AmbergrisCaye.com Home Forums About Belize Nation Laws & Taxes Hotel tax to increase to 12.5%

I attended the Belize Hotel Association General Meeting yesterday and although the speeches were not so clear about the new tax, during the mingling before and after the meeting this became clear:

The Ministry of Tourism wants to raise the hotel tax to 12.5% like the GST. Hotels can then deduct GST paid on expenses. The question is who is going to collect it, it looks like the GST office is going to collect it for the Ministry and the BTB will then get a budget from them for their marketing. Obviously BTB is against this and want to become GST agent (like customs) so they can collect and have control over the budget.

The hotels should then include the GST in the rack rates, so not add it on and are expected not to raise prices with the same percentage, because they can deduct GST on expenses. The new law is supposed to go to the cabinet this week.

Jan

Well, that totally sucks. We are too small to even have a GST registration and have no gift shop or restaurant. Plus we have already booked rooms for next year with the current tax schedule in place.

Wonder how they will propose that we now tell guests booked in advance that they will have to pay an extra 3.5% in tax. This should be something that is done at least a year in advance.

In my industry our tax rate went from 6% of gross income to 15% of gross income overnight. It's a killer. And to add insult to injury they only audit those of us that are registered tax payers, tons of fly by nighters just keep openly doing business without a care in the world and don't pay taxes! Whoa, don't get me started.

Just great, lets just make our hospitality industry less competitive.
I totally agree with Amanda.
This increase will adversely affect all of us who properly collect and file the BTB tax while there are tons of people who rent their condos and homes under the table and don't pay any tax at all.

15%'s a big increase, though better than the 25% some of us pay. What ever the tax rate, we don't get much return!!

Totally agree with Amanda and Ana. Those of us who collect our 9% hotel tax regularly and submit it on time will be the ones hurt by this. Add in the fact that most of us have already booked rooms for 2013, without the increase. DO we surprise them when they check out and tell them then that the room rate we quoted them was incorrect?

This will hurt the hotels, particularly the small ones, and management companies who rent a few units.

Hasn't the hotel industry been complaining about being zero rated? Seems that this complaint was based on some idea that being inside the GST system would be a benefit. Would like to see a spreadsheet showing the actual change in the vendor's bottom line after credits for GST spent are factored in. Not saying what the result would be because I haven't done the math yet - but curious as to what the numbers will show.
My sense is that a sales tax is ok - but that it should not exceed something like 5%.
When the numbers get too high, compliance goes down. When taxes are too high we all strangle.
Business tax of 1.75% is generally tolerated and we're told compliance is good.
Lower taxes and universal enforcement of payments - that's what I'd like to see.

Diane, the larger hotels already are included in the GST program because they have dive or tour shops, restaurants, gift shops, etc. The smaller hotels and those that manage a few properties for short term rentals were not included because they don't meet the cap for GST. The bottom line may be the same by the time you credit yourself for BTL BWS and BEL, BUT the issue is that you now have to raise your rates to include the 12.5%. Guests ASSUME that there will be a hotel tax/service charge, and they are given that amount up front, say 9% tax and 10% service charge in addition to the nightly rate. Travel Agencies have already received our rack and net rates for the upcoming year. Guests have been booked at the old rates for 2013.

I am NOT opposed to this, but I just think it should be discussed, and implemented at least a year in advance, so that we as hotels without GST currently, have time to adjust our rates and explanations to guests BEFORE they make a reservation.

I don't want to have to tell any guests who have already booked for 2013 that their room rate has now gone up because the tax at 9% has now been changed to 12.5% and that it is built into their rate, plus they pay an additional 10% service charge.

Those of us that were "exempt" were only those of us who do not have restaurants, bars, dive/tour shops, or gift shops, and therefore do not meet the cap for GST.

Our GST has been a "pass through" amount. Charged by the tour companies, paid by the guests, then paid back to the tour companies. We were never the "end user".

In addition, you have people renting their condos/homes without paying any hotel tax at all, therefore they are now able to "show" that they have lower rates, because they don't have any tax that they report.

Does that make sense?

I guess I should have been clearer. The larger hotels were not paying GST on their rooms, but paid on their amenities, so that they are able to take the GST paid off their utilities and anything else they pay. Hotel tax was totally separate on rooms rented.