TANZANIA: Government Insists On VAT In Tourism Sector

The new 18 per cent Value Added Tax (VAT) on tourism services would not harm the growth of the sector as it was carefully researched before it was introduced, a government minister has said.

The Minister for Agriculture, Livestock and Fisheries, Dr Charles Tizeba, said in Dar es Salaam yesterday that key stakeholders in the sector were consulted before the new tax was introduced and were satisfied that it would not cripple the sector which is leading in foreign exchange earnings in Tanzania.

Speaking during the inauguration of the Swissport cargo terminal, the minister appealed to members of public people to stop giving misleading information concerning the new tax measure because it may send wrong message to tourism stakeholders.

Dr Tizeba, who was representing Minister for Works, Transport and Communication, Prof Makame Mbarawa, said that, the government arrived at the decision after consulting key players in the industry .

"The government is aware of the competitive environment among the East African Community member states and the country's weaknesses and strengths in the sector, thus this matter should not be used to mislead people because it may send wrong signal to the stakeholders," he said.

Mr Tizeba further explained that Tanzania's tourism was different from other countries such as South Africa, Zimbabwe and Kenya noting that "while Kenya is leading in number of tourists visiting the country, Tanzania earnings from the sector were high compared to Kenya. He observed that, before the Finance Act was endorsed by Members of Parliament, key players were involved in every aspect as in budget preparation passed through various stages.

Expounding, Mr Tizeba said that the introduction of 18 per cent VAT on tourism was carefully researched and highly debated in the Parliament before being endorsed thus allaying fear expressed by some stakeholders that it would lower the number of tourists and negatively impact on aviation industry. In his remarks, Swissport Tanzania Plc Chief Executive Officer Mr Gaudence Temu informed the Minister that the industry key players were of the views that the newly introduced VAT on tourism services was likely to have negative impact on both tourism and aviation sector.

"This is because the tax is an additional cost given that it was not factored in tour packages some of which had already been sold one year ago," Mr Temu said. He added that the tax was also going to erode the country's competitiveness against its neighbours who have scrapped VAT on tourism services.

Describing the state-of- the-art Air-cargo import warehouse, he said it is one of its kind in Africa with fully secured environment, access control through turnstiles and biometric locks. The cargo facility has locations provided for handling special cargo such as room for live animals 17sqm, Morgue capable to store up to 4 bodies, vulnerable items storage room 64sqm, valuable storage room of 40sqm, radioactive room 12sqm and dangerous goods room of 65sqm among others

. Mr Temu however noted that by having the cargo import terminal Swissport will have now met the International Civil Aviation Organisation (ICAO) requirement for segregation of import and export cargo.