The VAT increase from 14% to 15%, announced in then South African Finance Minister Malusi Gigaba’s 2018 Budget Speech in February, met with concern throughout most business sectors in South Africa.
Amongst others, the tourism industry faces the conundrum of who will carry the 1% difference in bookings that have already been quoted on or advance-paid – and it seems that an increasing number of establishments are absorbing the costs until the activation date of the new VAT rate.
Arathusa Safari Lodge has published an adjustment in its rates as of April 1 – the effective date of the increase – but will be honouring any confirmed and provisional bookings at the existing rate of 14% VAT. Any bookings made from March 12 for travel beyond April 1 will include the new VAT rate.
Sabi Sand Wildtuin will also adjust its Reserve Entrance Fees and Guest Conservation Contribution as of April 1.
The Classic Portfolio – a leading collection of eco-sensitive camps, private game reserves, luxury hotels, secluded beach retreats and renowned wine estates in Africa – has announced that all members in its portfolio have agreed to absorb this increase in their current published rates. The Collection believes that even with the increase, South Africa’s VAT remains the lowest on the continent.
Singita’s quoted rates are inclusive of VAT so the group will be absorbing the increase from April 1 on all bookings, both existing and new. This will leave the total invoiced amount unchanged.
As challenging as the announcement by government has been to the industry, it is working to keep a careful balance between business astuteness and customer care. The book remains open on the VAT increase rollout, as various organisations and associations continue to approach government with queries and concerns.