ZRA warns hotels against non-compliance with the new levy

Unguja. The Zanzibar Revenue Authority (ZRA) has warned hotels against non-compliance with the new hotel levy (new infrastructure charging rates for hotels), which took effect on July 1, saying there would be legal consequences.

In a public notice signed by ZRA’s Commissioner General Yusuf Juma Mwenda, hoteliers were informed that in the government budget that was passed on June 23, among other issues, were the new infrastructure charging rates.

"This is to inform all respective esteemed tax payers that the House of Representatives approved government budgets for the financial year 2023–24, and among other things, the new infrastructure charging rates for hotels for guests who stayed in any hotels in Zanzibar," reads the notice.

The notice says that, by nature of their business, the hotel management is a lawful agent responsible for the collection of such tax as provided by the law.

The notice also states that in order to ease collection, the authority will allow hotels to pay the collection in installments with effect from July 1 but not later than October 30.

"Agents (hotels) will be allowed to pay the lawful agreed tax in installments within three months with effect from July 1," reads part of the notice.

As per the new levy, guests will have to part with up to $5 (Sh12,000) for a single night, up from the original $1 or its equivalent for every occupant, something that stakeholders say has taken them by surprise.

The implementation comes at a time when hoteliers have voiced their concerns to the authorities regarding the implementation of the new rates, saying it would interrupt their operations.

The hoteliers and different umbrella bodies have argued that the current shoulder season has already been sold through their different agents across the world.

Speaking to The Citizen at different intervals, they said such measures only make Zanzibar an expensive and unpredictable place to do business.

They said having so many levies takes away the competitive edge that Zanzibar has against other island nations in the Indian Ocean.

"Hotels are already charging 15 percent as VAT now plus $5 dollars; this is definitely felt by consumers who might be forced to look elsewhere," said one hotelier in Stone Town who preferred anonymity.

She added: Though we are seeing a rebound in the sector with some handsome numbers of arrivals, we have to remember that this is an industry that was ravaged by the pandemic and some of the businesses are still in the recovery period.

In their opinion, the increase, which is about 500 percent, is not a bad thing, but the timing of the implementation could have severe ramifications for the entire industry.

"Most of our arrivals are from chartered flights as opposed to scheduled flights; this makes it tricky because of the added expenditures," said another.