Live event promoters in Malaysia hope state governments will reduce, or better still, remove the 25 per cent entertainment tax.
Arts, Live Festival and Events Association (ALIFE) chairman Paramanathan Rajagopal also expresses concern that industry players will be further hit next year – due to the economic uncertainties that may impact consumers’ spending patterns.
This comes as Malaysia is set to host a list of world-class acts, including Billie Eilish, Justin Bieber, Jay Chou, and Blackpink.
“The live entertainment industry has many levels of individuals and companies, from (those) producing (acts at) small venues, to concerts in stadiums, which include arts, music, and comedy (shows). Ninety per cent of the revenue is generated from ticket sales,” said Paramanathan.
“This 25 per cent (tax) is going to be added to the ticket price and the consumers will have to absorb it. If ticket prices are too high, attendance will be affected, resulting in financial losses to the producers.
“There are multiple costs involved in putting on a show. It is a high-risk business, which involves multiple factors – from artistes falling ill, to bad weather, a pandemic, or an accident. The producers’ profit margin, if all goes well, is only between 10 and 15 per cent. The 25 per cent tax is on gross sales,” he added.
In July, Deputy Communications and Multimedia Minister, Datuk Zahidi Zainul Abidin said his ministry would meet with state governments to discuss the proposal for entertainment tax to be cut, or reduced.
“There has been no formal engagement with the ‘live’ events industry,” said Paramanathan.
“ALIFE, in the course of our discussions with the Selangor government, was shocked to find out that Kuala Lumpur had gone back to demand the full 25 per cent entertainment tax. Some promoters have already received their notices to pay this amount.”
In April, the Selangor government had said that the tickets for stage performances by Malaysians would be exempted from taxes until Dec 31, this year. This exemption did not apply to foreign artistes.
Paramanathan explained that promoters also had other taxes to pay.
“We also need to pay the 15 per cent withholding tax imposed on international artistes. The Immigration security bond depends on the artiste’s nationality. If the artiste is a United States national, it is RM2,000 per pax, and RM1,500 for non-US nationals. This bond is to be paid to the Immigration Department in case the promoter, artiste or crew fails to exit the country after the show.
“We also need to pay a deposit of RM30,000 for each international show, and RM10,000 for a local show. The amount cannot be rolled over if there are two shows in the same month.
“ALIFE has been engaging with Kuala Lumpur City Hall to reduce these amounts and to allow the roll-over. We heard that City Hall is considering allowing the roll-over following the hue and cry from local producers.”
Paramanathan added that the government had approved a waiver on the entertainment tax due to the impact of the Covid-19 pandemic that crippled the ‘live’ entertainment industry in Malaysia and around the world.
But he said that the waiver only applied to acts held in Kuala Lumpur, and that it had to get the Finance Ministry’s approval.
“We are very concerned about 2023… the actual market sentiments (will be seen) post-Covid-19. ‘Revenge’ buying will end, and inflation, and other economic factors will really hit consumer spending.”
The depreciation of the ringgit against the US dollar is expected to exacerbate things. The ringgit is at RM4.46 against the greenback.
“For international events, yes … the ringgit has depreciated almost eight to nine per cent, and that is quite a big jump in our show fees payment.
“Also, most suppliers in the events industry buy sound and lighting equipment from abroad, and in USD. These cost more now, compared to a few months ago. Logistics and flight tickets are also higher, due to our ringgit.”
Paramanathan pointed out that Singapore and Thailand do not impose entertainment tax, and instead, impose Goods and Services Tax, (GST) and Value-Added Tax (VAT) respectively, on the tickets.
“We should also follow the same system, so it’s fair to all industries.”
“In my opinion, five per cent (entertainment tax) is fair.”
