Hotels Association poised to make major economic contribution

The hotel industry remains the only industry in the country which has the potential to turn around the sluggish economy. We eagerly look forward to the opportunity of partnering with the government in taking Sri Lanka’s economy to new levels, with proper incentives and conditions in place similar to those in other countries in the region, The Hotels Association of Sri Lanka (THASL), said in a year-end statement yesterday.

“We further request the government to pursue both legal and policy reforms that will recognize tourism as an export industry and establish the necessary framework for a vibrant, diverse and successful tourism industry in Sri Lanka,” THASL President Sanath Ukwatte said.

THASL requests the government, once again, to treat the industry fairly. “Excessive and arbitrary taxation has made it very difficult for our member hotels to compete with other regional countries. Sri Lanka’s hotels pay 22 percent tax on the total revenue (not profit) in addition to corporate income tax (on profit). 

This includes taxes such as Value Added Tax (VAT), Nation Building Tax (NBT), Tourism Development Levy (TDL) and Economic Service Charge (ESC). This multiple taxation on both revenue and profit creates an environment that is unfavorable for Sri Lanka’s hotels and thereby makes our tourism offering uncompetitive in comparison to our neighbours. This is our strongest disincentive in developing the tourism industry.”

“In addition to the existing revenue-based tax burden, the tourism industry is also faced with municipalities and local governments threatening to charge an additional 1percent tax on total revenue. We believe this tax is entirely unrealistic, discriminatory and arbitrary as it only targets the hotel industry. Hotels already pay annual municipal and local government rates to cover municipal and local government services. We request the Government to abolish all such arbitrary taxes and adopt a simplified and fair tax policy similar to that applicable in other countries in the region. This is an urgent priority,” Ukwatte added.

“We would like to see the government taking some meaningful steps in the New Year to relieve us of uncompetitive tax burdens and encourage the sector to enhance and grow. We are hopeful that the budget for 2019 will accommodate our requests, in order to realize and strengthen the inherent potential of the industry.” 

THASL, which has a member base of over 250 hotels, said Sri Lanka is now steadily on the path to recovery, following a series of internal issues that rocked the industry.