HomeBusinessTourism sector urged to embrace the 15% VAT

Tourism sector urged to embrace the 15% VAT

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ZIMBABWE Revenue Authority (Zimra) Commissioner-General Gershom Pasi has urged the tourism sector to embrace the 15% Value Added Tax (VAT) which was introduced by Treasury in January, arguing this would enable government to draw a meaningful financial benefit from the sector.

BY TARISAI MANDIZHA

The cash-strapped government early this year introduced a 15% VAT on foreign tourists in a bid to widen its revenue base.

Speaking at a media briefing on Friday, Pasi said it was unfair that the tourism players were complaining over the introduction of the 15% VAT when the plan was initially announced by Finance minister Patrick Chinamasa way back in 2013.

“It’s not fair for the tourism industry to be complaining on the move to pay 15% VAT. The Finance minister announced this in the 2013 Budget that government would introduce 15% VAT effective in 2015. The way it has been handled, it’s like they were ambushed but this is not an ambush,” Pasi said.

He said players in the tourism sector should now work on their cost structures as the 15% VAT was already in place.

“The 15% VAT is legitimate tax and will allow revenue to flow. We need everyone to be willing to contribute and with the 15% VAT from the tourism sector government will have a meaningful contribution,” he said.

In his 2015 Budget statement, Chinamasa said the sector was projected to grow by 4,7 % in 2015 as compared to 3,9% in 2014 and this translates to tourist arrivals of about 2,1 million in 2015 from last year’s two million tourists.

“For the hotel business, the average room occupancy is expected to close the year at 53% and is anticipated to rise to 54% in 2015.
“Consequently, bed occupancies are also expected to increase to 38,5% in 2015, from 38% in 2014,” Chinamasa said.

Government introduced VAT in 2003, but the tourism sector was exempted from tax payments as it was duly recognised as an exporter.
Experts argued that reintroduction of the levy would be regressive following gains made in the tourism sector over the years.

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