Tanzania Value Added Tax spreads to national parks

TANZANIA (eTN) - Implementing the Tanzania government’s decision to impose taxes on tourist services, wildlife parks authorities have reviewed entry fees for tourists and tour operator services effectively July 1, amid protest from tourist and travel trade stakeholders.

Ngorongoro Conservation Area Authority had increased Value Added Tax (VAT) on tourism services within its conserved area, the leading and most attractive wildlife area in East Africa.

The conservation authority had pegged the entry fee at US$60 per tourist entering the Conservation Area a day, while the Tanzania National Parks management had reviewed park entry fees to accommodate the much-protested VAT.

Other than entry fees, Tanzania National Parks had added VAT to all tourism services falling under its management jurisdiction as to comply with Tanzania government’s decision to extract more money from tourism through taxes.

Previous park entry fees ranged from US$30 to US$100 charged to a foreign tourist on daily basis in 3 categories of the parks which are Premium, Gold, and Silver.

Premium Parks are the Serengeti National Park in northern Tanzania where a foreign tourist was paying US$60 per day spent inside the park, Mount Kilimanjaro also in northern Tanzania had a visitor paying US$70 per day spent on the mountain, while Gombe and Mahale Chimpanzee parks in Western Tanzania had a daily fee of US$100 and US$80 respectively.

Gold parks are the Tarangire, Arusha, and Lake Manyara - all in Northern Tanzania where visitors have been paying US$45 day.

Silver parks, or the less-visited ones, are located in the Southern Tanzania tourist circuit and Lake Victoria. Visitors to these parks have been paying a daily fee of US$30 each.

From Friday this week (July 1), foreign tourists visiting Tanzania will be charged VAT to be added to the previous and the existing fees mentioned above based on each category of the park where the visitor has been booked.

The VAT will as well be imposed on all other tourism services offered inside the parks, including accommodation, beverage, and vehicle movements inside the parks.

A public notice that was issued by the Tanzania National Parks and seen by eTN this week was quoted as saying, “The Management of Tanzania National Parks would like to inform all our esteemed customers that the Finance Act 2016 has withdrawn exemptions of VAT in tourism services.

“In order to comply with the 2016 Finance Bill, the management will start charging VAT at the rate of 18 percent in all tourism services and products in the National Parks.”

Tanzania tourism operators have raised their voice over the Value Added Tax on tourism services announced in the national budget, which they want scrapped.

Tanzanian Finance and Planning Minister, Dr. Phillip Mpango, said the government had imposed 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.

Tanzania Association of Tour Operators (TATO) Executive Secretary Sirili Akko said in a statement that the VAT charges for the tourism industry would be counterproductive and will hamper growth of the sector which contributes to nearly 17 percent of Tanzania’s economy.

Mr. Akko had expressed serious concerns on the cross-cutting negative consequences of the tax measures on the tourism industry.

He said TATO, among leading tourism players, was worried they will lose their business to Kenya and other tourist destinations where VAT in tourism is zero-rated, as VAT on the tourism services would make Tanzania a more expensive tourist destination.

Tanzania tour operators, according to TATO, are already subjected to 32 different taxes, 12 related to business registration and regulatory license fees as well as 11 duties for each tourist vehicle per annum, and 9 others.

Kenya had imposed VAT on tourism services in 2015 but scrapped it this year after learning of its negative and counterproductive results.

"Kenya learned a hard lesson in 2015 when it imposed VAT on tourist services; thanks to a quick rebound which seeks to restore their competitiveness and glory in the tourism sector," he said adding, "Tanzania should avoid the same mistake.”

The TATO Executive Officer said the organization was urging the government to reconsider the plan for VAT on tourism services as that would risk the reputation of Tanzania as a reliable safari destination and cautioned that it would have long-term negative consequences which will not be easy to correct.

Charging VAT on tourist services will make them expensive and place the Tanzanian tourism industry in a disadvantaged position due to regional and international parties, TATO argues.