Casinos and hotel operators in Malaysia are bracing for another back-breaking tax as the state tries to balance its finances amid weaker currency and lower oil revenues.
Nikkei reported that the Malaysian Parliament approved the so-called Tourism Tax Bill on Thursday morning in a record breaking session that lasted for almost 20 hours.
The measure provides that the tax rate for non-rated hotels will reportedly be set at RM2.50 (US$0.56), while the rates for two-star, three-star, four-star and five-star hotels were set at RM5 ($1.13), RM10 ($2.25), RM15 ($3.38) and RM20 ($4.51), respectively.
Malaysia’s Tourism and Culture Minister Mohamed Nazri Abdul Aziz estimates that revenue from Tourism Tax would be in the region of RM654.62 ($147.55 million) if the overall occupancy rate for the 11 million “room night” in the country can achieve 60 per cent.
Data from the Tourism Ministry showed that some 26.7 million tourists visited Malaysia in 2016.
But casino operators and hotel owners beg to differ.
They pointed out that the new tax will add to the woes of operators struggling to cope with the Goods and Services Tax (GST) introduced two years ago.
“On top of the extra cost, there will be more (administrative) work for the employees,” the association’s executive director Shaharuddin M Saaid said, according to TODAY. “[The hotel industry] will be affected.”
Even analysts pointed out that the government’s revenue will be at the expense of hotel operators’ earnings.
They said stocks of Genting Malaysia, which operates a hilltop casino resort that attracted more than 20 million visitors last year, and Shangri-La Hotels Malaysia may be hurt by the tourism tax in the near term.
“The tax will add pressure on the hotel segment,” said KLCC Property Holdings’ Chief Executive Hashim Wahir. “I am not very optimistic.”
Lee Meng Horng, an analyst at Hong Leong Investment Bank, on the other hand expects that casino and hotel operators will likely pass on the taxes to tourists in order to tackle the new charge.
“The tourism tax will take out some of the expected earnings gains made on increased tourist levels this year,” said Lee, “and if the ringgit reverses course and strengthens against the dollar, the impact will be even more pronounced.”
