Tanzanian tourism players protest against VAT on tourism services

Tanzanian players in the tourism industry on Thursday protested against the government's intention to impose Value Added Tax (VAT) on tourism services, saying the move will kill the industry.

Sirili Akko, Executive Secretary of the Tanzania Association of Tour Operators (TATO), said imposing VAT on tourism services could force the multi-million dollar sector into a sharp decline.

He said by reinstating VAT in the tourism business, Tanzania, which was already an expensive destination, would not only be shunned by foreign visitors but would give advantage for the country's close competitors such as neighbouring Kenya where VAT in tourism is zero-rated.

Akko said he did not expect the Minister for Finance and Planning Phillip Mpango to impose further taxation in the sector which was grappling with a lot of bottlenecks.

He said this will lead to sharp increase on the cost of tourism services which had to be borne by the local and foreign companies handling the tourists.

Unveiling the 2016/2017 government budget proposals in Parliament in Dodoma on Wednesday, Mpango said the government would impose VAT on tourism services, including supplies of tourist guides, game driving, water safaris, animal or bird watching, park fees and ground transport services in the coming fiscal year.

Aafez Jivraj, who operates the Arusha-based Tanzania Private Select Safaris, said Tanzania will once again be shunned by visitors gunning for game safaris.

"And basically by bringing in VAT, we will be digging our own graves. Many foreign tourists will simply cancel their bookings," said Jivraj.

Tourism is the leading sector in generating foreign exchange for Tanzania. Available statistics indicate that it attracted an income of 2.04 billion U.S. dollars last year, up from 1.9 billion dollars in 2014. Endit