Zanzibar will start classifying hotels to enable implementation of the new changes on infrastructure tax announced in this fiscal year.
The classification of hotels will assign hotels, mainly tourism, according to their stars, to pave the way for the execution of the new changes as per the State-Minister, President’s Office (Finance and Planning) Dr Saada Mkuya Salum while presenting the 2023/24 budget last month.
The Zanzibar Revenue Authority (ZRA) Commissioner General Yusuf Juma Mwenda said soon the classification or grading exercise of the hotels will be ready.
“After knowing which rank your hotel belongs to, you must pay,” Mr Mwenda said during a meeting here with the hoteliers over the weekend to emphasize compliance with the new tax increase.
“Do not evade or cheat as the changes in infrastructure tax aims to support developing infrastructures including roads in the areas where the hotels are located,” the commissioner general explained.
According to changes which follow a review of the Zanzibar Finance Act No 9 of 2015 establishing an infrastructure tax, a flat-rate of 5.0 US dollars will be charged for a person who sleeps in a five and four-star hotel.
Before the changes, a flat rate of one US dollar was charged per a person who sleeps in any hotel.
Under the new changes four US dollars will be charged per a person who sleeps in a three and two-star hotel and two US dollars per person who sleeps in a one-star hotel and others including visitors who sleep in renting apartments.
The new rates took effect on July 01 but encountered complaints from hoteliers as most did not know which class or grade star they belong, prompting authorities to classify before applying the new infrastructure tax rate.
According to available data, most of the 706 hotels in Unguja and Pemba range from one to two-star, while five, four and three-stars are few.
Additionally, Mr Mwenda said ZRA is working with the Tourism Commission and experts to classify and grade hotels and that the ranking according to their stars list will be released as soon as possible for all hotels in Zanzibar.
Earlier, the Chairperson of the Zanzibar National Chamber of Commerce (ZNCC) Mr Ali Amour said that the issue of infrastructure tax changes is something that needs to be implemented in accordance with the laws.
“The purpose of increasing the infrastructure tax has great benefits in developing tourism in Zanzibar because when the tax increases, it enables the government to implement its programmes including having better road infrastructures for tourists,” he said.
Mr Eddi Abdalla Ali from the Zanzibar Ocean View Hotel and Mr Sai Samuel from the Seacliff Hotel, said they have been receiving complaints from many guests including poor road conditions.
Mr Ali said thanked the government for considering their request not to adopt the new infrastructure tax charges for those tourists who have already booked and paid for this year, before the tax review.
Meanwhile, ZRA advised hotels to use electronic payment and get connected to the authority system, and that integration of the tax system, to include immigration, airports, seaports, and other relevant income sources, is underway aimed at controlling fraud.