The Income Tax (Exemption) (No. 9) Order 2021 [P.U.(A) 344/2021] (‘E.O. No. 9') was gazetted on 23 August 2021. E.O. No. 9 has effect from the year of assessment 2021 until the year of assessment 2022.

E.O. No. 9 exempts a qualifying person from the payment of income tax in a basis period for a year of assessment in respect of the statutory income derived from a qualifying activity. The exemption under E.O. No. 9 only applies the total number of local tourists for a qualifying activity is not less than 200 persons in a basis period for a year of assessment.

For the purposes of E.O. No. 9: 

  1. a ‘qualifying person' is a company resident in Malaysia which is licensed under the Tourism Industry Act 1992 to carry out a tour operating business and which carries on a qualifying activity; 
  2. a ‘qualifying activity' is a tour operating business which provides a domestic tour package for travel within Malaysia utilised by local tourist and foreign tourist, including transportation by air, land or sea and accommodation; 
  3. a ‘tour operating business' has the same meaning assigned to it in the Tourism Industry Act 1992, that is any business of providing all or any of the following services: 
    • arranging for sale or commission any transportation, accommodation, tour services or any other incidental services for tourists within or outside Malaysia;
    • organising or conducting for sale or commission inbound or outbound tours;
    • providing conveyances for hire to tourists; and
    • any other services incidental to any of the services enumerated above; 

    Notwithstanding the definition of ‘tour operating business', it must be noted that exemption under E.O. No. 9 only applies to statutory income of a tour operating business that is derived from the qualifying activity, that is domestic tour packages for travel within Malaysia which are utilised by local and foreign tourists. 

  4. the total number of local tourists and foreign tourists for a qualifying activity shall be verified in writing by an authorised officer of the Ministry of Tourism, Arts and Culture Malaysia. 

Where a qualifying person carries on a qualifying activity and an activity other than a qualifying activity, each activity shall be treated as a separate and distinct source of that qualifying person. A qualifying person who is granted an exemption from income tax under E.O. No. 9 shall maintain a separate account for the income derived from each of the aforesaid activities in the basis period for each year of assessment.


While it is doubtful that licensed domestic tour operators will derive much benefit from the tax exemption under E.O. No. 9 for the earlier part of this year due to the various movement control measures imposed over many parts of Malaysia, the gradual relaxation of these measure in the near future could result in a boom in the local tourism industry due to the release of pent-up demand for domestic travel.

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