PFM president Panchacharam P Nalliah said an extension of the waiver would help revive the struggling industry, especially since Selangor and Kuala Lumpur were the biggest markets for local movies.
“If Selangor extends the entertainment tax waiver to include local movies, then that will be a yardstick which we can use to campaign for other states to follow suit.
“Currently, 25% from every movie ticket sold is collected by the state, leaving the remaining 75% to be shared between the cinema operators and film producers,” he told FMT.
He was commenting on the Selangor government’s decision to waive the entertainment duty of 15% on all stage performances by local artistes.
Under the Entertainment Duty Act 1953, states can impose duties or taxes on every payment for admission to a place where entertainment is offered.
Panchacharam, commonly known as Pansha, said that in the longer term, entertainment duties for local movies collected by state treasuries should be refunded to film producers to help the industry, adding that this used to be the practice.
“In the 1980s, the Malaysian National Film Development Corporation (Finas) managed to get all the states to refund the entertainment duty collected from Malay films back to film producers.
“It lasted a few years but then they stopped the practice, as at the time Malay movies were doing well, and states were losing a lot of revenue.”
‘Review entertainment tax law’
Meanwhile, Para Rajagopal, owner of events company PR Worldwide, said the Entertainment Duty Act should be reviewed.
Para said there was a lack of clarity over how the Act in its current form benefitted the industry.
“Entertainment duties should be used for the betterment of the industry but there is no clear mechanism to demonstrate that they are (being used for this purpose),” he told FMT.
He said it was the consumer who ultimately bore the burden of the entertainment tax as businesses would pass it on to them.
“Additionally, the collection mechanism is stifling (the industry) as event organisers are required to pay the entertainment duty even before selling tickets,” he said.
Para said although refunds on the tax paid on unsold tickets would be given, this process took months.
He said a review of the Act should involve the input of the industry.
“Often, they do not consult industry operators. I think there has to be more dialogue between the industry and policymakers,” he said.