Transportation, hotel stay, cruises subjected to GST

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KOTA KINABALU: The impact of the Goods and Service Tax (GST) on the travel industry would include taxable supplies such as hotel accommodation, domestic transportation/hire of vehicles, inbound tour package and restaurant meals.

It will also include tickets for entry to exhibitions, entertainment venues, spa services, agency commission, booking fees, tour guide services, inbound travel insurance services, visa fees and other related tourism services, all of which will be subject to standard rate of 6 per cent GST.

Malaysian Association of Tour and Travel Agents (MATTA) Malaysia president Hamzah Rahmat disclosed this at the MATTA Malaysia GST seminar.

For land transportation, he said taxi will be exempted, excursion bus for domestic tour, limousine and airport taxi, hire and drive vehicle will all be standard rated supplies. For cruise services, cruises-to-nowhere, cruise around Malaysian waters and cruise around international waters are subject to GST at standard rate.

As tourist destinations, Langkawi, Tioman and Labuan are expected to have a slight advantage under the GST-era compared to other states because these islands are “designated areas” whereby there is generally no GST charged on goods/services such as retail shops, restaurants and hotels located therein, thus giving these islands a small cost-advantage for tourists, he said.

Hamzah urged members to register early and start preparations as non compliance of the GST rules will attract heavy penalties.

Additional manpower requirements are needed to ensure compliance.

As most of the travel agents have an annual turnover above RM500,000, and would become a GST-registered business, he advised travel agencies to put in place procurement policies that are GST-compatible and notify respective vendors/suppliers that GST-registered vendors/suppliers will be preferred in order for the travel agencies to recover Input Tax Credits on the GST incurred on goods and services purchased.

“As responsible corporate citizens, we must ensure our organization, system and processes are well equipped and able to embrace the implementation of GST,” he said.