TOURISM LEVY PROGRAMME FRAMEWORK FOR THE IMPLEMENTATION OF THE TOURISM LEVY MINISTRY OF TOURISM AND ARTS

Transcription

1 PROGRAMME FRAMEWORK FOR THE IMPLEMENTATION OF THE TOURISM LEVY MINISTRY OF TOURISM AND ARTS

2 .0 PREAMBLE...3 Table of Contents 2.0 BACKGROUND JUSTIFICATION FOR INTRODUCING THE TOURISM LEVY MODALITIES FOR IMPLEMENTATION OF THE LEVY ELIGIBILITY ROLL OUT PROJECTION OF AMOUNT TO BE COLLECTED PROCESS OF PAYMENT PROCESS OF COLLECTION PROCESS OF REMITTANCE RECORD KEEPING VIS-À-VIS TOURISM LEVY COLLECTORS MONITORING AND EVALUATION REFUND OFFENCES AND PENALTIES

3 1.0 PREAMBLE The Ministry of Tourism and Arts, in collaboration with the Ministry of Finance will start implementing a mandatory Tourism Levy in 2016 in all tourist enterprises in Zambia. The Tourism Levy is a tax collected from tourists, both local and international who patronize tourism establishments. Tourism Enterprise Operators will collect the levy from consumers of tourism services on behalf of the Government. The Tourism Levy will be charged on an advolerem rate of 1.5% per person on accommodation establishments and conference facilities to begin with, and will be later rolled out to all the tourism enterprises on a phased approach. As opposed to other Levies or taxes in the country, the Tourism Levy will be retained in the tourism sector for developmental activities, rather than being absorbed in the national treasury. The Tourism Levy is one of the ways of financing the Tourism Development Fund (TDF) which is provided for under Section 64 of the Tourism and Hospitality Act No. 13 of The TDF is intended to provide funds for the development of the tourism sector, for the purposes of: tourism product development; tourism research; tourism marketing; tourism training; and tourism infrastructure. The establishment of the Tourism Development Fund is anchored in the Tourism Policy for Zambia. The Fund shall consist of: such moneys as may be appropriated by Parliament for the purposes of the Fund; moneys collected from such tourism levies as the Minister responsible for finance may prescribe, in consultation with the Minister responsible for tourism; such moneys as may be received by the Fund from donations and grants from any source; such other moneys as may vest in, or accrue to the Fund; and such other moneys as may, by or under any other law, be payable to the Fund. The Fund is vested in the Minister responsible for Finance and managed and administered by the Minister responsible for Tourism. According to the Act, the Minister responsible for Tourism, in consultation with the Minister responsible for Finance, by Statutory Instrument is required to constitute a Tourism Development Fund Committee to administer the Fund. The Committee will comprise of both public and private sector members, appointed to administer the Fund who will be responsible to the Minister responsible for Tourism. 3

4 2.0 BACKGROUND The Tourism Levy is an intervention created to respond to the need to augment the resources provided by the Government Treasury for the development of the tourism sector. Government and stakeholders in the sector have at several fora recognized the need for enhancing the quality of the tourism product as well as the marketing efforts in the country. It was also recognized that for proper development of tourism, increased marketing and product development, the sector required other sources of funding and ultimately, reduce the dependence on the funding from the Treasury. In order to address the challenges of budget limitations for the sector, consultative meetings were held in 2008, by the then Ministry responsible for tourism and various stakeholders in the industry. The meetings discussed the possibility of implementing a Tourism Levy, taking a leaf from neighboring countries in the region. The meetings resolved that Zambia should implement the introduction of a Tourism Levy for the purposes outlined in the Act. The meetings also recommended bench marking missions to some selected SADC countries that were already collecting the Tourism Levy. Two study tours led by Permanent Secretaries were undertaken with the first being in 2008 where a combined team of stakeholders to include the private sector went to South Africa, Namibia, Botswana and Malawi to learn lessons on the collection of the levy. The second study tour involved South Africa, Namibia, Zimbabwe and Tanzania on the implementation modalities and study of best practices on the administration of the Levy was made in August The findings from the respective study tours have informed the development of modalities for the introduction of the Tourism Levy. 3.0 JUSTIFICATION FOR INTRODUCING THE TOURISM LEVY The following are the reasons for implementing the introduction of the Tourism Levy: 3.1 Inadequate Funding of the Sector The two teams that conducted regional tours were able to establish that regionally Zambia s budget for Tourism marketing, Training and Product development was the least which resulted in poor marketing of tourism in the country. In all the countries that were visited during the two tours, poor budgets for marketing and training were supplemented by the Tourism Levy. Zambia competes with all its neighbors for tourist arrivals since most tourists who visit the region come from the same source markets, and are attracted to the same tourism product. In order for the country to compete favorably within the region, there is need to increase the budget allocated to the tourism sector. 3.2 Skills Development and Enhancement Skills development and enhancement is critical to provision of quality tourism product. Even if the country had enough resources to market the country as a tourist destination, in the absence of quality tourism product it is difficult to achieve a corresponding effect. There is need to supplement Government funding for training in the tourism industry. The Tourism Levy will assist in achieving this. 4

5 3.3 Need to diversify the Tourism Product Zambia needs to diversify its tourism portfolio in order to exploit niche markets. Much of the country s tourism product is far from being developed and if the country is to derive maximum benefits from tourism, it is important that the country develops a wide or diversified product range. There is need to develop other tourism products apart from wildlife which is our strategic strength. With limited resource allocation for this purpose it is difficult to achieve this goal, hence the need to solicit for other sources of moneys. Once this goal is achieved, it would mean an increase in the number of tourist arrivals and length of stay, which would in turn increase the occupancy rates and foreign exchange earnings. 3.4 High Cost of Marketing and Promotion The country is facing long standing difficulties of marketing and promoting Zambia as a tourist destination. Ideally, marketing is a big cost and requires a big budget. Government funding alone cannot meet the needs of tourism marketing in the country. The limited budget for marketing puts the country at a risk of losing all potential tourists to neighboring countries. Competition is very high as all our competitors are selling the same product. Moneys derived from the Tourism Levy will greatly supplement government funding for marketing. 3.5 Stakeholder Consultation and Support An extensive stakeholder engagement with the private sector in the tourism industry was conducted over a period of years, in preparing for the introduction of the Tourism Levy. The Ministry received substantial support on the need to introduce the Levy specifically to supplement Government funding for tourism development in the sector. This was on the understanding that the Tourism Levy was necessary for its purposes as the funds derived from the collection would be retained and directly expended within the sector, for tourism development. 4.0 MODALITIES FOR IMPLEMENTATION OF THE LEVY The following are the modalities for the collection of the Tourism Levy: 3.1 ELIGIBILITY Application The Tourism Levy will be applied to all categories or types of accommodation establish ments and Conference facilities The Tourism Levy will be charged on the total bill of a guest that stays overnight, i.e. room, food and beverage, at an accommodation establishment; and for every guest that is not resident, but attends a meeting or workshop on a package, i.e. conference, food and beverage, at a Conference Facility Guests on package tour will have their accommodation, food and beverage costs extracted and 1.5% imposed there on The Tourism Levy shall apply to all accommodation establishments regardless of the number of rooms; and to all conference facilities regardless of the number of conference 5

6 rooms; and regardless of their location Exemptions There shall be no exemptions on payment of the levy hence; no establishment shall be exempt from collecting. 3.2 ROLL OUT Commencement Date Collection of the tourism will commence on 1 st March Phased Approach The Tourism Levy will be collected from only five provinces in 2016, in the following sequence: Lusaka March Southern- April Copperbelt May Eastern- June Central- July PROJECTION OF AMOUNT TO BE COLLECTED Levy Collection After conducting several scenarios which took into consideration the number of existing bed capacity let out each month, as well as the number of conferences held in a month and assuming 40% compliance, a percentage rate of 1.5% was recommended. Below are the computations of the annual Tourism Levy collections as submitted in the 2016 budget framework: Year Description Estimated Number of Bed spaces Estimated days occupied (%) in a year Average price spent per person per night Sales Figure 1.5% x % compliance 2016 Bed Spaces 20, ,314,000, ,884, Bed Spaces 20, ,413,864, ,603, Bed Spaces 25, ,381,477, ,433, Rationale for Bed Spaces: Accommodation establishments charge on a per person basis rather than rooms. 2. Number of Bed Spaces: estimated at 20,000. 6

7 3. Annual Occupancy: 40% taken to imply bed spaces will be occupied for 146 of the 365 days of the year. 4. Average Price spent per night per person: Each tourist will pay a minimum K450 per night per stay. 5. Sales Figure: this figure is a dependent variable and will fluctuate based on conditions. 6. Expected collection: at 1.5% of the sales figure and assuming the rate of compliance is 40%. Rationale for Bed Spaces: Accommodation establishments will continue to charge on a per person basis. 2. Number of Bed Spaces: The 2016 estimate will hold. 3. Annual Occupancy: The 2016 estimate will hold. 4. Average Price spent per night per person: This will assume an inflation rate of 7.6%. 5. Sales Figure: this figure is a dependent variable and will fluctuate based on conditions. 6. Expected collection: Assuming the rate of compliance increases to 50%. Rationale for Bed Spaces: Accommodation establishments will continue to charge on a per person basis. 2. Number of Bed Spaces: These will have increased by 25% to 25, Annual Occupancy: The estimate is projected at 50%. 4. Average Price spent per night per person: This will assume an inflation rate of 7.8% on the 2017 price. 5. Sales Figure: this figure is a dependent variable and will fluctuate based on conditions. 6. Expected collection: Assuming the rate of compliance increases to 60%. 3.3 PROCESS OF PAYMENT Notification Guests and the general public at large will be notified of the requirement for paying the Tourism Levy through: i. A public announcement through print ( government gazette and national newspapers) and electronic media ( TV, Radio and internet) on the commencement of the imposition; ii. During the reservation process and subsequent correspondence; iii. All marketing and promotional mediums and materials of the particular establishment; iv. The display of a plaque and certificate at the entrance and reception of the accommodation establishment respectively. v. Information on the destination provided by the Ministry of Tourism and Arts and its statutory bodies and all stakeholders Charge The following will apply: i. Every guest (per person) staying in an accommodation establishment will have added to his main bill on check-out, a 1.5% Tourism Levy, imposed on accommodation, food and beverage. 7

8 ii. A non-resident guest attending a meeting or workshop will have a 1.5% Tourism Levy on the main bill, imposed on conference, food and beverage Non-Application of VAT The Tourism Levy will be exclusive of VAT Method of Payment Guests will settle their dues using the normal channels agreed with the accommodation establishment or conference facility, i.e. cash, debit or credit cards, cheque or on account (local purchase order). 3.4 PROCESS OF COLLECTION Collection Period The collection period for the levy will be one (1) calendar month Tourism Levy Collector Registration i. All accommodation establishments will be registered as Tourism Levy Collectors, using a Prescribed Form ii. All conference facilities will be registered as Tourism Levy Collectors using a prescribed Form II Appointment as Tourism Levy Collector The accommodation establishment and conference facility will be appointed as an agent of Government and authorized to collect the Tourism Levy on behalf of Government after signing a service level agreement with the Ministry of Tourism. The appointment will take the form of: i. A Unique Reference Number (URN) assigned to the specific establishment. ii. A certificate of registration issued in the name of the establishment and displayed at the reception as per Form III. iii. Provision of a prescribed Tourism Levy Collector plaque to be displayed at the entrance of the accommodation establishment Application of Cash Accounting i. The Tourism Levy collected through the normal channels used by the guests, will be entered into the establishment s books of accounts, clearly specified as such, enable proper audit to be conducted at a later stage. 8 ii. All payments made by the guests, this includes payments in cash, credit card, c heque, electronic funds transfer or through Local Purchase Orders, shall be deemed to have been collected and received on the date the guest checks out of the estab lishment, or the last day of the meeting/workshop.

9 3.5 PROCESS OF REMITTANCE Tourism Development Fund Account By a special dispensation from the Treasury, a special account has been opened at ZANACO Bank under the control of the Permanent Secretary, Ministry of Tourism and Arts Electronic Payment An e-payment system has been created to reduce transaction costs for the Tourism Levy Collectors. Tourism Levy Collectors will quote their URN in all their transactions regarding the Tourism Levy Remittance of Funds by Tourism Levy Collectors Tourism Levy Collectors will be encouraged to remit the funds in the following ways: i. Cash ii. Manager s Cheque iii. Direct deposit iv. Electronic transfer In the case of e-payments, a GRZ general receipt will be issued to the operators on presentation of the deposit slip. Once the e-payment system has taken root, a delib erate policy to discourage cash transactions will be followed Remittance Period The operator will remit the collected levies to the Committee within 14 days from the end of the accounting month Remittance Form Each payment shall be accompanied by duly completed prescribed Forms IV or V. 3.6 RECORD KEEPING VIS-À-VIS TOURISM LEVY COLLECTORS Maintenance of Records A Tourism Levy Collector shall maintain records and books of accounts containing information necessary to determine the amount of the levy collected to be remitted to the Committee. 3.7 MONITORING AND EVALUATION Periodic Spot Checks Periodic spot checks will be conducted as per schedule prepared and approved by the Tourism Development Fund Committee in the annual work plans Verification of the information Verification of the information submitted will be done every two months. 9

10 3.7.3 Inspection of the Tourism Levy Collectors Books An inspection of the Tourism Levy Collectors books will be conducted every quarter (3) months Audit of the Tourism Levy Collectors Accounts Annual audit of the Tourism Levy Collectors books will be conducted Feedback Mechanism i. A nationwide survey will be conducted once a year to obtain information on guest opinion on the Tourism Levy. The survey will be linked to the exit survey. ii. An online survey platform will be developed for operators to provide feedback on the implementation of the levy Annual Report An annual report for submission to Parliament will be prepared on the Tourism Levy collection. 3.8 REFUND Application for Refund The Tourism Levy Collector that has remitted the levy may apply within 90 days after paying the levy, to have the levy refunded if: i. The levy was paid in error; or ii. If the part of the bed nights or venue were sold to guests (diplomats,non-profits) that are exempted from paying tax and have an exemption letter to prove it Payment of Refund On receiving an application that complies with the provisions stated in clause 4.9.1, the Tourism Development Fund Committee will refund the levy. 3.9 OFFENCES AND PENALTIES False and Fraudulent Information A Tourism Levy Collector, who intentionally provides false information or informa tion likely to mislead in order to reduce the amount of levy to be remitted to the Committee and proof, is obtained thereof, will have their license revoked or be charged a penalty fee Late Remittance A Tourism Levy Collector, who fails to pay the levy in full on the last day for payment as prescribed by regulation must pay, in addition to the levy, a charge equal to 5 % of any outstanding amount of the levy in respect of each month or a part of a month during which the outstanding amount remains unpaid. 10

11 3.9.3 Non-Remittance A Tourism Levy Collector who, on expiry of a period of 14 days after the Committee has sent a written demand to the Tourism Levy Collector requiring him or her to pay any outstanding amount of the levy or interest accrued, fails to pay that amount is guilty of an offence and liable to a fine Penalty for Failure to keep Proper Records A Tourism Levy Collector who fails to keep proper records as required by the Com mittee commits an offence and is liable on conviction to a fine Non-Registration as Tourism Levy Collector i. An accommodation establishment who does not register as a Tourism Levy Collec tor commits an offence and is liable on conviction to a fine. ii. An accommodation establishment shall not be provided an operating license unless they are registered as a Tourism Levy Collector. 4.0 DISBURSEMENT OF THE TOURISM DEVELOPMENT FUND After the collection attains the half mark, the Tourism Fund Committee shall commence the disbursement of the funds for identified and approved projects, in line with prescribed guidelines. 5.0 ADDITIONAL INFORMATION Contact the Office of the Director Tourism for clarifications or specific information on any matters concerning the Tourism Levy. 11

12 MINISTRY OF TOURISM AND ARTS Kwacha House, Cairo Road P.O. Box Lusaka, Zambia Telefax: FRAMEWORK FOR THE IMPLEMENTATION OF THE TOURISM LEVY