AIRBNB WORKING OUT TOURISM LEVY WITH MALAYSIA
Government looking to close tax gaps caused by players in the digital economy
AIRBNB has agreed to work with Malaysia on tax collection, with initial efforts to focus on a tourism levy as the government prepares to cast a wider net on the digital economy.
The San Francisco-based home-sharing company is moving to finalise a deal with tax authorities, which will apply a new tourism tax of RM10 per night to Airbnb members who rent out five rooms or more. The tourism levy presages an agreement on goods and services taxes.
“We have been engaging the authorities in meaningful and productive conversations,” said Airbnb head of public policy for Southeast Asia Mich Goh.
“We want to help our hosts follow the rules, and we are actively keeping them informed of all regulatory updates,” she said.
The levies won’t stop there, says EY partner for indirect tax Aaron Bromley. After speaking with tax officials, he expects Malaysia to widen the scope of the tax to include Airbnb arrangements as early as this year. The country is one of Airbnb’s fastest-growing markets in Asia, with rentals jumping 137 per cent last year, said the company.
Malaysia’s actions are part of a regional trend to close loopholes and find ways of taxing new digital businesses from Netflix to Uber, said Bromley.
Internet-based companies are increasingly sophisticated at skirting tax laws, the Organisation for Economic Co-operation and Development (OECD) wrote in a report this week. It gave the example of flexible work contracts in the gig economy, which make it easier for tech companies to “minimise tax liabilities and reduce the tax base”.
Chan Wai Choong, executive director of PwC Malaysia, predicts the tax amendments will be issued with the next budget, slated for October. He said officials were studying the tax model of registering overseas vendors.
The Malaysian tourism tax is one symptom of the tensions between traditional and newer business models. Hotels balked when they were first required to pay the levy last year but home-sharing services were not.
“It would be fairer if all tourists are charged, whether they stay at higher-class hotels or Airbnb accommodation,” said Malaysia Budget Hotel Association President P.K. Leong.
Goh said Airbnb aimed to work “hand-in-hand with the government to help them realise the revenue potential that home-sharing offers”.