Malaysian live sector predicts collapse after 25% tax imposed

Malaysia’s live events sector has predicted “catastrophic economic consequences” after plans to reimpose a 25% entertainment tax in Kuala Lumpur were announced.

Malaysia’s Association for Live Performances (ALIFE) has called for an urgent review of taxation across the sector after the levy was imposed on ticket sales by city authorities. Live events had been exempted from the tax, which was first introduced at a national level in 2001, for the previous decade.

ALIFE has now written to government authorities outlining its opposition to the tax’s return, noting changes to the socio-economic landscape since it was last imposed. In particular, ALIFE noted the impact of the Covid-19 pandemic over recent years and the complications of collecting the tax following the switch to digital ticketing systems.

In the letter, ALIFE emphasised “the need for immediate action to prevent catastrophic economic consequences and to ensure the continued competitiveness of the live performance industry in the region”.

ALIFE noted that live performances are already liable for a 15% withholding tax, as well as levies and bonds related to touring artists. Officials should reconsider the overall burden on events organisers if they are to be competitive with peer nations such as Singapore and Thailand, the body added.

Loss of international concerts

In a statement, ALIFE said: “The sudden imposition of high entertainment tax rates could have severe repercussions, potentially leading to the industry’s collapse, especially when many producers are still recovering from nearly three years of inoperability during the pandemic.

“A modern and consistent approach to taxation is essential to enable the industry to compete with its regional counterparts. Notably, neighbouring countries like Singapore and Thailand impose 0% entertainment tax but collect Goods and Services Tax (GST) and Value-Added Tax (VAT) on tickets.

“Any rate higher than these countries’ tax structures would diminish Wilayah Persekutuan’s competitiveness, resulting in the loss of international concerts, festivals, and shows.”

ALIFE said recently that more than 70 events had been forced to adhere to the new tax legislation or face the cancellation of their shows.

ALIFE chairman Para Rajagopal said: “Live events constitute a substantial part of the nation’s cultural and economic fabric, generating income through accommodation, food and beverage, and transportation. They provide employment opportunities for countless young professionals within the gig economy and contribute to both domestic and international tourism.”