HARARE: The Zimbabwean government has raked in $1.6 million from a disputed 15% value-added tax (VAT) on foreign tourists. Zimbabwe introduced the new levy early this year in a bid to widen its revenue base. It’s not fair for the tourism industry to be complaining on the move to pay 15% VAT
Hospitality industry players argue that the tax levied on foreign tourists’ accommodation could make Zimbabwe a more expensive tourism destination compared to its neighbours, dampening efforts to revive the depressed sector.
Finance secretary, Willard Manungo defended the levy before a parliamentary committee on tourism on Monday, saying it was the norm in the region and they had raised $1.6 million between January and April. At this rate, by December $4.8 million could be raised.
“Tanzania is on the upper end, applying 18 per cent, while Seychelles and Mauritius both charge 15 per cent,” he said. “South Africa charges 14 per cent, while Botswana charges 12 per cent. “Zambia is the only country in the region which does not have the levy in place.”
The tourism industry’s contribution to the economy is expected to grow to 15% at the end of 2015. Zimbabwe Revenue Authority (Zimra) Commissioner-General, Gershom Pasi defended the levy saying it was legitimate. “It’s not fair for the tourism industry to be complaining on the move to pay 15% VAT.
“The way it has been handled, it’s like they were ambushed but this is not an ambush,” he said. Tourism players contend that the move to impose a 15% tax on hotel accommodation for foreign tourists shows high levels of desperation.
The tax, introduced in January, has reportedly prompted cancellations by foreign tourists, some of whom had made bookings well in advance. The tourism industry, which claims to have lost $6 million in potential revenues in the last quarter of 2014 due to Ebola scare, registered 4 per cent tourist arrival growth during the nine months to September 30, 2014.
In his 2015 budget statement, Finance minister, Patrick Chinamasa said the sector was projected to grow by 4.7 per cent in 2015 as compared to 3.9 per cent in 2014, translating to about 2.1 million tourist arrivals in 2015 from last year’s 2 million.
