TAX INCENTIVES FOR
SPECIFIC INDUSTRIES :
HOTEL & TOURISM
INDUSTRY CHAPTER 33, CKF
The Team
Khoirul Bariyah Nur Syameera Nur Hani Ulya Nur Qamarina
2020621098 2020462086 2020614438 2020461516
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INTRODUCTION
The Malaysian Government has
been in recent years promoting the
tourism industry to bring the
inflow of foreign funds, and to
encourage the local to spend their
earnings locally instead of
spending overseas.
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ELIGIBLE CRITERIA
In order to qualify for the tax incentives, the
hotel business & tourism industry must
participate in the following PROMOTED
ACTIVITIES :
Establishment of medium and low cost hotel
(up to 3 stars hotel);
Expansion/modernization of existing hotels;
Establishment of tourist project;
Expansion/modernization of tourist projects;
TAX INCENTIVES AVAILABLE Establishment of recreational camps;
Establishment of convention centers.
PIONEER STATUS
INVESTMENT TAX ALLOWANCE
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Group 1
PIONEER STATUS
• A company granted PS enjoys tax exemption 70% of its statutory income for 5 years.
• This amount will be credited into an exempt income account (EIA) from which
two-tier dividend can be declared.
• It will only have to pay tax on 30% of its statutory income, commencing from its
production day which is determined by MIDA.
For example, SI for YA 2019 is RM 2,000,000.
PS Exemption = 70% X RM 2,000,000 = RM 1,400,000
Another 30% of SI (RM 600,000) is chargeable to tax at 24%.
• Unabsorbed capital allowance (CA) and accumulated losses incurred during the
pioneer period can be carried forward and deducted from the post pioneer income of
the company.
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• Hotel business or tourism project located in eastern corridor of Peninsula
Malaysia, Sabah, Sarawak and Labuan will be given an exemption of 100%
of its statutory income.
The amount (after the deduction of current year non-pioneer loss followed
by pioneer loss) will be credited to exempt income account. Two tier
dividend can be declared from such
Income account.
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Investment Tax Allowance
• ITA claimed is 60%
of the QCE incurred.
• The claim has to be
set off against the
70% of SI in order
for the set off to be
credited into EIA
• Peninsular Malaysia
• Sabah 100% of CE
• Sarawak
• Labuan
• The claim has to be
set off against the
100% of SI in order
for the set off to be
credited into EIA
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Definition
Hotel Hotel Tourist
Business Project
The carrying on of a Any accommodation A project other than a
business in a hotel where which includes a hotel, a hotel business exclusively
such business involves the motel, chalet or hostel of carried out for purposes
provision of sleeping the approved standard and connected with the
accommodation, food, registered with the promotion of tourism and
drinks and other services TDCM. registered with TDCM.
or facilities.
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Expansion List
w.e.f 01/01/2020, the scope of
tourism project is expanded to
include:
• Integrated tourism
• Sports tourism
• International theme park
• Holiday camp
• Recreational project
• Conventional centre
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Industrial Building Allowance
w.e.f 23/08/2014
Company incurred CE on hotel building, extension or
modernization of hotel building is no longer eligible to
industrial building allowance.
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4 & 5 Star Hotels
Pioneer status ITA
5 Years Application is made to MIDA from
5 Years 01/01/2014 – 31/12/2020
Rate:
Exemption of statutory • Peninsular Malaysia – 60%
income: • Sabah & Sarawak – 100%
• Peninsular Malaysia – SI Set Off:
70% • Peninsular Malaysia – 70%
• Sabah & Sarawak – 100%
• Sabah & Sarawak – 100%
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Service Tax Exemption International Theme Park Group Inclusive Tours
Hotel operators including hotel, w.e.f 01/01/2020, eligibility Resident company :-
inns, lodging house, service international theme park for: • Licensed under the Tourism
apartment, homestay and any other Industry Act 1992
Pioneer Status • Caryying on tour operating
similar establishment are exempted
from service tax of 6% during • 100% exemption of SI for 5 years. business
01/03/2020 – 31/08/2020 • Total number of tourist
Investment tax allowance outside Malaysia is at least
• 100% on the QCE incurred within 750 in the basis perion for a
5 years. It is to be deduct against YA
70% of SI • Certified by a letter from
Ministry of Tourism and
Culture Malaysia
This shall be exempted on tax of
the SI derived from group
inclusive tours.
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Domestic Tours DD for overseas exp for
promotion of tourism
Company resident in Malaysia:- Eligibility:-
• Licensed under the Tourism Industry
Act 1992 1. Every company resident in Malaysia
• To carry on a tour operating business carrying on:
• Total number of local tourists on • Hotel business in a hotel registered with
domestic tours is at least 1,500 persons the TDCM
in the basis period of YA
• Certified by a letter from Ministry of • A tour operating business registered with
Tourism and Culture Malaysia the TDCM
2. The cost incurred primarily and
Therefore, the SI derived from operating principally for the purpose of promoting
domestic tours will be exempted from tourism to Malaysia which are allowable
tax. under s 33 and not prohibited s 39(1) of the
act.
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Allowable Cost
Publicity and advertisement Provision of brochures, Cost of market research Fares in respect of travel to a • Actual exp up to a max of
in any media outside magazines and guidebooks outside Malaysia and country outside Malaysia RM300 per day for
Malaysia without charge to prospective approved by the Minister of accommodation
tourists outside Malaysia Tourism and Culture • Concluding contracts for
including cost of delivery. Malaysia overseas advertisement • A max of RM150 per day
for sustenance
• For the purpose of
participating in trade fairs for the whole of the period
commencing with the
• Conference or forums representative’s departure
approved by the Minister from Malaysia and ending on
of Tourism and Culture his return to Malaysia
Malaysia
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Allowable Cost
Cost on the holding of Cost of maintaining sales The expenses excludes
overseas trade fairs, office overseas for the cost incurred by the
conferences of forums purpose of promoting company having a place
approved by the Minister tourism to Malaysia. of business and subject to
of Tourism and Culture tax in the country where
Malaysia. such outgoing or exp were
incurred.
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Exemption for conference
promoter
Other Entities Exemption for promoter of car or
w.e.f from YA 1997 : motorcycle races
Income tax exemption of 100% SI on
promoting and organising conference w.e.f from YA 1999 and exempts:
Exempts conference promoter
resident in Malaysia from is given to any other organisation
besides conference promoters that can • The driver of a racing car or
payment of income tax in respect motorcycle from the payment of
of SI derived from organizing bring more than 500 foreign
participants annually on conferences income tax in respect of the gross
conferences held in Malaysia income earned from competing in
with the condition that the total organised by them.
races of international standard held in
number of foreign participants Malaysia
brought in for conferences held
in the basis period for each YA • A promoter of car or motorcycle from
is 500 or more. the payment of income tax in respect
of 50% of the SI derived from the
organization of races of international
standard held in Malaysia
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EXAMPLE THEORY QUESTIONS
Question 1
Identify the expenses that would qualify for double deduction for the Year of Assessment 2020.
• Overseas expenses incurred by hotel and tour operators for the promotion of tourism
• Participation fees in outside Malaysia Trade Exhibition approved by MATRADE
• Advertisement of travelling packages outside Malaysia.
Question 2
Discuss the requirements to qualify for income tax exemption.
• The company must resident in Malaysia
• The company must be licenced under Tourism Industry Act 1992
• The tour must be a ‘group inclusive’ one, meaning that it includes transportation by land, sea or air and
accommodation of tourist from outside Malaysia
• The total number of tourist must be at least 750 in the basis period of a YA.
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Question 3
Shakir Tours Sdn bhd was incorporated in March 2015 to carry on a tour operating business. The company is keen to operate
inbound and outbound tours and has obtained a licence under the Tourism Industry Act, 1992 to carry out such activities.
Required: Advise Shakir Tours Sdn Bhd on the tax incentives available to the company and the conditions applicable to such
incentives. (5 marks)
Answer :
A company resident in Malaysia which is licensed under the Tourism Industry Act, 1992 carrying on a tour operating
business will be exempted from payment of tax in respect of 70% of the statutory income derived from group inclusive
tours and/or domestic tours.
The above exemption will apply if the number of tourists outside Malaysia on group inclusive tours for that company is not
less than 750 and the number of local tourists on domestic tours is at least 1500 in the basis period for a year of
assessment which is certified by a letter from the Ministry of Tourism.
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Question 4
State any three (3) activities that falls under promoted activities.
Answer ;
Establishment of medium and low cost hotel (up to 3 stars hotel);
Expansion/modernization of existing hotels;
Establishment of tourist project;
Expansion/modernization of tourist projects;
Establishment of recreational camps;
Establishment of convention centers.
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Thank You
