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.
In line with the government effort to promote domestic tourism
and to assist the hotel industry, it is proposed that:
- 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
- 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
Presently, benefits in kind is deemed to be an income and is subject to tax.
Benefits in kind, among others, include the benefits or amenities consisting of leave
passages provided for the employees and members of their immediate families by their
employers. However, under section 13(b)(ii) of the Income Tax Act, 1967 leave passages
not exceeding three times within the country and one passage abroad in a calendar
year are exempted from income tax.
As a measure to curb the outflow of funds, it is proposed that the tax exemption
in respect of benefits in kind in the form of leave passages abroad be capped at
the maximum of RM3,000. The exemption for leave passages within the country will
be maintained as it will promote domestic tourism.
This proposal will be effective from 24 October 1998.
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.
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:
- 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;
- 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;
- admission tickets to cultural and arts shows, exhibitions,
festivals and sports competitions be exempted from the entertainment duty; and
- 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.
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.
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:
- income earned by the drivers be exempted from tax; and
- income earned by the organisers be given tax exemption of
The proposal is effective from the year of assessment 1999.
Currently, luxury boats and yachts repair and maintenance activities are not
given any tax incentive. Langkawi, a popular tourist destination, will be able to
attract owners of luxury boats and yachts who have relatively high purchasing power,
especially if repair and maintenance facilities for their boats and yacths are available.
Hence, Langkawi has the potential to be a regional centre for the repair and maintenance
of luxury boats and yachts.
To ensure that Langkawi becomes a leading regional centre for the repair and
maintenance of luxury boats and yachts, it is proposed that such activities undertaken
in Langkawi be granted income tax exemption for a period of 5 years.
This proposal will be effective after Budget Day 1999.