ZIMBABWE: Zim Collects $1,65m Tourism VAT

Hard–hit Zimbabwe government collected a total of $1,65 million from value added tax (VAT) on non-resident tourist accommodation in the four months to April this year, a top official has revealed.

Willard Manungo, Finance ministry’s permanent secretary, on Monday told Parliament that government was aware of implications surrounding the VAT introduction and this was consistent with developments within the southern African regional countries.

“From a fiscal point of view, we continuously monitor the environment to try and ensure that we don’t undermine the recovery of the tourism sector,” he said adding that the VAT was only introduced based on submissions from tourism stakeholders.
The permanent secretary noted that government from 2009 introduced rebates on capital goods and suspension of duty on vehicles imported under tourism sector as way of supporting the tourism industry in expansion initiatives and refurbishment of hotel facilities.

“In 2014 alone, the concessions that we gave with regards to tourism industry, we have foregone over $2 million in terms of duty that should have been paid by the sector again as a way of trying to improve the sector’s competitiveness,” he said.

He added that 33 tourism operators had so far benefitted from the rebate on capital goods related to the tourism sector while the suspension of duty on motor vehicles imported by the sector had benefitted about 22 tourism operators.

“All in all, 55 operators have actually been able to benefit by way of concessions on both capital goods as well as on motor vehicles,” said Manungo.

This comes as the Zimbabwe Tourism Authority (ZTA) has already pleaded with tourism operators to maintain last year’s rates despite the introduction of levy on foreign accommodation as a way of boosting tourism.

“This year we have agreed that industry will pay and they are already paying the 15 percent but they can’t change their rates,” ZTA chief executive Karikoga Kaseke recently said.

“It means the tax is eroding into their revenues and profitability. I don’t know what will happen when we let them increase rates next year. It will be bad,” Kaseke said.

The tourism boss noted that his organisation was not ruling out the possibility of a reversal of the decision to impose the tax.

“The 15 percent VAT has been lumped on industry whilst efforts to try and persuade fiscal authorities are underway and the minister (Walter Mzembi) is very much pushing for reversal of that decision,” said Kaseke.

In January this year, Zimbabwe unilaterally imposed a 15 percent tax on foreign tourists’ accommodation to enhance its depleting coffers.

The southern African country has not been charging VAT on foreigners’ accommodation payments and tourism-related services for the past decade.

When the Vat system was introduced in 2003, the travel and tourism sector was recognised as an exporter and was exempt from VAT on foreign visitors’ payments.

Tourism is one of Zimbabwe’s major foreign currency earners, generating $827 million in 2014, down from $856 million in 2013