Tourism industry say new tax could hurt earnings

via Tourism industry say new tax could hurt earnings | The Source January 23, 2014

Players in the tourism industry say the recently introduced 15 percent value added tax on foreign receipts will hit the sector hard at a time when it was showing signs of recovery.

The 2014 national budget extended the VAT on accommodation services for non-resident tourists, which operators say is making Zimbabwe expensive.

“Tourist arrivals from South Africa are already on the decline following the weakening of the rand against the US dollar and the VAT on non-resident guests will worsen the situation,” said a Hospitality Association of Zimbabwe official, Jonathan Hudson.

“We had already made rates for 2014 (when the budget was announced) and had not factored in the 15 percent tax meaning that our earnings will fall similarly as government is going to demand its dues.”

Tourism executive, Clement Mukwasi said the industry is anticipating a negative reaction from its source markets.

“Tourists had already budgeted to come here and suddenly they are hit by a 15 percent increase. We are going to have a lot of some negative reaction from them,” he said.

Tourism’s contribution to the economy is expected to grow to 15 percent by 2015. In 2013, the sector improved by an estimated 3.4 percent. Average hotel room and bed occupancy levels, which averaged around 59 percent and 41 percent respectively in 2013, are expected to improve to 61 percent and 42 percent this year.

At least 2.1 million tourist arrivals estimated to have visited Zimbabwe by the close of 2013, a 17 percent growth from the 1.8 million recorded in 2012 boosted by co-hosting the 20th United Nations World Tourism Organization General Assembly last August.

The 2013 arrivals translate to $851 million in revenue, from the $750 million in 2012.