SST revision does not justify hotel rate hikes, MOF says

The Finance Ministry indicated that the sales and service tax (SST) does not warrant the hotel room rate increases asserted by some hotel associations.

The ministry clarified that the SST revisions effective July 1 do not include any change in the service tax applied to hotel accommodation or food and beverages (F&B) served at hotels.

“The SST revisions do not affect basic daily goods but may affect hotels indirectly through the expansion of service tax to cover rental on commercial properties, and also sales tax on selected food items such as premium seafood and imported fruits.

“However, these indirect impacts are unlikely to translate to a 10 to 15 percent increase in costs faced by hotels,” the ministry told Bernama when asked about a possible hike in hotel rates due to the extended SST.

The ministry was responding to claims by hotels that they would need to raise room prices by 10 to 15 percent following the revised tax structure.

The ministry added that if hotels proceed to raise rates on the pretext of the SST, the government, through the Domestic Trade and Cost of Living Ministry, will examine the matter to prevent unreasonable price increases.

“If there are hotels that do raise rates by 15 percent on the pretext of SST, the government, through the Domestic Trade and Cost of Living Ministry, will review the impact of SST on these hotels to ensure there is no element of profiteering,” it said.

- Bernama

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