ABST increase to draw Airbnb rentals into the tax net

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By Machela Osagboro

The government is ramping up its efforts to eke more revenue out of the tourism sector by implementing an increase in the Antigua and Barbuda Sales Tax (ABST) on all short-term stays at Airbnbs and hotels in Antigua and Barbuda.  

The extra money will help government cope with the shift in the tourism culture which is seeing more visitors inclined to stay in cheaper, flexible rentals, explained Deputy Commissioner of Inland Revenue Department (IRD), Jermaine Jarvis.

He said that the government is moving forward with the tax in order to position itself “to cope with the change in global trends in terms of accommodation”.

Hotel guests will be required to pay an additional one percent in sales tax on all accommodation as of March 1, an increase over the current rate of 13 percent, thereby bringing ABST for the sector to 14 percent.

Meantime, the ABST rate on all short-term boutique rentals will become applicable by June 1.

Jarvis told OBSERVER media that currently no monies are being collected from Airbnb type accommodations, and this is causing a decline in the amount of revenue that can be collected from room accommodations.

 He posited, although the country has seen a growth in tourism arrivals, the increases are not reflected in the amount of revenue earned from the sector because many tourists are choosing to stay in Airbnb places.

The IRD official revealed that the current number of Airbnb rooms in Antigua could easily translate to more than one-third of available rooms within the country, a situation which has directly impacted the revenue generated from hotel stays.

“If more and more people are shifting from the traditional hotel accommodation to these types of accommodation, it will have impact on the revenue that should be generated from the growth [in the sector],” Jarvis said.

To this end, the Deputy Commissioner said that the IRD will be mounting an education and information drive to ensure that these smaller taxpayers are able to “grapple with the rigours of an ABST tax return to ensure that they can meet the requirement of filing that return”.

 A forum will be held on February 18 for existing hotels and one on March 21 for small boutique hotels to discuss how the new changes to the ABST will affect their sales.

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