KUALA LUMPUR: Travelers and tourists who purchase duty free cigarettes in airports will now have to declare and pay taxes on their duty free cigarettes before entering Malaysia.
This new regulation is akin to adding more burden to duty free retailers who are already suffering significantly from the Covid-19 pandemic, said The ZON Duty Free, one of the largest duty free retail groups in Malaysia.
The ZON Duty Free, a member of Atlan Holdings Bhd Group of Companies, had estimated its outlets to suffer further losses because of this regulation.
This unnecessary problem comes at a time when duty free operators like The ZON is facing extremely low customer traffic due to border closures and flight restrictions for over a year.
The ZON Duty Free director Ong Bok Siong duty free cigarettes are one of the most popular items among travellers.
"We have many customers who come in to our outlets just to buy cigarettes but then ended up buying other products as well. By making duty free cigarettes not duty free, we expect to lose more than cigarette sales.
"In addition, we also expect a lot of confusion when customers expect to get duty free prices and then realise they have to declare and pay taxes when they exit the airport into Malaysia. Is this the experience we want our foreign tourists to have?" he said in a statement today.
He said clearly, the government is not doing the tourism and retail industry any favours in putting in place this policy.
"We foresee many duty-free retailers will cut jobs, if not close completely, before the Covid-19 comes to an end.
"We would like to urge the government to reconsider taxing duty free cigarettes at airports. Instead, we hope that the government will provide assistance to the tourism and retail sector to recover and contribute further to the Malaysian economy," he said.
In Budget 2021, finance minister Tengku Zafrul Tengku Abdul Aziz said taxes would be imposed on cigarettes and tobacco products on all duty-free islands and any free zones that have been permitted retail sales of duty-free cigarettes, which now has been enforced by the The Royal Malaysian Customs.
This requirement is currently impacting the duty-free operators in duty free islands and free zones.
The ZON Duty Free is part of public-listed Duty Free International, of which 75 per cent is held by Atlan Holdings.
It operates stores at Bukit Kayu Hitam, Padang Besar, Pengkalan Hulu, Langkawi, Rantau Panjang, Penang International Airport, Tioman Airport, KLIA, Melaka Airport and Johor Bahru.
Source: https://www.nst.com.my/business/2021/03/676727/unfair-tax-duty-free-cigarettes-airports-adds-burden-retailers-says-zon