Tanzania Maintains Value Added Tax Charge On Tourism

Arusha — The Tanzanian finance and planning minister, Dr. Philip Mpango has defended the proposal to introduce Value Added Tax (VAT) on tourism services.

Presenting the Tanzania 2016/17 budget proposals in Parliament two weeks ago, Dr. Mpango said the government would impose VAT on tourism services, such as park fees, ground transport services, tourist guiding, game driving, water safaris, animal or birds watching.

Dr. Mpango, while responding to member of parliaments and a section of tourism stakeholders mainly tour operators said that the 18% charge on tourism services will remain since they were initiated after a thorough research. "We came up with this proposal after we were convinced that VAT charges are not a major aspect in tourists when making decision on the destination", he stressed.

Some of the aspects that are put into considerations, according to the minister, include attractions, security, tourism services and transport.

In his defense the minister made a comparison index with Kenya and South Africa destinations which were imposing VAT services until the year 2015. Even without VAT charges Tanzania, according to him has a significant increase of tourists' additions comparing to the two destinations.

To support his proposal the minister gave tourists statistics of the year from 2011 to 2014. He said that in 2011 Tanzania received 867,994 tourists while Kenya and South Africa having been charging VAT attracted 1,750,000 and 8,339,000 tourists respectively. The year 2012 Tanzania received 1,077,058 tourists while Kenya and South Africa received 1,619,000 and 9,188,000. In 2013 Kenya received 1,434,000 tourists and South Africa received 9,537,000 tourists while Tanzania received 1,095,884 only. In 2014 Tanzania received 1,140,156 tourists while Kenya received 1,261,000 and South Africa 9,549,000.

Dr Mpango concluded that the VAT charges on tourism services will have no impact on tourism since Tanzania was only keen to receive high-end tourists who spend more in the country.

Highlights of the Tanzania National Tourism Policy (by the ministry of natural resources and tourism 1999) focus on Tanzania need to attract high-yield low volume tourists.