WWF-US (Chile)
While the growth of protected area systems has accelerated worldwide in recent years, government funding has lagged and many protected areas remain unmanaged or poorly managed. Private Conservation Trust Funds (CTFs) can be key institutions for addressing the funding gap and stimulating a complementary increase in direct public funding by leveraging innovative conservation finance mechanisms, international assistance, and donations. In this project, a governmental scheme is proposed to refund Value-Added Taxes (VAT) paid by international travelers on tourism services whereby a Conservation Trust Fund (CTF) is authorized to affect the refund transaction and, as part of the process, deduct fees for (1) its operational costs, and for (2) financial support to protected areas. Through this scheme the government designates the CTF to serve as an intermediary between national tax authorities and international travelers to refund the VAT paid on in-country tourism services (hotels, restaurants, tours, car rentals, etc.). As part of the transaction, the fund would deduct a fee to support protected areas, as well as the operational costs of the CTF. For a country with around 5 million international visitors per year and a 20% VAT rate, it is estimated that the “Tax-free Tourism for Protected Area Finance” concept would raise about US$ 100 million per year. A cost-benefit analysis, communications plan, and promotional materials are useful tools for informing lobbying efforts for inclusion of this financial mechanism in relevant tax legislation and/or regulations.