Special Tax Incentive for Hotel : Malaysia Budget 2026

With Visit Malaysia 2026, the Malaysian government is offering special tax incentives to encourage hotels and tourism operators to upgrade their properties and attract more international visitors.

One of the most important incentives is the tax deduction for renovation and refurbishment costs — something many hotel owners often miss or are unsure how to claim.

This guide explains what the tax deduction is, who is eligible, and how to claim it, in simple terms.

Tax Deduction for Hotels: What You Need to Know 

Normally, renovation and refurbishment costs cannot be deducted from tax. However, as part of Visit Malaysia 2026 incentives, the government allows registered tourism operators to:

✔ Claim a tax deduction on qualifying renovation and refurbishment costs
✔ Up to RM500,000
✔ For renovations carried out for business purposes

Effective period:
📅 Expenses incurred from 11 October 2025 to 31 December 2027

Who Can Claim This Tax Deduction?

You may qualify if you are:

• A hotel, resort, homestay, or tourism-related business
• Registered with MOTAC (Ministry of Tourism, Arts and Culture)
• Carrying out renovation or refurbishment for business operations

What Renovation Costs Are Usually Allowed?

Examples of qualifying renovation and refurbishment works include:

• Guest room upgrades

• Bathroom refurbishment

• Lobby or reception renovation

• Structural repairs and improvements

• Guest facilities upgrades

How to Claim the Hotel Renovation Tax Deduction (Step-by-Step)

✔ Step 1: Confirm Your MOTAC Registration

• Make sure your business is registered and active with MOTAC. Without this, the deduction will not apply.
  

✔ Step 2: Track Your Renovation Expenses Properly

Keep all:

• Invoices
• Payment receipts
• Contracts with contractors
• Renovation scope documents

👉 These documents are required during tax filing or audit.

✔ Step 3: File the Deduction in Your Tax Submission

• During your company income tax filing:
• Include renovation costs under qualifying tax deduction
• Cap the claim at RM500,00
• 💡 Best practice: Work with your tax agent or accountant to avoid mistakes

Final Takeway

Renovating or upgrading your hotel for Visit Malaysia 2026 is not only about enhancing guest experience — it can also help reduce your tax costs.

With tax deductions of up to RM500,000 available for qualifying renovation and refurbishment expenses, this incentive offers real financial benefits for eligible hotel and tourism operators. However, MOTAC registration is a key requirement to qualify for this tax deduction.

To help you take the next step, we’ll be sharing a complete step-by-step guide on how to apply for a MOTAC licence, so you can ensure your business is eligible and confidently claim this tax incentive.

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