KUALA LUMPUR • Foreigners staying at paid lodgings in Malaysia will be charged a flat rate of RM10 (S$3.20) per night as tourism tax, while Malaysians will now be exempted from it completely, Tourism and Culture Minister Nazri Aziz said yesterday.

The tax, which is meant to be implemented from next Tuesday, was initially announced last month, with a rate of between RM2 and RM20 per night depending on the type of hotel accommodation, and both Malaysians and foreign tourists would be affected. But that decision was greeted with a howl of protest from the tourism industry and many Malaysians.

Sarawak's Tourism Minister Abdul Karim Rahman Hamzah called for a deferment of its implementation in his state and in Sarawak, insisting that the federal government had no right to impose the new tax on these two states under the 1963 agreement to form the Malaysian federation. Sarawak a few days later announced it was withdrawing from the Malaysian Tourism Board.

To calm the ruckus, the federal government met industry stakeholders including tour operators, the Royal Malaysian Customs Department and the state authorities before coming with the new rate that will exempt Malaysians and settling on a fixed fee for foreigners.

"Whether they (locals) stay at five-star or zero-star hotels, all Malaysians are exempt from the tourism tax," Datuk Seri Nazri told reporters yesterday. "The flat-rate mechanism will ease the Customs' collection duties and at the same time make it easier for the ministry to make estimates."

He said to fund the tourism promotion activities of state governments, RM1 from this tax would be returned to them for every RM10 collected.

The move to tax the hotel industry comes as the Malaysian government takes steps to generate higher tax returns to boost its income.

THE STAR/ASIA NEWS NETWORK