Malaysia Hotel Tax 2025: Comprehensive Guide for Hoteliers to Fees & Rates

As a hotelier in Malaysia, understanding the various taxes and fees is crucial for compliance, financial planning, and managing operational costs. With different taxes imposed at national and state levels, staying informed about the latest hotel tax requirements ensures your business runs smoothly and avoids potential penalties.

This guide outlines the key taxes that impact Malaysia’s hotel industry in 2025, including the Tourism Tax (TTX), Service Tax (SST), and other local fees such as the Heritage Fee and Pahang Lestari Fee. Let’s dive into the complete list of taxes and fees you need to know.

Complete List of Malaysia Hotel Taxes and Fees for 2025

1. Tourism Tax (TTX)

The Tourism Tax is levied on foreign tourists who stay in hotels or other lodging facilities throughout Malaysia. This tax is designed to support the development of tourism infrastructure and initiatives in the country. 

1. Rate: RM 10 per room per night (for foreign guests only).
2. Applicability: All hotels, resorts, and guesthouses, regardless of star rating, are required to collect this tax from foreign guests.
3. Filing Requirement: Hotels must file monthly Tourism Tax returns with the Royal Malaysian Customs Department (RMCD).
   
   

For more information and frequently asked questions about the Tourism Tax, check out our blog here. 

2. Service Tax (SST)

SST, or Service Tax, is a consumption tax imposed by the Malaysian government on certain goods and services. It was reintroduced in September 2018, replacing the Goods and Services Tax (GST) system. For hotels, the Service Tax applies to accommodation and related services, designed to simplify the tax structure and ensure that services provided by businesses contribute to the national revenue.

1. Rate: 8% of the total taxable service amount.
2. Applicability: Any hotel with an annual turnover exceeding RM 500,000 must charge SST on taxable services.
3. Filing Requirement: SST returns are generally filed every two months, based on your company’s taxable turnover.

3. Heritage Fee

Specific to states with rich cultural heritage, such as Penang and Melaka, this fee helps fund the maintenance and preservation of historical landmarks. The fee is paid by hotel guests but collected by the hotel.

1. Rate: RM 2 per room per night.
2. Applicability: Hotels operating in heritage zones or cities like George Town and Melaka.
3. Filing Requirement: Fees are typically remitted to the local authorities on a monthly or quarterly basis.
   
   

Read also Melaka Heritage Fee: A Practical Guide for Hoteliers

4. Pahang Lestary Fee

Unique to Pahang state, is an environmental conservation charge implemented in the state of Pahang. This fee is used to support sustainable tourism practices and the conservation of natural resources within the state.

Travellers staying in Pahang can expect to pay this additional fee, which contributes to the preservation of Pahang's rich biodiversity and natural beauty.

1. Rate: RM 3 per room per night.
2. Applicability: Hotels located in Pahang, including popular tourist destinations like Cameron Highlands and Taman Negara.
3. Filing Requirement: Fees are collected from guests and remitted to the state government on a regular basis.

A complete guide to Pahang Lestari Fee is written in this blog.

5. Service Charge

While not a government-mandated tax, many hotels implement a service charge, typically ranging from 5% to 10% of the total bill. This charge is meant to cover the cost of service provided by hotel staff, distributed among staff as gratuities and is commonly included in guest invoices. As this is not a government tax, hotels do not have to file returns for the service charge but must maintain transparent records of its distribution.

Potential Penalties for Non-Compliance

Failing to comply with Malaysia’s hotel tax regulations can lead to significant penalties, which could harm your business. Penalties for non-compliance may include:

1. Fines and Back Taxes: Hotels may be required to pay fines or back taxes for failing to properly collect and remit the Tourism Tax, SST, or other fees.

2. Business License Revocation: Local authorities may revoke a hotel’s business license if it fails to comply with local taxes, fees, or operational requirements.

3. Legal Action: Continued non-compliance could lead to legal action, further damaging your hotel’s reputation and financial stability.

Preparing for Tax Audits

To prepare for potential tax audits, consider the following best practices:

1. Maintain Organized Financial Records: Keep detailed records of all transactions, taxes collected, and remittances to ensure smooth audits.

2. Consult a Tax Professional: Regularly consult with a tax professional who can help you navigate complex regulations and stay compliant.

3. Use Reliable Accounting Software: Ensure that your accounting systems are integrated with your hotel’s property management software to automatically calculate and track taxes.

Future Changes to Hotel Taxes

While these are the primary taxes and fees applicable in 2025, Malaysia’s hotel tax landscape is constantly evolving. Hotel operators should remain vigilant as potential changes to tax policies may introduce new fees or adjust existing rates.

For example, the Melaka government previously proposed an increase in the Heritage Fee to RM3  -RM5 in June 2024; however, this decision was later retracted. This illustrates that changes can happen at any time, and hoteliers must be prepared for potential updates that could impact their operations.

To stay informed about any forthcoming changes, it is advisable for hotel operators to regularly consult with local authorities and tax professionals. Engaging with industry associations can also provide valuable insights and updates on the evolving regulatory landscape.