The 15% VAT levy on tourism accommodation in Zimbabwe is discouraging tourists and has the potential to result in job losses and a 7.7% decline in tourist arrivals, according to a study published by the Zimbabwe Council for Tourism (ZCT).

Francis Ngwenya, President of ZCT, said the imposition of VAT on accommodation for foreign visitors, which was implemented by the Zimbabwean government in January 2015, has already had an effect on tourism with a decline in arrivals.

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By increasing accommodation costs by more than 5%, the study showed that 75% of tourists visiting Zimbabwe, and especially Victoria Falls, would reduce their length of stay and would decide not to visit again. ZCT said room occupancy rates for foreign visitors continued to slow, adding that the average hotel room occupancy rate was 18% in 2014 and 15% in 2015.

The analysis in the study also showed that the 15% VAT on lodging, food and beverage would result in a nett public sector revenue of US$10 million (R152 million) but would also cause 32 013 job losses in the tourism sector.

Ngwenya said while African tourist destinations were increasing VAT, which would result in Africa getting a smaller share of the 1.8 billion tourists projected for 2020, other countries were reducing VAT. He said France had reduced its VAT from 19.6% to 5.5% and created 50 000 new jobs; and Germany reduced its VAT from 19% to 7% and increased jobs by 2.9%.

ZCT said it would continue to lobby for the return of the previous position, where there was no VAT on foreign visitors’ accommodation.

The Zimbabwe Tourism Authority has also called for government to lower the 15% VAT levy to 10% or less, to allow for the sector to recover, according to a report by News Zimbabwe.