Why did Selangor fail to collect RM17 million in entertainment duty?

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Selangor's Entertainment Duty Shortfall Reaches RM17 Million

A substantial shortfall of RM17 million in entertainment duty collection has been identified in Selangor, representing a significant potential loss of revenue for the State Treasury (PNS). This deficit stems from a combination of factors, including a failure to adhere to established collection procedures, inadequate monitoring and enforcement, and under-collection due to incorrect rates and calculation discrepancies.
Deficiencies in Collection and Monitoring Processes

The Auditor-General's Report (LKAN) highlights that the collection of entertainment duty by PNS was not conducted in strict accordance with applicable rules and acts. This procedural non-compliance has led to notable weaknesses in both the collection mechanisms and the subsequent monitoring of outstanding payments. Consequently, a portion of the entertainment duty remains uncollected, with arrears accumulating from various entertainment premises.
Breakdown of Uncollected Revenue

The RM17 million shortfall is distributed across several entertainment sectors. Theme parks account for the largest portion, with RM11.41 million in uncollected duty. Sports competitions represent another significant area, with RM4.09 million not collected. Movie theatres saw a shortfall of RM530,000, and non-ticketed entertainment premises contributed RM176,760 to the total deficit. Furthermore, the report noted an RM87,000 potential loss of receipts due to the non-application of compounding penalties.
Issues with Rate Application and Calculation Adjustments

Beyond procedural lapses, the under-collection of entertainment duty is also attributed to the inconsistent application of collection rates. Discrepancies in the calculation of adjustments for the year 2021 have resulted in the duty being collected at incorrect amounts. These calculation errors, alongside the broader issues of non-collection and arrears, have contributed to the overall revenue gap.
Need for Enhanced Enforcement and Licensing Compliance

To address these shortcomings, the report emphasizes the necessity for enhanced monitoring and enforcement activities. These measures are crucial to ensure that entertainment premises remit payments that accurately reflect the actual type of entertainment provided. Additionally, PNS is called upon to take appropriate action against owners operating without the requisite licenses and to actively assist them in obtaining valid permits, thereby improving overall regulatory compliance.

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Why did Selangor fail to collect RM17 million in entertainment duty?

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