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PUBLISHED: Mar 10, 2015 5:12pm

Local hotels keep service charge, will impose GST

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KUALA LUMPUR, March 10, 2015: 

The Goods and Services Tax (GST) will have a minimal impact on the local hotel industry but teething problems are, nevertheless, expected when the new tax regime is implemented on April 1,

Malaysian Association of Hotels president Samuel Cheah Swee Hee said members are now in a better position to implement the GST after having attended numerous sessions with the Customs Department to gain relevant technical knowledge.

“I believe we have no issues in implementing the GST. However, we expect some hiccups when we switch over to the GST from the current Sales and Service Tax (SST) after March 31.

“Just like the transition that took place during the Y2K problem. Computers had to be updated with new information and programmes to prevent havoc resulting in the coding of computerised systems around the world at the beginning of the year 2000.”

Asked if guests would have to fork out more during their stay at the association’s 808 member hotels, he said “they need not worry as the GST would be replaced with the SST” but with a slight adjustment.

“For example in SST, the room rate could be RM100 plus a 10% service charge and 6% service tax with the final amount coming up to RM116.

“But with GST, the rate stays at RM100 and service charge at 10%, bringing it to RM110. GST is then charged on the RM110 and the room rate will finally amount to RM116.60. As such, the guest only needs to pay an additional 60 sen.”

However, Cheah said 50% of association members would only charge the normal hotel rate and GST without the 10% service charge as agreed to when minimum wages were implemented in 2013.

“So hotels that currently operate without the service charge will not be affected at all.”

Cheah also said the association was still awaiting clarification from the government to waive payment of the GST for customers doing advanced hotel bookings.

He said it was unfair for customers to pay the GST upfront as a refund, in the case of a cancellation, would be cumbersome.

On the outlook for hotel industry, Cheah expected a slow down for this year, following the downtrend in the global tourism industry.

“Due to the economic slowdown, we have seen a decline of about 8-15% in hotel bookings from Chinese, Middle Eastern and European guests.”

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