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ICAEW Calls on Welsh Government to Keep Visitor Tax Simple

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ICAEW’s Director in Wales, Robert Lloyd Griffiths is urging the Welsh Government to prioritise simplicity in the design and administration of the proposed tax on visitors.

The Welsh Government intends to give local authorities the power to levy a charge on visitors who stay in a wide range of accommodation including hotels, self-catering accommodation, B&Bs and campsites. Visitor accommodation providers would be responsible for the collection and payment of the levy to the tax authority (which could be a local authority or the Welsh Revenue Authority). The plan is to reinvest the revenues raised into local authority and tourism services.

ICAEW’s Tax Faculty has submitted a written response (published as ICAEW REP 96/22), focusing on questions regarding the design and administration of the levy. The response highlights the challenges a tourism levy may present for accommodation providers against the backdrop of recent struggles in the tourism sector and the importance of keeping the design of any future levy as simple as possible, so that it is easily understood by visitors and accommodation providers.

Robert Lloyd Griffiths said:

“We are concerned about the administrative burden that collecting, recording and paying over the levy may create for accommodation businesses, especially small providers.

“Feedback from our members in Wales suggests that the introduction of a levy will create another burden for businesses against a background of the recent difficulties encountered by the Welsh tourism industry. These difficulties include, obviously, the COVID-19 pandemic, which saw the forced closure of visitor accommodation providers for many weeks or months, with many taking on additional debt through the loan guarantee scheme, the current challenges of supply and staffing issues, inflation and high energy bills.

“It would certainly be helpful if administration of the levy could be integrated into existing systems as this would reduce the burden on visitor accommodation providers. For example, consideration should be given to whether a visitor levy would be included in the VAT base. For comparison, the per capita tourist charge in France is not subject to VAT, while the tourist charge of a flat rate based on the price of the hotel accommodation is subject to VAT.

“One thing is clear, introducing a new levy such as this will involve a lot of technical considerations. You’ve only got to look at Dubai’s Tourism Dirham Fee to see that tourism tax can work but the practicalities and the timing must be given very careful consideration.”

ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities.

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