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Tourism sector lobbies for incentive scheme

President of the Tourism and Hospitality Association of Guyana, Shaun Mc Grath.

The Tourism and Hositality Association of Guyana (THAG) wants government to slash the Value Added Tax (VAT) to eight percent and grant duty free concessions on vehicles and construction materials for the sector, the Finance Ministry said in a statement.

But Finance Minister, Winston Jordan said granting of the concessions would depend on precise data on the impact of the tourism sector. 

“Minister Jordan advised that data on tourist arrival are critical to the consideration of the proposals for concessions and incentives while at the same time recognizing that the industry provides employment to a vulnerable section of society, namely women,” the Finance Ministry said in its statement.

The request for the concessions was made in budget consultations this week with Minister of Finance, Winston Jordan and Director of Budget, Sonya Roopnauth meeting representatives of the Tourism and Hospitality Association of Guyana (THAG).

During the meeting on Monday, Shaun McGrath, accompanied by Kit Nascimento and other executives of THAG, welcomed Government’s new initiative to use tourism to help develop the hinterland areas.

In putting forward proposals for consideration, Mc Grath 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.

He recommended that a national flat rate of no more than 8% be introduced for the tourism sector and licensed tourism service providers.

McGrath also cited the lack of a duty free incentive scheme on vehicles for tourism as a serious restraining factor on the development of the sector, and proposed that licensed companies be given duty free status for up to three suitable vehicles once every five years.

The Minister alsraised 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 organization 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 of Finance Winston 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.

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.

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 building, 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 material such as brochures and electronic material such as Websites and other Social Media promoting their business.

The meeting concluded with an undertaking from the Minister to consider fiscal incentive regime for the sector.