Home » Business » ZIMBABWE TAX AUTHORITY DEFENDS IMPOSITION OF 15 PCT VAT ON HOTEL ACCOMODATION

HARARE, March 3 ) — The Zimbabwe Revenue Authority (Zimra) says the value added tax (VAT) it is imposing on hotel accommodation for foreign guests is not unique to Zimbabwe but is common all over the world, including in neighbouring countries such as South Africa and Zambia.

Zimra Commissioner-General Gershem Pasi told the media here Monday that the tourism sector should not decry the introduction of a 15 per cent VAT on hotel accommodation for foreign guests as it was notified about the move two years ago.

Pasi added that players in the hotel sector should instead focus on creatively addressing cost structures which continue to make Zimbabwe an expensive destination.

The Zimbabwe government started effecting the tourism levy on accommodation this year although its introduction was announced in 2013 to give players time to adopt it.

Tourism players, backed by industry Minister Walter Mzembi, have criticized the levy which they alleged make it more expensive for foreign tourists and would likely negatively impact on the performance of the sector.
Tourism is seen as a low hanging fruit and one of the key sectors likely to drive Zimbabwe’s economic rejuvenation.

“We were one of few countries where tourists did not pay VAT on accommodation. Also to be fair to our (Finance) Minister (Patrick Chinamasa), he announced this not last year but in 2013 when he was delivering his budget,” noted Pasi.

“It was not a new tax. It was a tax that had been put on the books two years prior but there had been a stay of execution for one year. So it is not fair that the industry complains about the 15 per cent VAT.”

Pasi said tourism products in Zimbabwe were already expensive before the introduction of the levy while discounting claims by industry players that the tax made services exorbitant and had potential to choke the industry.

“What they should be doing is looking at their cost structures. Why is it that 100 (US) dollars here will buy you a mediocre room when in South Africa you will stay in a suite with the same amount?” he queried.

“Is it not time that we really looked at our cost structures rather than blaming a legitimate tax which should allow revenues to flow to Government and at least we can start to have a contribution from the sector? The way it has been handled its like it was an ambush but it was not an ambush.”

Besides the tax, the government is working on a tourism satellite accounting project which is targeted at improving collections and reporting of tourism earnings and statistics in the country.

The tourism sector in Zimbabwe is projected to grow by 4.7 per cent this year, up from 3.9 per cent in 2014.
This translates into tourist arrivals of about 2.1 million from 2.0 million last year.

It is estimated that hotel room occupancy will marginally increase to 54 per cent from 53 per cent in 2014

SOURCE: NEW ZIANA

Archives