HOTELS in Zimbabwe will become uncompetitive and recent gains in tourist arrival figures could be reversed if a plan to extend value added tax (VAT) to non-residents goes through, according to Cresta Hotels chief executive officer Glenn Stutchbury.
In the 2014 national budget, it was proposed that VAT be imposed on payments for accommodation and tourism services by foreign visitors.
Hotels in Zimbabwe are opposing the move and urging a rethink, in the best interests not only of the travel and tourism sector, but of the whole economy.
“The imposition of VAT will effectively increase prices by 15% and this will unquestionably make us uncompetitive and result in reduced numbers of tourists visiting the country,” he said.
“Such a development would be a setback for an industry slowly climbing out of a decade-long recession and would hinder the travel and tourism sector’s drive to increase visitor arrivals and thereby increase foreign currency earnings by the sector.”
Stutchbury said hoteliers were embarking on an exercise to engage authorities in discussions on the issue and gain a shelving of the plan for a minimum of five years. Until now it has been national policy not to charge VAT on foreigners’ payments of accommodation and tourism-related services.
When the VAT system was introduced in 2003, the travel and tourism sector was recognised as an exporter, exempt from VAT on foreign visitors’ payments. Stutchbury said the sector now felt strongly that after a slow but determined emergence from a 13-year period of depressed trading, the time was not right to undertake action that would have a detrimental effect on growth.
Such an impact would result in a drop in tourist arrivals with reduced growth for the travel and tourism sector and either stagnation or reduction in employment levels.
Stutchbury is the former president of the Zimbabwe Council for Tourism and was the winner of the 2013 Hospitality Award from the Hospitality Association of Zimbabwe for services to the industry.