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New Tax and Lower VAT for Accommodation Providers Coming

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THE Government of Saint Lucia will be introducing yet another tax within the tourism sector on April 1 of this year, however that is raising questions concerning whether the processes necessary to make that tax effective on the date specified will be in place.

The VOICE yesterday learned that a lot of finetuning is being done behind the scenes to make the tax, called an Accomodation Fee by the government, effective on the day specified.

A press release from the Tourism Authority earlier this week stated that, ”following consultations with stakeholders in the industry, government will be introducing a tourist accommodation fee to be used for destination marketing and development. As of April 1, 2020, stayover visitors to Saint Lucia will be required to pay an accommodation fee on their nightly stay on the island. All accommodation providers on the island (hotels, guest houses, villas, apartments etc.) will be required to collect from their stay over guests either US$3.00 or US$6.00 respectively on a nightly rate below or above US$120. The fees will be paid by the stayover visitor and collected by accommodation providers who will remit the fees collected to government via the Saint Lucia Tourism Authority. Guests at accommodation services sourced through sharing platforms such as Airbnb and VRBO will be subject to an accommodation fee of 7% on the full cost of stay.”

Executive Director of the Saint Lucia Hospitality and Tourism Association (SLHTA) NooraniAzeez, in an exclusive interview with this reporter, said that the Association has no objections to the tax/fee, however just wants to ensure that whatever needs to be in place is in place come April 1 to ensure that any negative impact that may arise from the tax/fee is mitgated and that there is full transparency in who is doing what and by what timelines.

The tax/fee structure to become effective April 1 was not exactly what the SLHTA had in mind when it held discussions with the Ministry of Tourism and the Ministry of Finance regarding the logistics of the implementation of this new tax/fee regime.

A statement from the SLHTA Board of Directors, its president being Karolin Troubetzkoy, noted that members’ concerns and proposals for a differently structured fee were shared with the ministries but did not significantly influence the final decision as to the structure of the pending fee.

Government has promised that the introduction of this new tax/fee will come with a lowering of the Value Added Tax on accomodation providers from 10% to 7%. But whether this will be applicable across the board for the accomodation providers is still not known, particuarly whether the 7% VAT applies only for accomodation or for food, beverages and other services.

Azeez said he does not know if the new VAT rate for accomodation providers will be applicable across the board, however wanted to know whether the VAT legislation would be amended in time, before the new tourism tax became effective.

A source within the government/tourism structure has confirmed that most of the mechanisms necessary for the tax/fee implementation are already in place, meaning that the fears accomodation providers have will be or have already been taken care of.

Meanwhile the SLHTA, in its statement noted that whilst accommodation providers generally expressed support for a special tax/fee as a means to create a consistent and reliable marketing budget for the Saint Lucia Tourism Authority, there have been mixed reactions regarding the structure and timing of such a tax/fee.

According to the SLHTA statement, membership was kept informed over the past 12 months about these ongoing discussions in newsletters, special communiqués, general meetings and newspaper articles, however it is still keen to receive final formal responses from the Government of Saint Lucia.

”A decision needs to be taken as to whether or not the tax is charged to visitors on arrival at their respective accommodation, as is currently the case in Barbados. Some properties may choose to absorb the head tax. Treatment of the tax may therefore differ from property to property,” noted the SLHTA.

The Association said it is in the process of organizing another round of meetings to address members’ concerns and questions to facilitate the introduction of the tourist accommodation fee.The SLHTA plans to meet with their small hotels today, January 9 to specifically address the introduction of the tourist accommodation fee with them, given the competitive environment and rate sensitivities in this market segment.

Meanwhile the government has stated that the tax/fee will be used to finance the Saint Lucia marketing activities undertaken by the Saint Lucia Tourism Authority (SLTA) as it promotes Saint Lucia’s tourism product worldwide and particularly in key markets within the US, Canada, the Caribbean, the United Kingdom and Europe. The tax/fee will also be used to support village tourism development, and destination management and development of the local product in Saint Lucia. The intention is to strengthen the SLTA’s ability to increase its marketing of the destination and to support tourism development in Saint Lucia with the collection of a fee that correlates to visitor arrivals.

The SLTA claims that Saint Lucia attracts up to 350,000 stay-over visitors to its shores every year and so has set a target of 541,000 stay-over visitors by 2022. Further, the Tourism Authority wants to increase airlift seat capacity and load factor on all flights into Saint Lucia to 85%. The SLTA says it is also working towards increased awareness of brand Saint Lucia adding that its annual budget for marketing and promotion is approximately $35 million.

Said the SLTA in a statement Tuesday, “The business of promoting a tourism destination is becoming increasingly challenging and highly competitive as countries worldwide try to capture a greater share of the growing tourist market. Given this, it is now a common practice for countries to finance the marketing of their tourism product through an accommodation fee or levy paid for by stay-over visitors to the destination.

“More established destinations with far greater resources than Saint Lucia such as Canada, the US and Italy all make use of accommodation fees for destination marketing purposes. In addition, many Caribbean countries such as Jamaica, Barbados and Belize and those within the OECS including Anguilla, Antigua and Barbuda, St Kitts and Nevis and Saint Vincent and the Grenadines, have implemented accommodation levies. These levies are often applied on a per room, per night basis and are sometimes scaled (tiered) based on the type of property. As configured, Saint Lucia’s Tourist Accommodation Fee is among the lowest in the OECS and CARICOM, and other well-established tourist destinations globally. Saint Lucia’s fee structure is similar to the Maldives.”

The Saint Lucia Tourism Authority further claimed that it is establishing a process to allow accommodation providers on island, international tour operators and booking websites to easily remit the fees they collect from stay-over guests. The system has built-in mechanisms to verify that the information being provided is accurate. Given that an automated system for remitting the fees collected from guests will be utilised, the cost to accomodation providers will be negligible.

Tourism Minister Dominic Fedee is quoted as saying that the tax/fee will allow tourism to pay for itself, as it will be levied to tourists to the island freeing up much needed funds for healthcare, education and national security.

Micah George is an established name in the journalism landscape in St. Lucia. He started his journalism tutelage under the critical eye of the Star Newspaper Publisher and well known journalist, Rick Wayne, as a freelancer. A few months later he moved to the Voice Newspaper under the guidance of the paper’s recognized editor, Guy Ellis in 1988.

Since then he has remained with the Voice Newspaper, progressing from a cub reporter covering court cases and the police to a senior journalist with a focus on parliamentary issues, government and politics. Read full bio...

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