PETALING JAYA: The slew of tourism tax incentives announced in Budget 2022 will help stabilise people’s income and spur the ailing tourism industry, an expert said.
Azni Zarina Taha, of the Department of Management at Universiti Malaya’s faculty of business and economics, said the incentives would ensure that companies can recover faster from the impact of Covid-19 lockdowns.
However, the government would need to strike a balance between giving tax breaks and revenue collection.
“We cannot keep this up for long, but as a short-term measure, it can be done to spur tourism. This is a conundrum because the government needs to fork out money to manage the pandemic and companies need to survive lockdowns and reduce capacity,” she said.
In tabling Budget 2022, finance minister Tengku Zafrul Aziz announced seven key initiatives amounting to RM1.6 billion to revive the tourism sector, which had been badly affected by the Covid-19 pandemic.
They include tax reliefs, wage subsidies for tour operators, financing, promotional funds and maintenance of tourism infrastructure.
Tengku Zafrul said the government would extend several tax incentives, including income tax exemption to organisers of arts and cultural activities, as well as international sports and recreational competitions until the year of assessment 2025.
The exemption on entertainment duty, including for theme parks and cinemas in all federal territories, and the tourism tax exemption would be extended until Dec 31, 2022.
Apart from that, the special individual income tax relief for domestic tourism expenses of up to RM1,000 would be extended until the year of assessment 2022.
Calling this a “chicken and egg” situation, Azni said it was crucial that the government think about collecting more taxes in the long run to provide more grants, such as the RM50 million in matching funds for companies to organise arts and culture-related programmes.
“The government will need to think about how long it can sustain the costs without any revenue,” she said.
Source: https://www.freemalaysiatoday.com/category/nation/2021/12/03/tax-incentives-to-the-rescue-of-ailing-tourism-industry/