KUALA LUMPUR: The Sales and Services Tax (SST) annual threshold for the hospitality industry should be increased from RM500,000 to RM1.5mil under Budget 2024, says the Malaysian Budget and Business Hotel Association.
Its president Dr Sri Ganesh Michiel said this was necessary to ensure the sustainability of budget hotel operators affected by competition from unlicensed accommodation providers.
“With SST, if the room price is RM100, it will increase to RM106 due to the 6% tax rate. If the room rate is higher, then the tax that customers have to pay also increases.
“Even though the room rates offered by these budget hotels are similar to that of unlicensed operators, they become more expensive due to SST and no longer attract customers,” he said.
He added that if the threshold value was raised to RM1.5mil, customers could enjoy affordable room rates without feeling burdened by the SST imposed by licensed hotel operators.
Sri Ganesh, who is also Malaysia Tourism Federation secretary-general, also hopes the government would immediately enforce the Short-Term Residential Accommodation (STRA) guidelines to ensure the sustainability of the hotel industry.
According to him, the government has lost tax revenue due to unlicensed businesses where the parties involved are not bound by legal regulations to pay taxes such as SST and the tourism tax, or the set tourism or hotel fees.
Airbnb South-East Asia, India, Hong Kong and Taiwan head of policy Mich Goh said the national STRA guidelines currently being developed would reflect Malaysia’s dynamism in embracing technology and innovation in the tourism sector. — Bernama