22 February 2019
Dear Members,
We would refer members attention to the letter from the Royal Malaysian Customs Department (RMCD), Ref: KE.HF (146) 769/13 Klt 17 (12), dated 28 January 2019, and we quote a paragraph from the said letter as below on the above matter.
“Perkhidmatan pengurusan pelancongan yang dimaksudkan didalam Peraturan Cukai Perkhidmatan 2018 adalah syarikat pelancongan (travel agency) yang menyediakan perkhidmatan mengendali dan menguruskan aktiviti pelancongan di dalam Malaysia kepada pelanggan dalam dan luar negara.”
Click here to view the official letter from RMCD.
MATTA Meeting with RMCD
MATTA met with RMCD (with En. Faizulnudin bin Hashim, Timbalan Pengarah, Bahagian CDN, RMCD, and his officers) on 15 February 2019 to seek further clarifications on the said letter.
At the said meeting of 15 February 2019, we were informed by En. Faizulnudin on the following:
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All inbound and domestic travel and tourism management are subject to Service Tax under the SST 2018. Outbound travel management is not subject to Service Tax.
It was further explained as below on way of reporting and payable amount of Service Tax by travel agents as below:
Concept A: Total Amount Billing
In any inbound or domestic tourism management, if a travel agency charges the customer with a total amount for the tour.
Example: For RM100.00 package, the service tax to be paid is 6% onto the total amount; which is (RM100.00 + RM6.00 = RM106.00) payable by the customer.
Concept B: Itemised Billing
The other method of Service Tax calculation is based on itemised billing.
Example: For RM100.00 package, the total amount of RM100.00 is broken up, or itemised, into as follows:
Accommodation: RM30.00
Transport: RM20.00
Food & Beverages: RM30.00
Management service by travel agency: RM20.00
Based on the itemised billing method, the Service Tax to be paid is based on the RM20.00 charged for management services by the travel agency; which is (RM20.00 + RM1.20 = RM21.20) onto the RM20.00 for management services.
At the said meeting, we had highlighted and explained the following:
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The method of Concept A: Total Amount Billing of Service Tax to be paid onto a total amount is not correct as there could be elements of double taxation of Service Tax as suppliers of accommodation and transportation could have also paid Service Tax when they sold their services to the travel agency.
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The method of Concept B: Itemised Billing is not correct and should not be done, as then travel agency business practice will be exposed to the customer in their margin, or management fees, they are charging to the customers.
We have been receiving questions and inputs from members on the above mentioned matter and we are preparing a paper to the Government on the serious adverse implications of the decision taken by the RMCD.
We are writing to members to provide further input and suggestions on the above matter. Kindly revert to us by 26 February 2019, Tuesday (2.00 pm), as we want to submit our paper to the Government soonest, as accordingly to RMCD, the above of Service Tax on Tourism Management Services is effective on 1 March 2019.
Kindly send your feedback to MATTA HQ (Attn: Ahmad Fadzly) at fadzly@matta.org.my.
We hope to receive your input soonest.
Thank You.
JIMMY THOO
VP Inbound & Domestic
Term 2017 - 2019