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Oliver Kazunga Senior Business Reporter
THE Zimbabwe Revenue Authority (Zimra) has defended the 15 percent tax on hotel accommodation for foreign tourists saying the requirement was not unique to the country.Finance and Economic Development Minister Patrick Chinamasa introduced a 15 percent Value Added Tax on foreign tourists’ payments for accommodation and tourism-related services while presenting his 2015 national budget.
Players in the sector strongly object to the move on the grounds that it makes Zimbabwe an expensive destination.
The players feel the tax has an effect of making the country less competitive compared to regional countries, which affects arrivals and earnings from the lucrative sector.
Zimra commissioner general Gershom Pasi, however, feels it is unfair for the tourism industry to complain over the introduction of the 15 percent VAT.
He says other countries levy up to 22 percent on hotel accommodation.
“What the tourism sector is saying is unfair to Zimbabwe. The issue of the 15 percent VAT on hotel accommodation was introduced some two years ago but its implementation was put on hold after the tourism sector asked the government to delay its implementation to this year,” Pasi told Business Chronicle.
“In some countries VAT on foreign tourists is as high as 22 percent. So, I don’t understand what’s so special about Zimbabwe for not charging VAT on hotel accommodation for foreign tourists when in actual fact such a tax is being charged the world over by other countries except Dubai.”
The Zimra boss said countries such as China, the United Kingdom, South Africa, Zambia, Botswana, Australia and the United States of America were charging VAT on hotel accommodation.
“Instead, the tourism sector should call for the adjustment of cost structures in the sector, which are making the country an expensive destination. To say that the country shouldn’t charge VAT on hotel accommodation is unfair,” he insisted.
Since 2009, the tourism industry has remained one of the major economic mainstays generating $827 million last year down from $856 million in 2013.
Tourist arrivals in Zimbabwe increased by 2,6 percent to 1,880,028 last year from 1,832,583 recorded the previous year.
At its peak in 1999, Zimbabwe’s tourist arrivals from traditional source markets such as Europe, the United States, Australia and Asia stood at 600, 000 per annum compared to the current 240,000.
Online Reporter