Airbnb wants ‘fair’ tax structure as Putrajaya sets sights on e-commerce revenue

Airbnb South-east Asia, Hong Kong and Taiwan general manager Mike Orgill speaks during a media briefing in Kuala Lumpur July 2, 2019. ― Picture by Yusof Mat Isa
Airbnb South-east Asia, Hong Kong and Taiwan general manager Mike Orgill speaks during a media briefing in Kuala Lumpur July 2, 2019. ― Picture by Yusof Mat Isa

KUALA LUMPUR, July 2 — Airbnb said today it welcomes Putrajaya’s proposal to tax its services along with other online firms, but pressed for a “fair structure” amid growing scrutiny over the Singapore-based firm’s revenue.

“Yes, of course we should have tax across the board,” Mike Orgill, its South-east Asia, Hong Kong and Taiwan general manager, replied to queries from the press here.

“But have a fair tax structure.”

Both the past Barisan Nasional government and present ruling Pakatan Harapan have honed in on the home-sharing company after policymakers said they want to start taxing Internet-based commerce, but the cross-border nature of some of these businesses makes collection tricky.

Most major tech-based firms like Airbnb and Grab are based in Singapore, where corporate tax is among the lowest in Asia.

Airbnb’s assertion today suggests a call for an amicable solution to the tax impasse, and that it was ready to sit with regulators to negotiate a deal that would benefit all stakeholders.

Four days ago, Airbnb released a potential regulatory and tax framework for short-term rentals in Malaysia, which its head of public policy for South-east Asia Mich Goh said was aimed at growing the country’s tourism industry and addressing local needs.

This comes after Tourism, Arts and Culture Ministry said in April it plans to review policies and laws to regulate the accommodation premises industry, especially unregistered hotel operators and online vacation home rental services.

Currently, only foreign guests are forced to pay tourism tax set at RM10.

Deputy Minister Muhammad Bakhtiar Wan Chik said the policy was important to regulate short-term accommodation activities like Airbnb’s.

He asserted that the firm has yet to register with his ministry, which makes its listing illegal.

Airbnb said its host and guests generated some RM3 billion in estimated direct economic impact last year, registering more than 3.25 million guests in Malaysia over the 12 months with over 53,000 listings.

This accounted for a 73 per cent jump year-on-year. Malaysia continues to be the fastest growing country for Airbnb in the region for the second year running, the company said. Kuala Lumpur is also its top 20 cities in turnover terms.

The company did not reveal how much it profited from their Malaysian listings that same year.

Airbnb is facing growing community opposition in many cities of the developed world, where it continues to be entangled in disputes with local authorities.

Surveys and studies carried out in these cities showed similar recurrences of problems that arise from Airbnb's business, including rental inflation.

This has resulted in the displacement of poorer local communities, as tenants hike property prices and rent up to force families out.

Cities like Madrid and Barcelona in Spain for example, have banned Airbnb rentals in some locations.

There has yet to be a study carried out in Malaysia to see if similar effects are taking place.

However, Airbnb insists that its business has a trickle-down effect to benefit local communities, either through rental yields or tourist spending.

This, they say, is based on a survey carried out on hosts and guests.

However, it did not provide a detailed breakdown to prove how much of tourist money returns to the local communities it is said to benefit.

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