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3.0 FINDINGS
The examination of Le Meridien Hotel’s annual report unveils several noteworthy findings
pertinent to tax incentives within the hotel and tourism industry.
3.1 Pioneer Status Eligibility
Le Meridien Hotel emerges as a qualifying entity for the Pioneer Status tax incentive,
showcased by its robust financial performance. The absence of recorded losses in the fiscal year
2023 positions the hotel favorably for potential benefits, entailing a substantial 70% exemption
from statutory business income for the upcoming year of assessment. This eligibility distinctly
aligns with the government’s proactive measures to stimulate economic activities in the hotel
and tourism sector, particularly favoring financially stable enterprises.
The anticipation of such a tax incentive holds strategic importance for Le Meridien Hotel, as it
not only signifies financial stability but also underscores the government’s recognition of the
hotel’s contribution to the industry’s growth. This favorable status can potentially translate into
enhanced competitiveness and increased attractiveness for investors and stakeholders alike.
3.2 Investment Tax Allowance (ITA) Eligibility
Le Meridien Hotel confidently satisfies the stringent conditions and criteria set by the Malaysian
government for Investment Tax Allowance (ITA). Engaging in construction, renovation, and
alteration projects strategically positions the company to leverage the benefits associated with
ITA. The detailed examination of Le Meridien’s Statement of Financial Position reaffirms its
eligibility for Investment Tax Allowance, as the company’s assets surpass its liabilities.
This eligibility serves as a testament to Le Meridien Hotel’s commitment to continuous
improvement and development within the industry. By investing in infrastructure
enhancements, the hotel not only enriches its own facilities but also contributes to the broader
tourism landscape, aligning with the government’s objectives for sustainable growth.
3.3 Qualifying Capital Expenditure for ITA
A detailed analysis of Le Meridien Hotel’s financial records on page 76 and 77 of the 2022
annual report discloses a substantial total qualifying capital expenditure of RM 87,984,000,
excluding the cost of freehold land. This significant investment positions the hotel to claim 60%
of the Investment Tax Allowance (ITA), a pivotal component in mitigating its tax liability. The
strategic allocation of ITA towards eligible expenditures holds considerable promise for Le
Meridien Hotel, potentially resulting in substantial tax savings.
Furthermore, the provision allowing the carry-forward of any unutilized Investment Tax
Allowance to subsequent years ensures a sustained advantage for the hotel. This flexibility not
only optimizes the tax benefits for Le Meridien Hotel but also underscores the government’s
commitment to fostering long-term investments within the tourism sector.
3.4 Deferred Tax Assets
Le Meridien Hotel boasts a stable and positive deferred tax asset position, revealing a figure of
RM 82,915,000 on page 120 of the 2022 fiscal year. Derived from overpaid taxes, this asset
serves as a financial buffer, positioning the hotel to receive future tax relief. The consistent
increase in deferred tax assets indicates prudent tax planning and financial management,
emphasizing Le Meridien Hotel’s commitment to optimizing its financial position.
This deferred tax asset is not merely an accounting entry but a tangible representation of the
hotel’s prudent financial practices. It underscores Le Meridien’s proactive approach to tax
management, ensuring that overpaid taxes contribute to the hotel’s future financial resilience.
This strategic use of deferred tax assets showcases the hotel’s commitment to long-term
financial sustainability.
3.5 Deferred Tax Liability
Le Meridien Hotel’s annual report 2022 reveals a deferred tax liability of RM 35,587,000 on
page 120 of the annual report, reflecting a slight increase from the previous fiscal year RM
34,389,000. This liability, representing taxes owed but not due for payment until a future date,
is a standard accounting practice. It does not necessarily indicate financial strain but rather
underscores the importance of strategic tax planning for sustained financial stability.
The nominal increase in deferred tax liability signals the hotel’s proactive stance in managing its
tax obligations. By understanding and planning for future tax liabilities, Le Meridien Hotel
exhibits financial prudence, ensuring that tax obligations are met without compromising its dayto-day operational efficiency.
In conclusion, the findings from Le Meridien Hotel’s annual report highlight its eligibility for
crucial tax incentives, offering a strategic advantage in managing its tax liability and promoting
sustained financial stability in the dynamic hotel and tourism sector. These findings not only
underscore Le Meridien Hotel’s commitment to financial optimization but also align with the
government’s initiatives to foster growth and competitiveness within the industry.
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