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Expert: Tourist Refund Scheme will bring more tourists

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KUALA LUMPUR, Malaysia – The Tourist Refund Scheme (TRS) under the Goods and Services Tax (GST) to be introduced in April 2015 can contribute to greater number of tourist arrivals.

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KUALA LUMPUR, Malaysia – The Tourist Refund Scheme (TRS) under the Goods and Services Tax (GST) to be introduced in April 2015 can contribute to greater number of tourist arrivals.

The Dean of the Hotel Management and Tourism Faculty at Universiti Teknologi MARA (UiTM) in Shah Alam Assoc Prof Dr Mohamad Abdullah Hemdi opined that as TRS allowed tourists to reclaim the GST paid, they would not curtail on their spending during their stay in the country.

“TRS is only applicable for the goods taken out of Malaysia by the tourist and does not apply on services or products paid for and utilised in Malaysia including hotel and food bills, and etc.

“Tourists should ensure the tax invoice is handed over with the purchase receipt to support the refund process. This scheme, however, is only applicable for tourists who use air transport and have spent a minimum of RM300 including of taxes at approved outlets,” he told BERNAMA.

BEING COMPETITIVE

According to the Royal Malaysian Customs GST Division Deputy Director, Tan Sim Kiat, the department is now in the process of choosing the TRS agents, who were responsible in identifying the outlets to refund the tax to the tourists.

The agents would identify the outlets to establish partnerships before GST is implemented on April 1, 2015.

“After the outlets are identified, the visitors could head to the respective outlets to buy duty free goods. When they buy the duty free goods to take back with them, they can reclaim the taxes, that will be refunded by the TRS agent,” he said when met at the 2014 National GST Conference, in July.

Mohamad Abdullah said zero rated goods (after the TRS) would make Malaysian goods more competitive at the global stage.

The tax rebate promotion for tourists and an efficient tax reclaim process will help make Malaysia a shopping destination and draw more tourists.

“GST will help reduce costs in conducting business in Malaysia and at the same time will enhance the competitiveness of the country’s tourism sector.

“Though the GST rate of six percent in Malaysia is reasonable, we should not forget our neighbours who may try to enhance their competitiveness by bringing down the tax rate in drawing visitors to their respective countries,” he said.

THE RATES STREAMLINED

An international business management lecturer at Universiti Utara Malaysia Prof Dr Mohamad Hanapi Mohamad said in Europe, visitors were allowed to reclaim their Value Added Tax (VAT) on their purchases and local services.

Therefore, he opined that TRS could be implemented effectively if all purchases were done with receipts and invoices that state the VAT of GST rates.

Speaking of the GST rates in Malaysia, Mohamad Abdullah said the six percent is the lowest among the ASEAN nations and it could drive the nation towards greater competitiveness.

Nonetheless, he admitted that the rates could affect the tour operators’ costing, when the additional costs were transferred to the tourists thus pushing up the price of tourism services.

“However, there is also a likelihood that the GST cost could be absorbed by tour operators so that they could compete,” he said adding that the tourism industry is highly sensitive to pricing wars.

THE INDUSTRY STAKEHOLDERS

Touching on ways to draw more tourists after the GST comes into force, he said the main thing that one has to ensure is that the tour operators avoid raising prices indiscriminately on the pretext of GST.

He said the accurate information and a transparent and an effective GST management would provide a helping hand for the industry.

The Ministry of Tourism and Culture, he said should cooperate with the GST Monitoring Committee to ensure tour industry players avoid manipulating tourists with wrong information on GST.

“I support the government’s effort of establishing the GST Monitoring Committee in ensuring GST implementation. The committee should ensure the policies, laws and guidelines relating to GST are sufficient and should monitor the implementation by the respective agencies,” he said.

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editor

Editor in chief is Linda Hohnholz.