Tour operators call for VAT intervention
TOURISM and Safari operators have called for intervention by relevant authorities following the expiry of the exemption of Value Added Tax (VAT) on accommodation and services offered to domestic tourists.
The Government propagated Statutory Instrument 193 of 2020 and Statutory Instrument 87 of 2021 which were all consolidated into SI 8 of 2022. The statutory instrument ensured that tour operators were exempted from paying VAT on various products and services to domestic tourists.
However, the statutory instrument expired on 31 July this year thereby inconveniencing tour operators who say they have to back pay. Addressing tour operators at a Bulawayo hotel on Friday, Zimbabwe Revenue Authority (Zimra) commissioner (Domestic Taxes) Mr Misheck Govha confirmed the expiry of the Statutory Instrument.
“SI 193 of 2020 exempted VAT on accommodation offered to domestic tourists and this expired on 31 July 2021. This exemption was extended with effect from 1 August 2021 for a further 12 months, which has since elapsed. SI 87 of 2021 exempting tourism services offered to domestic tourists expired on 25 February 2022. SI 8 of 2022 combined the two SIs and the exemption was effective for a 12 month for period 1 August 2021 up to 31 July 2022,” said Comm Govha.
Some of the goods and services which were exempted from VAT by the mentioned Statutory Instruments included food and beverages served at a place of accommodation, safari operations, touring and exploring national museums and monuments; and recreational activities provided by companies registered with the Zimbabwe Tourism Authority (ZTA).
Hospitality Association of Zimbabwe Mr Farai Chimba said the potential of tourism as a low hanging fruit is boundless and this may lead to double digit contribution from about seven percent.
“We will see the growth of the sector when we also acknowledge that as a sector we are at the end of the value chain. Multiple industries and bodies feed into the sector and we then pass on this cost on our final pricing. We call for a look at this whole value chain with the input of key enablers also given favourable licensing and operating environment. As we drive towards Vision 2030 we formally believe our sector plays a huge role in growing the economy collectively. Synchronising of the various departments and other sun sectors will go a long way to give competitiveness in our country,” said Mr Chimba.
Mr Chimba said some of the key issues that needed to be looked at included the VAT exemption which had since elapsed.
“Some of the key issues we are looking at as a sector that we feel need to be looked at include the VAT Exemption on accommodation and related tourist services. The last facility ended on 31 July 2022, that is the SI 8 of 2022 and we wish relevant authorities could look into it as we are still recovering. The case of tax on commissions for foreign agents is also another issue of concern,” said Mr Chimba.
While appreciating tax rebates on safari vehicles and capital equipment which is in place and benefiting operators, Mr Chimba bemoaned the online payments systems saying they inconvenience tour operators.
“The online system is very inefficient and causes all sorts of challenges as it takes time to launch transactions. When one thinks they have submitted successfully they will be surprised upon renewal of tax certificates to be told they have outstanding returns. “Refund processing takes too long while the announcement and gazetting of SIs must be synchronised so that there isn’t too much time lag between the two processes as Zimra does not honour the period before gazetting, for example the exemptions,” said Mr Chimba.