South African hotels listing rooms on online platforms, such as Booking.com, could stand to lose a lot of money, according to Tshifhiwa Tshivhengwa, Chief Executive Officer of Federated Hospitality Association of South Africa.“
“The issue here is that Booking.com is not registered in South Africa and has no VAT number. When these online platforms charge their commission, they do so on the full listed price, which includes VAT,” said Tshivhengwa. He explains that hotels in South Africa pay VAT on the full listed price as well as the commission as arranged between themselves and Booking.com. Hotels are not liable for the VAT rebate because Booking.com is not VAT registered in SA.
According to Alastair Dooley, Divisional Director, Finance at City Lodge Hotel Group, the issue surrounding VAT is one of the reasons the hotel chain has not contracted to Booking.com. “Booking.com would not be in a position to issue a tax invoice for VAT purposes, even though the amount would include a VAT element, which would result in the hotel losing the input VAT claim and essentially paying a higher nett rate of commission,” said Dooley. “Booking.com was not willing to negotiate on its terms as it has a globally accepted agreement that has resulted in some significant costs to some industry players.
“The right thing to do is that bookings.com must register for VAT in South Africa,” concluded Dooley Tshivhengwa.