Latest Tax Incentive for Tour Operators

In conjunction with Visit Malaysia Year 2026, the government has announced an extension and enhancement of the existing tax incentive for tour operators, aimed at further boosting inbound tourism activities.

Current Position

Under the existing policy, companies operating tourism packages are eligible for 100% tax exemption on statutory income derived from the following activities:

1.Domestic tourism packages participated by at least 1,500 local tourists annually

2.Inbound tourism packages participated by at least 750 foreign tourists annually.

This incentive has been available from the year of assessment 2007 to 2020.

To mitigate the impact of COVID-19 on the tourism industry, the government made the following revisions in 2021:

• The domestic tourism threshold was reduced to 200 local tourists per year;
• The minimum requirement for foreign tourists was temporarily waived; and
• The incentive period extended to the year of assessment 2022

Proposed Incentive

To support Visit Malaysia Year 2026, the government proposes that:
Tour operators will be granted 100% income tax exemption on incremental income derived from inbound tourism packages, subject to the following conditions:

1.The operator must bring in at least 1,000 foreign tourists annually; and
2. “Incremental income” refers to the difference between the current year’s qualifying income from inbound tourism and the previous year’s income.

Effective Period

Applicable for Years of Assessment 2026 and 2027.
This initiative aims to stimulate inbound tourism growth, accelerate the recovery of the tourism sector, and strengthen Malaysia’s position as a leading international destination.