Finance Minister deems case compelling

THAG wants 8% VAT rate for tourism sector PRESIDENT of the Tourism and Hospitality Association of Guyana (THAG) Shaun McGrath is calling for a flat VAT rate of no more than 8 per cent for the tourism sector and licensed tourism service providers.

Current Minister of Tourism Cathy Hughes had made a similar pitch as an Opposition Member of Parliament.
In The Bahamas, the standard VAT rate is 15 per cent, but the rate applied in its tourism sector is 10 per cent; in Barbados the VAT rate in 17.5 per cent but its tourism sector enjoys a concessionary rate of 7.5 per cent.
Similarly, Dominica has a VAT rate of 15 per cent, but it is reduced to 10 per cent for its tourism sector.
McGrath was keen to point out that tourism is currently the only export in Guyana that is subject to a domestic tax.
He also pointed out that the VAT burden on tourism is not shared evenly, since VAT is waived for the entire sector in the Rupununi, and this leaves industry players in all other regions at a distinct disadvantage.
McGrath, accompanied by senior THAG executives, shared his views at a meeting with Minister of Finance Winston Jordan during a recent budget consultation.
He also cited the lack of a duty-free incentive scheme on vehicles for tourism as a serious restraining factor on development of the sector, and proposed that licensed companies be given duty-free status for up to three suitable vehicles once every five years.
Minister Jordan told THAG that they have made a most impassioned plea and compelling case for the sector to be examined differently. He assured them that the increased allocation for tourism in this year’s budget is an indication of government’s commitment to the sector and that more efforts will be made to boost the delivery of Guyana’s tourism product.

Infrastructural works
Mr Jordan said works have already begun on some of the infrastructure for the sector through the rehabilitation of two hinterland airstrips, and that his ministry is actively seeking the help of donors to refurbish the others.
The minister also raised the issue of disaggregating the data on tourist arrivals in Guyana. He was told by THAG that there is no definite figure as the data put out by the airport encompasses all the visitors to Guyana.
McGrath in response said that his organisation had lobbied the previous government for the breakdown of the figures but to no avail. Nevertheless, he hazarded a guess that of the 205,000 visitors who came to Guyana last year, about 8,000 to 10,000 would have been classified as genuine tourists.
Minister Jordan advised that data on tourist arrivals are critical to consideration of the proposals for concessions and incentives, while at the same time recognising that the industry provides employment to a vulnerable section of society, namely women.
Among other proposals mooted by THAG were investment incentives and concessions for tourism, including duty-free importation and waivers of VAT on supplies and building materials and equipment for construction, rehabilitation or refurbishment of tourism-related buildings, tax write-offs for marketing as well as training of staff by tour owners and operators.
According to McGrath, THAG will support the creation of an effective system that allows genuine operations to easily and quickly access concessions and suggested that letters of recognition and recommendation be issued to operators by THAG and GTA.
He also said that companies applying for concessions should be registered for VAT or exempt and compliant with all statutory requirements. He added that companies claiming to be in the tourism industry should be subject to inspection or provide proof of involvement through audited accounts, physical inspection of property and/or office by the relevant authorities where applicable, printed tourism-related materials such as brochures and electronic material such as websites and other social media promoting their businesses.
The meeting concluded with an undertaking from the minister to consider a fiscal incentive regime for the sector.