Decisive Action Needed To Counterbalance Vat Increase

Tourism and hospitality leaders have emphasised that the proposed value-added tax VAT increase, expected on May 1, will require South Africas government to take decisive action on key policies identified to drive inbound tourism including rapid implementation of an electronic travel authorisation ETA system.

Industry associations such as FEDHASA have cautioned that the 0.5 percentage point VAT increase announced by Finance Minister Enoch Godongwana in his March 12 budget speech in each of the 2025/26 and 2026/27 financial years will force hospitality establishments, restaurants and other suppliers to raise their prices.

Considering this, we need to see the VAT increase counterbalanced with quick, focused and decisive action to stimulate growth in the tourism and hospitality sectors. Whats clear now is that government has to focus on policies that boost tourism growth. This includes more visa reform and expediting the implementation of ETAs, FEDHASA Chairperson Rosemary Anderson told Tourism Update .

In his State of the Nation Address in February, President Cyril Ramaphosa said the Department of Home Affairs will launch an ETA system this year, driven by artificial intelligence and machine learning, to streamline visa processes.

Marc Wachsberger , CEO and Founder of The Capital Hotels, Apartments Resorts, said an effectively implemented ETA will potentially resolve several longstanding challenges affecting tourism.