Present Position

Present incentives for the tourism sector are biased towards inbound tourists. These incentives are in the form of Pioneers Status or Investment Tax Allowance for the tourist projects including hotels, tax exemption on income derived from at least 500 inbound tourists and double deduction on expenditures incurred in promoting tourism overseas.

Proposal

In line with the government effort to promote domestic tourism and to assist the hotel industry, it is proposed that:

1. companies organising domestic tour packages be given income tax exemption on income derived from domestic tour packages which are participated by at least 1,200 local tourists per year. For this purpose, a domestic tour package means any tour package within Malaysia participated by local tourists inclusive of transportation by air, land or sea and providing at least one night accommodation. Local tourists refer to those other than inbound tourists. This proposal will be effective for year of assessments 1999 and 2000; and
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3. one Saturday in a month be declared a holiday for the public sector. The working hours for that Saturday will have to be replaced by increasing the working hours of the other working days. The Public Services Department will issue a circular to implement this proposal which will be effective from January 1999.

Present Position

The country has the National Sports Complex, the National Theatre, the National Arts Gallery and Petronas Philharmonic Hall which are of international standards and have the capacity to accommodate large number of audience. Hence, these facilities should be utilised to the optimum throughout the year.

Proposal

In order to encourage the use of these facilities, it is proposed that cultural and arts shows, exhibitions, festivals and sports activities of international standards held at these places be given the following incentives:

1. income tax exemption be given on income earned by non-resident from performing in arts and cultural shows, participating in exhibitions, games and sports. This exemption will be given up to the year of assessment 2001;
2. income tax exemption of 50 percent be given on income earned by the organizers from organizing sports, cultural and arts shows, exhibitions and festivals involving foreign participation. This exemption will be given up to the year of assessment 2001;
3. admission tickets to cultural and arts shows, exhibitions, festivals and sports competitions be exempted from the entertainment duty; and
4. exemption of import duty and sales tax on goods sold by companies operating in the Industrial Free Zones (FIZ) or operating as Licensed Manufacturing Warehouse (LMW) during an approved sales carnival held at Bukit Jalil Sports Complex.

This proposal will be effective from Budget Day 1999.

Present Position

Malaysia will be hosting the "Formula One" racing in 1999. The event has been proven to attract large number of tourists as experienced in several European countries. Besides "Formula One" racing, our country has the capability of hosting other cars and motorcycles racing of international standards. As such, the event that would be held in Malaysia should be promoted because it would attract large number of tourists into this country.

Proposal

As a measure to attract cars and motorcycles racing of international standard to be held in Malaysia, such as "Formula One", it is proposed that the drivers and the organizers of such racing be given the following incentives:

1. income earned by the drivers be exempted from tax; and
2. income earned by the organisers be given tax exemption of 50%.

The proposal is effective from the year of assessment 1999.