Goods & Service Tax (GST) impact on the travel industry

If you have been planning to go for a holiday, travel now to avoid paying GST! 

With the implementation of Goods & Service Tax (GST) in April 2015, cost of travel will increase as any travel on or after 01 April 2015 is subject to GST irrespective of when the booking was made.

This simply means, even if you make a booking with full payment today but travel 01 April 2015 onwards, the travel arrangement that you have purchase is subject to GST as the consumption of your travel arrangement is on or after 01 April 2015.

As of now, based on tax consultants interpretation of the GST laws, GST will be standard rated (6%) for all domestic travel (i.e. travel within Malaysia) – flights, hotel, entrance fees, tour packages…etc, except public transportation (example, bus tickets). For international travel, GST is zero rated for flight tickets, overseas hotels, overseas tour packages…etc. However service fees, travel insurance are standard rated (6%).

Your travel agent might absorb the charge or they may send you a “Tax Invoice” on 01 April 2015 to collect the GST from you. It’s best to check when you are making any travel arrangements for travel 01 April 2015 onwards.

Alternatively, the best thing to do is to go for a holiday and complete your travel before 01 April 2015 to avoid paying the GST.

Update 06 April 2015:
Royal Malaysian Customs Department (RMCD) revised the GST Guide on Travel Industry.

  1. Service fees imposed by Travel Agents for international flights will be zero rated.
  2. Domestic flights which is part of the international carriage and provided by the same supplier will be zero rated.
  3. Domestic flights which is part of the international carriage and provided under code-sharing will be zero rated.
  4. Amendment charges to Outbound Tour packages and international flight ticket are zero rated.
  5. Fuel surcharge incurred by any airline for domestic or international will be zero rated.

Update 09 April 2015:
Malaysia Airlines announced that all ticket issued prior to 01 April for travel on/after 01 April 2015, will not be subject to GST. However, ticket issed prior to 01 April 2015 and reissued on/after 01 April 2015 will be imposed GST.

Eugene

I'm a blogger and travel consultant. Working in the travel industry for over 18 years has allowed me to travel extensively in Asia and Europe. This blog allows me to share my travel experience and tips.

Leave a Reply

%d bloggers like this: