Tourism goods VAT scrapped

GOVERNMENT has removed Value Added Tax (VAT) payable on selected goods and services in the tourism sector in an effort to promote domestic tourism and catapult the industry back to its hey days.

The reprieve will be in place for the next 12 months and is expected to assist the sector to recover from the adverse effects of Covid-19 travel restrictions.

Various stakeholders in the tourism industry have been calling for a discount or zero rating on VAT to be able to operate arguing that the domestic market was different from the traditional international market. Hoteliers and other tourism service providers were forced to close, leaving thousands of workers jobless.

The VAT reprieve is contained in the Statutory Instrument 87 of 2021 gazetted by the Minister of Finance and Economic Development, Professor Mthuli Ncube as part of measures to facilitate vibrant domestic tourism.

"It is hereby notified that the Minister of Finance and Economic Development has in terms of Section 78 of the Value Added Tax Act made the following regulations, which may be cited as Value Added Tax (General) (Amendment) Regulations 2021 (No. 56), that, supply of the following services to domestic tourists for a period of twelve months from date of publication," read part of the new S.I.

The selected goods and services include food and beverages served at place of accommodation, shuttle services, car rental services, marine and ferry services, sport fishing, safari operations, tourism and exploring national museums and monuments, recreational activities provided by companies registered with the Zimbabwe Tourism Authority.

 The SI defines a domestic tourist as a person who visits but does not sleep at the place or in the area visited. In January last year, the Treasury also suspended Customs and Excise duty payable on specified motor vehicles imported by safari operators for a period of 24 months to December 2021 through SI 276 of 2019.

This also included suspension of duty on selected powdered milk and specified alcoholic beverages also imported by the tourism sector. Tourism Business Council of Zimbabwe (TBCZ) chief executive, Mr Paul Matamisa, welcomed the development saying it will result in reduced costs for domestic tourists, which could boost volumes.

The Government prioritises the recovery of the tourism sector hence the $500 million Tourism Support Fund introduced by the Treasury last year to guarantee tourism players' access to loans from banks. This was part of an $18 billion Economic Recovery and Stimulus Package availed by Government.

Of this package, a total of $20 million was meant to provide seed capital to kick-start a Tourism Revolving Fund while Value Added Tax (VAT) payable by tourists for accommodation and visitor services at 14,5 percent, was waived.

Players in the tourism industry had appealed to the Government for a 50 percent slash of permits and licence fees so as to capacitate the industry to revive operations. They cited VAT as one of the contentious issues as they felt the tax was too high and made Zimbabwe as a destination expensive.

The just ended Easter holiday saw the industry recording about 20 percent bookings especially on the accommodation side.