The Zanzibar Revenue Authority’s (ZRA) recent ‘Implementation of Amended Infrastructure Charging Rates for Hotels’ is not a significant barrier to tourism, according to operators. But it was implemented at short notice at the start of the month, which has made it difficult for hotels and guests in Zanzibar to manage.

Flora Fubbs, Director of Operations at The Holiday Factory, which sells holiday packages to Zanzibar, told Tourism Update that, although there had been an infrastructure tax in place for a couple of years already at US$1 per person per night, this new increase came into effect with very little notice on July 1, meaning hotels had to collect an additional US$4 per person per night.

“It would have been much easier to manage had we had a bit more notice. It was a bit of a mad rush to contact all our clients with very little notice. Zanzibar is developing rapidly and definitely needs to invest in infrastructure. Presumably, this increase will allow them to invest more funds into the roads and other infrastructure on the island, which is ultimately a benefit to the tourism industry,” said Fubbs.

Marian Sandu, Owner of AfricaStay, added that the short notice had affected clients who were already on holiday, because they did not know about the increase until its implementation at the start of the month.

“The biggest challenge has been the short notice. Guests and hotels had to sort it out in-person in the hotel during their stay, which has been a bit of an inconvenience,” said Sandu.

‘Hotels not affected in the long term’

Sandu said although the tax would affect bookings to Zanzibar, it would not affect hotels in the long term.

“Overall, it will not affect hotels in the long term. Five- and four-star clients staying at luxury resorts will not have a problem paying the tax of US$5 per person per day. The lower-end of the market will be more affected as it caters for travellers that have a lower budget while on holiday.”

Despite the impact on the low-end market, Fubbs said the Zanzibar Government had been smart with regard to tiering the increase.

“Guests who travel to Zanzibar on a very tight budget, like backpackers, for example, only pay US$2, two- and three-star hotels US$4, and four- and five-star hotels US$5. For luxury hotels, the US$5 is not a massive percentage.”

Fubbs concluded that the tax introduction did not affect the upfront price of its packages to Zanzibar, as guests settled the tax on departure from the hotel.

Increased tax fee

The ‘Implementation of Amended Infrastructure Charging Rates for Hotels’ means that guests will now have to pay an increased tax fee when staying at any hotel in Zanzibar.

Chairperson of the Zanzibar National Chamber of Commerce, Ali Amour, said infrastructure tax changes needed to be implemented in accordance with the laws.

"The purpose of increasing the infrastructure tax has great benefits in developing tourism in Zanzibar because when the tax increases, it enables the government to implement its programmes, including having better road infrastructures for tourists,” he said.

Requirement

The following are the new infrastructure charging rates for hotels:

Implementation

The following section has been taken from the ZRA public notice that contains the implementation details of the law:

“The hotel infrastructure tax is payable by the guest in any hotel residing in Zanzibar. The hotel management is a lawful agent responsible for collecting such tax as provided under the Tax Administration and Procedure Act, Number 7 of 2009.

“To ease the administration of Infrastructure tax for hotels in the year 2023/2024 and reduce inconvenience to the respective taxpayers with a forward sales agreement at the repealed rates, the following guidance may be adopted:

(a) All agents (hotels) with justifiable lawful verified cause may be allowed to pay the lawful agreed required infrastructure tax by instalments upon application to the Commissioner General as provided under section 40 of the Tax Administration and Procedure Act, Number 7 of 2009 within three months from July 1, 2023.

(b) All agents (hotels) with justifiable lawful verified cause may be allowed to extend part of payments of the lawful agreed required infrastructure tax not later than October, 2023, upon application to the Commissioner General as provided under section 31(4) of the Tax Administration and Procedure Act, Number 7 of 2009.”