FINANCE Minister Tendai Biti on Tuesday announced the reinstatement of duty rebate on capital goods for the tourism sector and suspension of duty on motor vehicles used by safari operators in a move that is expected induce growth in the tourism sector.
According to the Mid-Term Budget Review Statement, both measures will start applying on September 1 but the suspension of duty on motor vehicles for safari operators will be in force for six months only.
Minister Biti said both measures would only be extended to tourism and safari operators registered with the Zimbabwe Tourism Authority, the Zimbabwe Council of Tourism and the Safari Operators Association of Zimbabwe.
“Furthermore, the Minister for Tourism and Hospitality Industry will be responsible for recommending to Treasury the list of beneficiaries to ensure accountability and effective monitoring.
“Companies that intend to benefit from this facility will be required to provide a valid tax clearance certificate and proof of registration with ZIMRA,” he said.
Minister Biti said the decision to reinstate the rebate on capital goods was taken after the realisation that operators in the tourism industry had not realised much benefit from the initial rebate in terms of maintaining and upgrading facilities, due to limited access to long-term financing.
The initial rebate of duty, which allowed duty-free importation of capital equipment to support the expansion and modernisation of hotels and restaurants, was introduced in March 2009 and expired in February this year.
“The tourism industry has been able to access loans, in particular from the PTA and Afrexim banks. The funding is, however, being availed at a time when the rebate of duty is no longer in place, hence the cost of recapitalisation has increased.
“In order to facilitate the recapitalisation programme, I propose that the rebate of duty on capital goods be re-introduced, with effect from 1 September 2011,” he said.
In terms of the removal of duty on motor vehicles for safari operators the minister said his ministry had taken into consideration strong representations that were made by genuine Safari operators.
“Safari operators require customised vehicles, which are suitable for the rugged terrain in which they operate. Such motor vehicles are not available locally.
“They, however, were not able to benefit from the duty suspension due to limited access to financing. I, therefore, propose to re-introduce suspension of duty on motor vehicles used by safari operators, for a period of six months with effect from 1 September,” he said.
The rebate had been suspended to curtail abuse by some operators who imported vehicles for purposes other than tourism.
The tourism sector performed better during the first half of this year with tourist arrivals and bed occupancy rate having both registered a 14,3 percent growth when compared to the same period last year.
A total of 650 000 tourists visited the country during the first half of this year while average bed occupancy rate increased from 31 percent to 36 percent.