Ministry seeks tax reduction in tourism sector

THE ministry of Tourism will soon engage the Finance Ministry over burdensome taxes that have hampered the sector’s quest to fulfil 100-day targets, businessdigest has learnt.

By Kudzai Kuwaza

The tourism industry has bemoaned the tax regime affecting the sector, particularly the 15% value-added tax on tourism, which they say has made the Zimbabwean product more expensive. The cash-strapped government in January 2016 unilaterally introduced the levy on foreign tourist accommodation in a move seen as a desperate measure to augment the government’s dwindling revenues. This was despite appeals and protests from stakeholders in the tourism sector, who viewed the tax as tantamount to choking them out of business.

Tourism permanent secretary Thokozile Chitepo told businessdigest last week that her ministry will engage the Finance Ministry to address the issue of taxes affecting the sector.

“The ministry will shortly be engaging the ministry of Finance on the matters regarding taxes,” Chitepo said.

“At the same time the ministry will have this matter addressed under an Inter-ministerial Committee on Tourism Facilitation that is to be established under government’s 100-days programme.”

Research conducted by the Zimbabwe Council for Tourism revealed that the country would experience a 75% drop in the number of foreign tourists and lose up to US$124 million per year if the levy is not reviewed downwards.

Hospitality Association of Zimbabwe president Innocent Manyera welcomed the negotiations over taxes between the two ministries. “It is a welcome development especially after the outcry over the taxes,” Manyera told businessdigest this week.

“If the taxes are reduced we can then work on sprucing up our facilities and become more competitive.”

He said the reduction of taxes was all the more essential, considering that the sector has been struggling during the last 20 years of economic decline.

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