Tourism

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Tourism industry outcries VAT proposal

Posted: Thursday June 12, 2008 5:55 AM BT

By Valentine Marc Nkwame

A communication from the Director of planning in the Ministry of Natural Resources and Tourism which was sent to local tourism organizations and agencies this week, revealed that the Tanzania Revenue Authority is proposing to the Government to lift VAT exemptions from six fields of tourism undertakings that were previously enjoying the waiver.

The government is intending to impose Value Added Tax to other local tourism activities a move which has started to cause uproar in the industry countrywide.

The communication which was emailed under the subject, 'Tourism services to be taxed' was sent to about 15 tourism associations in the country through the Tourism Confederation of Tanzania.

The TRA's proposal submitted to the Task Force of Tax reforms for the forthcoming annual budget wants these amendments targeting Tourism Services to be effective in the next fiscal year 2008-2009

Areas that will now be subjected to the Goods and Services Tax are: Tourist Guided Game Driving, Water and Sea sports, Animal and (or) Bird watching, Park Fees, Tourist chatter services and Ground transportation or transit services.

According to our sources, the Tanzania Ministry of Tourism, is however very concerned that should the TRA proposal be approved, the Tanzania Tourism Industry will be hard hit, making the destination 'un-competitive.'

As far as the TCT is concerned, the ministry is requesting the industry (public and private) to come up with counter proposal that was to be submitted to the task force last Friday, April 25. However some operators requested more time to come up with their presentation.

"We need to make a reasoned and well argued presentation to make sense to many technocrats who know either nothing or very little about international competitiveness of the travel and tourism industry," they said.

After the value added tax was introduced here in 1997 the tourist industry was subjected to pay a partial part which however got removed in 2001 for the expedition part of tourism and remained only in hotels and accommodation.

Compared to its close Eastern African competitors in tourism Tanzania at the moment is the most expensive destination to visit.

The recent tourism study indicated that it costs US $5070 per person on two people sharing seven night safari in Tanzania while the same tour operator will charge US $4796 for the same package in Botswana and the cost drops down to only US $2392 for the same Safari in Kenya.

Another tour operator was found to charge US $13,850 per person for a 14 night tour expedition in Tanzania while the same company asked for just US $9,996 for a 15 night package in Botswana and again Kenya came out cheapest at US $5200 for a 12 night treat.

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