‘Positive signals on tourism tax cuts’

The ministries of Tourism and Finance have agreed on the prices of certain products in the tourism sector, which have been obstacles to its operations, businessdigest has learnt.

This comes after the tourism industry bemoaned the tax regime affecting the sector, particularly the 15% value-added tax on tourism, which they claim 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 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 this week that there has been movement in terms of negotiations over the issue.

“We have made some progress on certain specific items there is no blanket (on all items),” Chitepo said.

“However I cannot go into detail until the appropriate time.”

She also revealed earlier this year that the ministry will have this matter addressed under an Inter-ministerial Committee on Tourism Facilitation that was to be established under government’s 100-day 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.

Former tourism minister Walter Mzembi spoke out strongly against the tourism levy. “The sector and myself still believe that it’s early days to impose such a full-blown tax on foreign arrivals that we are still trying to recover,” he said.

“I often hear arguments about Zambia or that other countries are doing it. Why not us, but really, we are coming from different backgrounds given our history of a country under sanctions, at least in the travel market, until 2009. So, we need taxation creativity in other areas that do not constitute a barrier to entry and growth of the sector.”
Tourist arrivals increased by 15% from 480 510 to 554 417 in the first quarter of this year. —Staff Writer

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