KUALA LUMPUR, July 18 – A coalition of 122 local business groups coined as Industries Unite is campaigning for the total abolition of the Entertainments Duty Act 1953. 

The 122 groups are represented by associations such as Malaysian Association for Arts, Live Events, Concerts and Festivals (ALIFE), Malaysia Shopping Malls Association (PPK), Malaysian Association of Themeparks and Family Attractions (MATFA) and Malaysian Association of Film Exhibitors (MAFE).  

During a recent press conference, Industries Unite is calling for not just the abolishment of what they deemed as an ‘outdated’ Act but also calls for a standardised policy while pointing out the positive impact for the country if the Act were to be removed. 

Here’s a breakdown of some of the points behind the group’s campaign:

What is the Entertainments Duty Act 1953?

The Entertainments Duty Act 1953 was introduced during the colonial era to generate revenue from luxury activities, which at the time included commercial amusements such as cinema screenings, theme parks, concerts, and sporting events.

While the tax levy initially peaked as high as 50 to 60 per cent, subsequent policy updates—most notably a major tax reform in 2001—saw the rate reduced to 25 per cent. 

Most recently, during the tabling of Budget 2024, the federal government slashed the entertainment tax for the Federal Territories to just 10 per cent. 

The Selangor state government followed suit under its Budget 2025 by reducing its state-level entertainment tax from 25 per cent to 15 per cent to boost local tourism, though standard cinemas and family attractions were excluded from this relief and continue to be taxed at the legacy 25 percent rate.

Lawyer Datuk David Gurupatham, who was present as one of the panelists at the press conference, however pointed out that calling for the total abolition of the Entertainments Act is complicated due to every state reserving the right to impose it, making it hard for it to be standardised. 

“Why it’s complicated is because the right to impose an entertainment tax is a right that is given to the states, under the Ninth Schedule of the Federal Constitution.

“So individual states have that right to tax. But then we also have the Entertainment Act of 1953 regulation, and that’s an empowering act. 

“In other words, it gives the government certain powers to see and regulate or manage how states actually impose this tax and how it is allocated, and so on and so forth,” he said. 

He added that through the group’s call, they are hoping to establish a working relationship with the federal and state governments alike while also calling for the re-look into the Act. 

Gurupatham also cited the rising cost of living, labour and doing business are also amongst the factors behind the call for the abolishment. 

Current issues with the Entertainments Act

Apart from the Act being a colonial-era law, Industries Unite pointed out how the law failed to reflect the current entertainment state in Malaysia where they claimed is one of the critical drivers of tourism, culture and creative economy rather than being seen as a luxury. 

The group also presented the challenges they faced with the Act in their respective industries. 

ALIFE’s senior advisor Rizal Kamal, representing the live event sector, said that a common misconception is that the tax only affects massive international concerts but in reality, it penalises all ticketed live performances including theatre, comedy clubs, musicals, dance and cultural showcases. 

The weight of this policy falls heaviest on grassroots performers, local venues, and independent promoters. 

Driven by punitive administrative rules, organisers are forced to pay the 25 per cent entertainment tax based on total venue capacity rather than actual sales, trapping crucial cash flow before the event even starts.

Fragmented regulations across states also makes it hard for artists to do domestic touring due to confusing patchworks of different tax rates, approval processes and administrative interpretations depending on the state or municipality they perform in. 

“Different municipalities have different policies, so there is no one stable policy. 

“In terms of us who want to do shows, we have to go to that specific municipal council and check what the entertainment tax rate is and we have to appeal, because if we don’t appeal, a lot of it would be at the standard 25 per cent. 

“Sometimes when we appeal, we could reduce it to even as low as five per cent and this is for nearly all states in Malaysia. Long term investments cannot thrive under this short-term policy,” Rizal said. 

He added that in some cases, the outcome of the appeal depends on personal connections and talking to the right people. 

On the cinema front, MAFE chairman Koh Mei Lee highlighted the stark disparity where traditional cinemas bear a levy up to 25 per cent, while digital streaming (OTT) platforms pay zero entertainment tax (though OTT platforms have been subject to an eight per cent Digital Service Tax since 2020).

Koh noted that cinema operators are still recuperating from heavy pandemic-era losses amid a permanent global shift in audience behaviour and shrinking Hollywood output. 

With viewers now highly selective, cinemas are largely reserved for massive blockbusters, leaving mid-tier films to wait for streaming releases. 

Koh stressed that these interconnected operational challenges, compounded by the rigid tax, heavily strain local operators.

Meanwhile, MATFA and PPK, representing theme parks and shopping malls, took aim at the broad definition of ‘entertainment.

They pointed out that an act originally designed to tax colonial-era adult vices is now being used to penalise healthy, family-friendly recreation. 

The associations argued the law should be completely repealed to eliminate legal ambiguity and stop taxing family-friendly and community activities.

What to gain with Entertainments tax gone

Industries Unite—the coalition behind the successful campaign for the Federal Territories tax relief—argued that abolishing the duty nationwide would unlock massive economic multipliers. 

Live events, for example, trigger a lucrative trickle-down effect directly benefiting hotels, retail, transport, and local employment.

Rizal noted that the Federal Territories’ tax exemption for international shows until 2028 has already demonstrated what stable policy can achieve.

“KL has experienced remarkable growth in international concerts and live entertainment, attracting investment, creating employment, and generating significant economic activity across tourism, hospitality, retail, and transportation.

“This growth has contributed substantial revenue to the Federal Government through tourism, corporate taxes, income taxes, SST, and the wider economic activity generated by a thriving live entertainment industry,” Rizal said.

According to the group’s economic modeling, a total abolition of the tax could double public attendance and drive a 150 per cent growth in tax revenues within two years, alongside lowering ticket prices. 

Rizal added that while KL is currently the hub for live events, states like Penang, Sabah, and Sarawak possess similar untapped potential to become major cultural destinations.

Historical precedent strongly supports this projected growth where MAFE highlighted that a previous tax cut in 2001 drove a steady 13 per cent average annual growth in Gross Box Office which was accompanied by the addition of over 1,200 cinema screens nationwide by 2019.

The recent Federal Territories tax reduction showed a similar contrast. Under the pilot, KL’s box office metrics saw a positive three per cent shift and added 30 new screens. 

Meanwhile, cinemas outside the capital—still tied to legacy state tax rates—suffered an 18 per cent box office decline and lost 32 screens.

For shopping malls, PPK shared that the space dedicated to leisure and entertainment has surged from under five per cent to up to 30 per cent of net lettable area over the last decade, now driving roughly 22 per cent of total mall revenue. 

Eliminating the tax would directly empower malls to generate stronger economic returns through increased visitor spending and enhanced tourism appeal, while continuing to provide safe leisure and recreational venues for families.

Ultimately, Industries Unite is calling for closer cooperation and a joint federal-state collaboration to establish a clear, unified roadmap toward the total abolition of the Entertainments Duty Act 1953.