Online marketplace and hospitality service wants to sign MOU with SVG

by Bria King

Caribbean countries must find an alternative to Value Added Tax (VAT) if they hope to benefit from their citizens using online marketplace and hospitality service, Airbnb.

Airbnb, which was founded in 2008, is an online portal that enables persons to lease or rent short-term lodging, including vacation or apartment rentals, homestays, hostel beds or hotel rooms.

But unlike hotels and resorts in countries around the world, hosts are escaping the tax net, with one of the main reasons being VAT.

“The countries that have a straight sales tax, we can collect those easily and the countries that have a value added tax, what we’re asking them to do is create a new tax; either a hotel tax or tourism tax or share in economy tax, whatever they want to call it, that’s a simple straight kind of sales tax, like a percentage like we have in the United States,” Shawn Sullivan, Airbnb’s representative for the Caribbean and Central America told SEARCHLIGHT yesterday.

In St Vincent and the Grenadines (SVG), hotels pay the Government 11 per cent VAT on accommodation and those that include restaurants pay 16 per cent VAT on those services.

Sullivan revealed that the first listing on Airbnb SVG was made in 2011. He also noted that the company has brought roughly 1,000 tourists into this country in the past 12-month period.

“Right now we have 180 host owners in St Vincent and the Grenadines (SVG) and we have 270 active listings. So, that generally means there’s either a property manager or several property managers with several properties,” he explained. “On average, our typical hosts there made about US$1,800 over the past 12 months from Airbnb. The average length of stay for a guest is about five days.”

So far, the online hospitality service has signed two tax deals with the US Virgin Islands and Puerto Rico, which guarantees that those governments are paid and receive appropriate revenue from host owners.

And the Airbnb representative for the Caribbean and Central America says that negotiations are ongoing with six countries in the region to sign similar tax deals.

“We feel that our hosts have an obligation to pay their taxes,” he said. “It’s something we don’t have to do, but we believe it’s important to do and we want a productive, cooperative relationship with governments and we think this is one way we can help governments; instead of spending money chasing everyone, we can do it right away and submit it to the governments.”

The company, which has a presence in 192 countries, has been fostering relationships with governments in the region through the signing of memoranda of understanding (MOU).

So far, eight countries, Anguilla, Antigua and Barbuda, Jamaica, Grenada, Bermuda, Aruba, Curacao, Puerto Rico and the Caribbean Tourism Organization have signed MOUs with Airbnb.

These MOUs allow for a working group to be set up with stakeholders to discuss issues of concern, help to promote the country as a tourist destination on the Airbnb platform and gives governments access to data.

“We would love to sign an agreement with St Vincent and the Grenadines,” Sullivan told SEARCHLIGHT. 

The representative said that he has shared a draft MOU with SVG and is hopeful for a positive outcome.

Sullivan opined that Airbnb is a “great fit’ for the Caribbean, as it can help to diversify the tourism sector within the region. In order to do this, he said that “it’s all about working with governments to collect taxes, share data and to help them diversify, democratize tourism and create micro-entrepreneurs.”