Tourism sector insured on VAT

The Chronicle

Leonard Ncube, Victoria Falls reporter
The GOVERNMENT has assured stakeholders in the tourism sector that the suspension of value added tax (VAT) on certain goods and services of the tourism industry will remain in place for the foreseeable future.

However, the industry should seek partnerships with local producers in order to reduce operating costs, said Environment, Tourism and Hotel Industry Minister Nqobizitha Mangaliso Ndlovu.

The minister challenged the tourism and hospitality industry to take advantage of the revival of the local economy to acquire various inputs for the sector to reduce operating costs.

He said the Treasury was aware of the challenges facing the sector, hence the decision to ensure that the sector continues to benefit from the VAT stay.

“As a government we will continue our VAT exemption system and I have agreed with the Minister of Finance (Professor Mthuli Ncube) and he said that for the foreseeable future he (waiver) will be there even until 2023 and, if necessary, it will go beyond, ”Minister Ndlovu said.

He said the decision shows the government is committed to preaching and partnering with the sector.

The minister, however, pleaded with industry leaders to play their part in ensuring that the tourism product is affordable for locals.

“Our plea is that we meet halfway,” Minister Ndlovu said.

The government has removed VAT payable on certain tourism goods and services in an attempt to promote domestic tourism and help the industry come back to life. The stay was announced by the Ministry of Finance earlier this year and was to last 12 months.

Various players in the tourism industry had called for a discount or zero rate on VAT to be able to operate, arguing that the domestic market was different from the traditional international market.

The devastating Covid-19 pandemic has forced hoteliers and tour operators to close, leaving thousands unemployed. Despite the easing of foreclosure restrictions and the industry showing signs of recovery, the government believes the industry still needs time to find its feet and will therefore continue with the waiver.

Minister Ndlovu, however, is concerned about the cost of local tourism products and services and believes that the partnership between tourism industry players and local farmers, in particular, can reduce operating costs. He said there were a number of cost drivers that can be eliminated through partnerships.

This comes as tourism players, especially hotels, source mainly from outside the country, particularly South Africa.

Tourism is a key contributor to the country’s gross domestic product and can guide the government’s vision for an upper middle-income economy by enhancing the enhancement of value addition in National Development Strategy 1 (2021-2025) .

“We must constantly strive to be competitive because cost is a key determinant of competitiveness. Let us be seen as providing better service at lower cost to attract more people to Zimbabwe and the volumes will certainly accelerate the recovery, ”said Minister Ndlovu.

“As a sustainable medium and long term strategy, we need to identify the cost drivers and break them down. There are inputs to the hospitality industry like food, we have communities that live around the industry and we have to see how much is contributing to the industry.

“Otherwise, it means we spend more inputs outside the country. These are the strategies we have to say as a sector isn’t it worth contracting out a local farmer to make tomatoes or onions and attaching a well qualified Agritex agent to provide skills so that we have also quality products, ”Minister Ndlovu said. .

He said that once input costs are reduced, tourism products and services will also be affordable for locals. – @ncubeleon.

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