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Guidelines for Accommodation


Introduction

The Guidelines for Accommodation, published on 26 February 2024, provide guidance on the application of service tax to the provision of accommodation premises in hotels, inns, lodging houses, service apartments, homestays and similar establishments.


Purpose

The guidelines aim to facilitate understanding on the scope of accommodation services that are within service tax, the tax rates, registration requirements, invoicing, payments and other operational aspects.


Key Points

The guidelines specify accommodations that are excluded like government premises, educational institutions etc.


It covers taxable supplies like theme park entries, corkage fees, seminar packages, spa services etc and illustrated examples.


Concepts of taxable values, deposits, cancellation fees are explained.


Transitional rules are outlined for the revised tax rates.


Frequently Asked Questions

  1. Q: If a hotel provides free parking to guests during their stay, does service tax apply? A: No, parking provided FOC to hotel guests during their accommodation period is not subject to service tax, as it is considered part of the accommodation package.

  2. Q: My hotel has an in-house spa which offers massage services to guests. Are these spa services taxable? A: Yes, massage services and other wellness services provided in-house are taxable at the standard rate under accommodation services.

  3. Q: I operate a small boutique hotel with less than 25 rooms. Do I need to register for service tax? A: Yes, you should register if the total value of taxable services provided exceeds the registration threshold of RM500,000 for a 12 month period, irrespective of the number of rooms.

  4. Q: Guests have to pay a corkage fee if they bring their own liquor to be consumed in my pub premises. Is the corkage fee subject to service tax? A: Yes, any corkage fee charged to customers is considered a taxable service under accommodation.

  5. Q: If a customer makes a room booking by paying in advance but fails to turn up, will the hotel charge a no-show fee? Is this fee taxable? A: Yes, the no-show fee will be subject to service tax if payment is received by the accommodation provider.


In summary, the guidelines establish service tax treatments and compliance requirements in the accommodation industry with effect from 26 February 2024.


A comprehensive coverage of rules, rates and operational issues is provided to ensure uniform adoption across hotels and related accommodation premises. Reference


335.1 Guidelines for Accommodation
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