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Gershem Pasi

The Zimbabwe Revenue Authority (Zimra) says tax on hotel accommodation for foreign guests is not unique to Zimbabwe but is common all over the world including in neighbouring countries such as South Africa and Zambia.

Zimra commissioner general Gershem Pasi told the media that the tourism sector should not decry introduction of a 15 percent Value Added Tax (VAT) on hotel accommodation for foreign guests as it was notified about the move two years ago.

Pasi said players in the sector should instead focus on creatively addressing cost structures which continue to make Zimbabwe an expensive destination.

The government started effecting the tourism levy on accommodation this year although its introduction was announced in 2013 to give players time to adopt it.

Tourism players, backed by industry Minister Walter Mzembi, have criticised the levy which they alleged makes it more expensive for foreign tourists and would likely negatively impact on the performance of the sector.

Tourism is seen as a low hanging fruit and one of the key sectors likely to drive Zimbabwe’s economic rejuvenation.

“We were one of few countries where tourists didn’t pay VAT on accommodation. Also to be fair to our (Finance) Minister (Patrick Chinamasa), he announced this not last year but in 2013 when he was delivering his budget,” said Mr Pasi.

“It wasn’t a new tax. It was a tax that had been put on the books two years prior but there had been a stay of execution for one year. So it’s not fair that the industry complains about the 15 percent VAT.”

Pasi said tourism products in Zimbabwe were already expensive before the introduction of the levy while discounting claims by industry players that the tax made services exorbitant and had potential to choke the industry.

“What they should be doing is looking at their cost structures. Why is it that $100 here will buy you a mediocre room when in South Africa you will stay in a suite with the same amount?” he queried.

“Is it not time that we really looked at our cost structures rather than blaming a legitimate tax which should allow revenues to flow to the government and at least we can start to have a contribution from the sector? The way it’s been handled it’s like it was an ambush but it wasn’t an ambush.”

Pasi said there was nothing wrong with tourists contributing to tourism development through the tax.

The levy widens the base for the state revenue collector which is already battling with high demand for funding from the government.

Besides the tax, the government is working on a tourism satellite accounting project which is targeted at improving collections and reporting of tourism earnings and statistics in the country.

The tourism sector in Zimbabwe is projected to grow by 4.7 percent this year, up from 3.9 percent in 2014.

This translates into tourist arrivals of about 2.1 million from two million last year.

It is estimated that hotel room occupancy will marginally increase to 54 percent from 53 percent in 2014. — New Ziana.