Special tax relief encourages domestic tourism in conjunction with VMY2026 - PM (UPDATED)

THE special individual income tax relief of up to RM1,000, as announced under Budget 2026, is part of the government's efforts to encourage Malaysians to travel within the country in conjunction with Visit Malaysia 2026 (VM2026).

Prime Minister Datuk Seri Anwar Ibrahim said that not only would it invigorate the domestic tourism sector, but also stimulate local economic activity.

At the same time, he said, the initiative can help rebalance the trend of outbound tourism, which has increased following the strengthening of the ringgit. 

"Due to the strengthening of the ringgit, there are also side effects, as more Malaysians are travelling overseas to places like Thailand, Japan and Indonesia. As such, we are introducing additional measures to boost domestic tourism by providing a tax exemption of up to RM1,000 for spending within the country,” he said during the Minister’s Question Time in the Dewan Rakyat today as reported by Bernama.

He was replying to a supplementary question from Jimmy Puah Wee Tse (PH-Tebrau) regarding the recent influx of nearly 200,000 Malaysians to Thailand and spending around RM50 million there recently.

 Anwar has a;lso raised concerns over the high cost of domestic travel, particularly in major tourist destinations like Langkawi, stating that prices for accommodation and food are deterring local tourists.

“When comparing Langkawi with Phuket in Thailand, Langkawi clearly has the upper hand in terms of cleanliness and natural beauty, but the issue lies in its high costs — and this is something we must address,” said Anwar, who also serves as Finance Minister.

He added that discussions are underway between the Second Finance Minister and the Menteri Besar of Kedah to explore strategies to make domestic tourism more accessible to Malaysians.

The Prime Minister made the remarks while highlighting the government's ongoing efforts to promote Visit Malaysia Year 2026 (VM2026). He noted that 70 per cent of promotional activities would be conducted digitally, with the remainder utilising conventional methods.

To support these efforts, the Ministry of Tourism, Arts and Culture (MOTAC) has been engaging with industry stakeholders, including airline companies, to boost flight frequency and connectivity.

Anwar also reiterated the government’s commitment to positioning Malaysia as a key hub for Islamic tourism and syariah-compliant economic development.

“Six Islamic nations have proposed that Malaysia take the lead in expanding Islamic financial instruments and economic initiatives, and integrate them with tourism,” he said in Parliament.

“I agree that this must be reviewed, and I will instruct MOTAC to prioritise the development of more Muslim-friendly tourism programmes — those that are family-oriented and free from elements of haram (prohibited),” he added.

He noted that countries such as Turkiye and Qatar have already successfully implemented Islamic tourism strategies, and that Malaysia is well-positioned to play a leading role in this space due to its international standing in syariah-compliant finance and halal tourism.

The remarks come as Malaysia gears up for VM2026 and looks to revitalise its tourism sector through incentives such as special tax relief for domestic travellers. - October 14, 2025