They have cited thin profit margins and a lack of investors as challenges they currently face.
The Malaysian Film Producers Association (PFM) said the current tax rate of 25% is extremely high compared with that in many other countries.
“Indonesia’s entertainment tax is around 10%, and a similar rate is charged by many countries across the globe,” PFM secretary Zahrin Aris told FMT Business.
He said that the high tax rate affects the quality of movies and hinders the development of the industry, which is already struggling to secure investors and turn in a profit.
“The profit is so low that investors are not willing to take the risk of investing in local films,” Zahrin added.
He said profit-sharing between cinema operators and movie producers is done only after accounting for the entertainment tax.
Under the usual arrangement, a movie producer’s cut declines from 50% in the first week to 45% in the second, 40% in the third, and 35% for the fourth and subsequent weeks.
“Film producers also have to pay fees to secure the necessary certificates issued by the Film Censorship Board of Malaysia before a movie can be screened in cinema halls,” Zahrin said. “On top of that, a movie producer is also liable for corporate tax at the rate of 24%.”
“The reality is that we are struggling to turn in a profit as a result of the taxes imposed and the high profit-sharing ratios charged by cinema operators,” he added.
On July 7, deputy communications and multimedia minister Zahidi Zainul Abidin said his ministry would meet state governments to discuss the proposal to reduce or abolish the entertainment tax.
The collection of the entertainment tax is under the jurisdiction of the local authority.
Merdekarya founder Brian Gomez believes that Malaysians do not derive any benefit from the tax. Instead, he said, people end up paying more for “live” music shows.
The people must be given the right to be entertained without being burdened by taxes, Gomez told FMT Business.
“The tax is a legacy of the colonial era and I believe it should be abolished,” Gomez said. “There is no justification for its existence in the present day.”
From 2014 to 2016, Selangor alone earned an annual revenue of RM48.2 million, RM50.4 million and RM56.2 million from the tax.
An exemption given during the Covid-19 pandemic in 2021 resulted in an estimated RM50 million loss in revenue for the state that year.