KOTA KINABALU, 6 February 2025: The Malaysian Tourism Federation (MTF) is appealing to the government to reinstate the sales tax exemption for tourism vehicles to support the tourism industry’s recovery and preparations for Visit Malaysia Year (VMY) 2026, which is expected to attract 35 million tourists.
The exemption, previously in place until 31 December 2022 and later extended to 31 December 2024, was introduced to ease the financial burdens on tourism operators during the Covid-19 pandemic. However, as the industry was still in a recovery phase at the time, many operators could not fully utilise the exemption. With its expiration, operators face increased costs just as a fleet replacement becomes critical.
Tour operators caught off guard
Malaysia’s ageing tourism vehicle fleet needs to be replaced with modern, high-tech buses equipped with the latest safety features is necessary to maintain service quality and ensure a comfortable travel experience, the federation points out.
However, many tour operators are caught flat-footed by the expiration of the sales tax exemption, making it difficult for them to commit to fleet upgrades.
MTF President Datuk Tan Kok Liang stated: “The tourism industry has only recently recovered from the pandemic, and cash flow remains a key concern. Reinstating the sales tax exemption will provide much-needed cost relief, allowing operators to invest in new vehicles and improve transportation services ahead of VMY 2026 and enhancing Malaysia’s appeal as a travel destination”.
Depending on the model, a 10% sales tax on a single excursion bus amounts to between MYR70,000 and MYR100,000. This added cost discourages investment in fleet renewal, just as demand is set to rise.
Call for a six-month extension to July 2025
“Given that the delivery of a new excursion bus takes six to nine months, an additional six-month extension of sales tax exemption would encourage operators to place orders while alleviating financial burdens. Extending the exemption will provide certainty and much-needed support for industry players looking to modernise their fleets in preparation for VMY 2026.
“If this reinstatement is approved, tour operators and stakeholders would certainly be encouraged to take advantage of this incentive and to commit to new vehicle purchases, ensuring that Malaysia’s tourism transport infrastructure is ready to meet the anticipated surge in visitors,” Tan concluded.
