to include tourism management services as one of the taxable services on Jan 1 as “fundamentally flawed”.

He said this will create serious adverse implications to the tourism industry, especially when the treatment details and mechanism of reporting are unclear.

“Under the service tax model introduced in September 2018, the tours and travel industry was not included in the scope of the service tax,” he said in a statement yesterday.

He said that in a meeting with MATTA on Feb 15, the Customs Department explained that the treatment of reporting and paying the service tax is based on either total amount billing or itemised billing.

However, Tan said MATTA disagreed with either approach as the total amount billing will have elements of cascading taxation in the supply chain of services, while itemised billing is unfair to travel agents as it requires businesses to expose their margins.

He also questioned the quantum of tourism management services to be charged to tourists.