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TOURISM: Tanzania, like Uganda, faces new VAT battle

ATC News by Wolfgang H. Thome

Tanzania’s tourism industry may be in for a rough year ahead should proposals for adding Value Added Tax (VAT) on tourism services be sanctioned by parliament.

The 18 percent tax, if implemented, would apply for any service rendered, from park fees to transport and from tour guide services to game drives, making packages for safaris in average 20 percent more expensive – due to the regular rounding up practice – for such components.

In neighbouring Kenya the 16 percent VAT was removed in the current budget for the same services after it was finally recognized that the move had a devastating effect on arrival numbers and revenues, forced job losses in their thousands and had tourists opt for cheaper safaris, notably in Tanzania.

Uganda’s introduction of an 18 percent VAT on the services of safari lodges and resorts has led to a sharp downturn in business, according to the Uganda Hotel Owners Association UHOA.

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