The delay in legalising the VAT reduction from 15% to 5% for travel and tourism businesses has irked the private sector, despite industry efforts for a fast-track revival post-Easter Sunday setback.
“The Cabinet approved the reduction in VAT for the industry two weeks ago, but there has been no follow up to operationalise it, and this is very disappointing,” an industry source told the Daily FT.
The frustration was evident, especially during the long weekend in resorts, who lured lots of locals with massive discounts, but couldn’t give benefit of the VAT reduction to guests and those who patronised restaurants for dining.
“The Government has been telling the industry to get the locals back, and we are doing so by offering many discounts. Guests are disappointed that VAT continues to be charged at the higher rate of 15%, despite announcements earlier that it has been reduced,” a hotelier complained.
The much-publicised one year moratorium for all registered/approved travel and tourism businesses on capital and interest repayment of their performing loans is also yet to be implemented.
Banks are awaiting a new directive from the Central Bank to effect the relief package to the travel and tourism industry, which includes concessionary working capital for two years.