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Tourism Tax Update: Local Tourists & PRs are Now Exempted

Water village in Sipadan, Sabah

After nearly a month from the previous update we posted in June on the tourism tax, we now have the latest information on when it will begin. According to Tourism & Culture Minister Datuk Seri Mohamed Nazri Abdul Aziz, the tourism tax will be implemented starting 1st September, not August as previously announced.

One of the biggest questions we had when the tax was first introduced was if it would be enforced on all tourists, both local and foreign, and we now have our answer. Nazri added that only foreign tourists who stay at hotels, inns, rest houses, and motels will be taxed, while local (i.e., Malaysian) tourists and permanent residents will be exempted. No word yet if this exemption includes expats who, like locals, work and pay taxes in Malaysia – they’re not PRs but nor are they foreign visitors.

In the latest shift in the frequently changing and controversial plan to implement a nationwide tourism tax, Nazri also stated that the new tax rate will be a flat RM10 per room per night regardless of hotel rating, which is a significant change from what they initially intended to do, earlier announcing a tiered rate of RM20/night for a 5-star hotels, RM10/night for a 4-star hotels, and so on. This revised flat rate is expected to generate about RM210 million in revenue every year, which is about RM400 million less than their previous estimate with the tiered rates and inclusion of Malaysian tourists.

For our previous updates on the tourism tax, please see:

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