PLAYERS in the tourism sector have expressed concern at Finance minister Patrick Chinamasa’s proposal to extend Value Added Tax (VAT) on payments for accommodation and tourism services by foreign visitors and are seeking to meet the minister to voice their concerns.
Chinamasa made the proposal in his 2014 national budget presentation last December.
Hotels in Zimbabwe will become uncompetitive and recent gains in tourist arrival figures reversed if the plan to extend VAT to non-residents goes through, said chief executive of Cresta Hotels, Glenn Stutchbury.
“The imposition of VAT will effectively increase prices by 15% and this will unquestionably make us uncompetitive and result in reduced numbers of tourists visiting the country,” he said. “Such a development would be a setback for an industry slowly climbing out of a decade-long recession and would hinder the travel and tourism sector’s drive to increase visitor arrivals and thereby increase foreign currency earnings by the sector.”
Stutchbury said hoteliers would try to engage the authorities on the issue so that the plan can be shelved for a minimum of five years.
Chris Chiparaushe, group general manager for Dunhu Ramambo — the holding company for Chengeta and Pamuzinda safari lodges as well as Umbozha Houseboats — added his voice to the calls for the shelving of the tax.
“This is not a good decision for the industry,” Chiparaushe said. “We had already decided on rates and these rates had been sent to international buyers. It becomes difficult to then turn around and say we have increased our rates to factor in VAT.”
He said that there was need to avoid killing the momentum the sector has begun to enjoy by making the country too expensive a destination. Chiparaushe said Chinamasa should delay the tax in the same spirit that he offered the sector tax rebates to encourage growth.
It has been national policy not to charge VAT on foreigners’ payments of accommodation and tourism-related services and when the VAT system was introduced in 2003, the travel and tourism sector was recognised as an exporter, exempt from VAT on foreign visitors’ payments.