TANZANIA: Tourism Campaign Goes To Asia

The government and private sector have agreed to partner in promoting tourism in the emerging economies, particularly in Asia.

Natural Resources and Tourism Minister, Prof Jumanne Maghembe and officials of the Tanzania Association of Tour Operators (TATO) agreed during the Karibu Tourism Fair that all promotion efforts should target Asia in order to double the number of tourists come 2020.

"Our joint marketing campaign should target China, India, Indonesia and other emerging economies in a bid to double the number of tourists visiting Tanzania annually" Prof Maghembe told tourism stakeholders who were taking part at annual Karibu Tourism Show in Arusha.

Wildlife tourism in Tanzania continues to grow, with more than one million guests who visit the country annually, earning the country $2.05 billion, equivalent to nearly 17.6 per cent of GDP.

Additionally, tourism provides 600,000 direct jobs to Tanzanians; over one million people earn an income from tourism not to mention the value chain of tourism which supports, parks, conservation areas and now community based wildlife management areas (WMA's) but also farmers, transporters, fuel stations, spare parts suppliers, builders, tent manufacturers, suppliers of food and drink.

Meanwhile, the minister assured the tourism stakeholders that the government has no plans to introduce the new fees, levies and other charges on tourism in a short notice, as a way to create conducive environment for local tour operators to compete "Tourism is a competition sector, the government will not enforce new charges with an eye to allow our destination a breathing space to remain competitive" Prof Maghembe told members of Tanzania Association of Tour Operators (TATO) at Karibu Fair.

Earlier, TATO Chairman, Mr Wilbard Chambulo implored the Minister to allow a minimum period of 12-month notice and participation of the tourism private sector before introducing new fees, levies and other charges.

Please, at least allow a minimum period of 12-month notice and participation of the tourism private sector before introducing new fees, levies and other charges in a bid to create trust in the international tourism market and to remain competitive globally, Mr Chambulo insisted.

Former TATO Vice-chairman, Mr Zuher Fazal, said Karibu Fair which is the East African premier and the second largest tourism show in Africa after South Africa's Indaba, needs joint efforts between private and public sectors to become international exhibition.

We need to elevate Karibu Fair from local to international travel and tourism show, but this can only be possible through public-private-partnership to market it extensively Mr Fazal explained.

Part of the 18-year-old outdoor event's uniqueness and excitement is that it offers a real safari experience.

Karibu Fair Chairman, Mr Sam Diah said the three days event, which is registered with the UN World Tourism Organisation (UNWTO), attracted nearly 8,000 visitors from within and outside the country.

The event, which is well covered by local, regional, and international media; attracts hundreds of exhibitors, delegates, and thousands of visitors, showcasing a diverse of local and regional tourism products.

It gives participants the opportunity to exchange ideas, build alliances, and network locally, regionally, and internationally.

TANZANIA: Destination Tanzania More Expensive Because Of 18% VAT To Tourists

When tourism stakeholders met with former President Jakaya Kikwete in the beginning of last year, they agreed to identify challenges facing the sector and put it in the lab of Big Results Now (BRN) to analyse and ultimately improve the business environment.

Mr Kikwete was the chairman of the Tanzania National Business Council (TNBC).

A committee was formed by the industry players from both public and private sectors and compiled a report with seven pillars of challenges facing tourism - ranging from threat to wildlife, poaching, and dynamite fishing to multiple taxes.

The report was ready at the time democratic choices had put a new government and that way, Mr Kikwete could not receive the report he promised to work on to address the challenges.

When President John Magufuli met representatives of the business community last December, the stakeholders gave him the report, with challenges they wanted addressed, they say.

According to them, they also presented the same report to the minister for Natural Resources and Tourism, Prof Jumanne Maghembe, and he received the presentation well.

When June 8, 2016 came, nothing had been done to address any of neither the identified challenges nor put tourism in the lab of BRN - the Malaysian model of development initiative adopted in the country which aims at adopting new methods of working under specified timeframe for delivery of the step-change required.

On top of that, a new challenge emerged when Finance and Planning minister Philip Mpango announced the introduction of the 18 per cent Value-Added Tax (VAT) on tourism services.

Despite all efforts to have the new tax removed, they hit a snag as Parliament endorsed both the Budget and the Finance Bill unchanged in the particular section.

That means, destination Tanzania is becoming more expensive by increasing its cost by 18 per cent to tourists when they enter national parks, game drive and marine cruising among others.

"VAT is not bad but the issue is its timing. We had identified challenges which the government has not yet worked on them and now it comes with the new problem. The sector needs support. What can VAT do for tourism?" says the Tanzania Confederation of Tourism (TCT) executive secretary, Mr Richard Rugimbana.

As the new tax emerges, the budget for the Tanzania Tourism Board (TTB) was still low compared to other competitors.

Kenya's marketing budget is about Sh90 billion but that of Tanzania is about Sh5 billion and has been up and down. Yet the countries are seeking visitors from almost the same markets.

Sources from the industry say that TTB will not even participate in the London-based World Travel Marketing (WTM) in November - a global annual event for the travel industry to meet industry professionals and conduct business deals.

Kenya introduced VAT on tourism in 2013 but its implementation, plus security challenges brought about by the terrorist attacks, affected the sector so much that the country scrapped it effective this July.

While the tourism players were contemplating on how to go about the imposed VAT on the sector, the Ngorongoro Conservation Area Authority (NCAA) announced another increment in rates effective July 1, 2016.

The new rates apply to entry fees; motor vehicle permits; annual fee for commercial vehicles; camping fees; aircraft landing fee; crater service fee among others.

That happened ahead of Britain voting to leave the European Union; a move that affected the performance of the sterling pound against the US dollar. Decelerating pound against the US dollar makes it more expensive for Britons to travel including to Tanzania as many of the charges to foreigners are pegged in the dollar.

Tourism is Tanzania's leading foreign exchange earner which generated $2.2 billion in 2015 and the income has been increasing year-after-year.

It employs about 500,000 people although the World Bank said most of the jobs to Tanzanians especially those from communities around tourist sites are low-end.

However, the industry players are now skeptical about the future of Tanzania tourism as it would be affected by abrupt changes and lack of consistent and unpredictable policies. "I think the future of tourism will remain challenged and the government will stand to lose more, not only because of VAT but also due to its abrupt changes on sensitive sectors like tourism," says the chief executive officer of Tanzania Association of Tour Operators (Tato).

Most companies will either refund clients or absorb the cost themselves; which means because of unpredictability, the international travel agents will not be able to print their two-year brochures including destination Tanzania in their 'sales' because they can't tell which Budget the changes will happen in between," he says.

Right now TTB has clearly expressed that they are not going for market in World Travel Market 2016, and this is another blow.

Why all these last-minute changes? Not only tour operators in Tanzania but also we operators abroad publish the rates up to 18 months in advance -- so should we continue losing money on bookings or should we shred all marketing materials we printed for expensive money with lower rates in it?

If it gets hard or impossible to make long-term-planning and calculations we need to focus on other more reliable countries," posted Mr David Heidler, Denmark-based tour operator on facebook as he commented on Mr Akko's post.

The impact of the VAT is not only to destination Tanzania but also to the region which seeks to market East Africa as a single destination.

Ms Carmen Nibigira, coordinator of the Nairobi-based East African Tourism Platform (EATP), says regional tourism will be not only about products but also competitiveness and VAT is a huge factor when one wants to measure value for money.

The bottom line is EAC should have one harmonized vat system on tourism services. We cannot talk about harmonisation of our laws and regional integration when we have disparities in our law system and maturity of our product and services, she says.

If we are all serious about promoting East Africa as a competitive destination, policy makers need to understand that as a region our tax regimes need to look at the trends.

When the product and the service industry is being developed and in most cases needing some incentives - imposing taxes is not the best approach," she adds.

Tanzania tour operators now are seeking intervention from the head of state despite the fact that Prof Maghembe has insisted that the new tax is here to stay.

TANZANIA: Value Added Tax, European Tourists Flee Tanzania

European tourists enjoy consumer protection second to none when it comes to their rights, and Tanzania is about to find out how they and their tour operators react to the folly of slapping VAT on tourism services.

The Tanzania's Finance Minister has introduced the tax in his budget speech, but the brunt of the dissent is now backfiring at Prof. Maghembe, the Minister for Natural Resources and Tourism, for not just abandoning his sector, but in a show of arrogance turning against the tourism industry, claiming tourists will have nowhere else to go.

Well, that notion is now being put firmly to rest as several European tour operators and travel agency associations have challenged the Tanzanian government to either lift the VAT or else they will rebook their clients to other African destinations.

Sources from within Tanzania are already counting their losses, as cancellations are pouring in thick and fast from tourists who are not ready to pay several hundred dollars extra for a visit to Tanzania.

Sources close to the main tour operator association, Tanzania Association of Tour Operators (TATO) in fact claim that their members have received way over a thousand cancellations and that the trend is accelerating for trips within the timeframe European tourists have to cancel their trips in case of price increases.

Kenya suffered a similar trend two years ago when the Kenyan government would not listen and an equally hapless tourism minister there also failed to stand up in cabinet and fight for the sector, offering similar lame excuses. The downturn in Kenya at the time accelerated, when into a time of down-turn the prices for safaris and beach vacations went up, before over the past six months a series of expensive but absolutely necessary financial incentives had to be launched to revive the tourism industry.

Kenya's tourism industry at the time was faced with the double whammy of anti-travel advisories and tax increases, leading key European tour operators to divert safari business at the time to Tanzania at the expense of Kenya while Zanzibar became en vogue in Europe while Mombasa's resorts remained empty.

Today, the boot has shifted to another foot as Tanzania is now faced with a similar exodus and the migration of business to neighboring Kenya, Uganda, Rwanda, and even as far as South Africa and Zimbabwe, where the cost of holidays is more affordable, in the case of South Africa aided by record low exchange rates of the rand versus major currencies.

Experience over the years tells that once a destination is in the bad books with European tour operators, it is very difficult to make up lost ground and only at a very substantial expense, as is seen presently in Kenya.

TANZANIA: Tourism 'To Lose Sh2 Trillion' As Value-Added Tax Hurts Tourism

Tanzania's new value-added tax (VAT) on tourism services could reduce the number of visitors from the European Union by half, a group has warned.

ECTAA, s a group of national travel agents' and tour operators' associations within the bloc, says member countries account for 50 per cent of all tourists who arrive in Tanzania and whose planned trips could now be cancelled over the additional cost.

The loss of 50 per cent of tourists would mean the country losing an estimated Sh2 trillion if data from the previous year's trading is anything to go by.

On July 1, Tanzania imposed VAT on tourism services despite outcry that it would make the country a more expensive destination.

So far about 8,000 tourists have cancelled their vacations to Tanzania, denying the country $660,000, The Tanzania Association of Tour Operators (Tato) says.

ECTAA has called on the Tanzanian government to either scrap the VAT or else they will rebook their customers to other African destinations.

ECTAA represents the national associations of travel agents and tour operators of 27 EU member states, of two EU accession countries as well Switzerland and Norway, and three international members.

It represents some 70,000 enterprises in Europe.

The permanent secretary in the Ministry of Natural Resources and Tourism, Maj Gen (rtd) Gaudence Milanzi has said the ministry would soon have a dialogue with Tato to see to mitigate the government decision on VAT on tourism services.

TANZANIA: Value Added Tax On Tourism Services To Stay

The government will not change the decision to introduce an 18 per cent Value Added Tax (VAT) on tourism services, the Minister for Natural Resources and Tourism, Professor Jumanne Maghembe has hinted.

He said here that the decision was arrived at after a careful planning and there are strong reasons for it than against. Professor Maghembe noted that hunting tourism is on the decline so there had to be found something to fill the gap of funds that will not be available. He said buyers and user of goods and services are charged VAT, and wondered why alarm is raised on tourism services.

Also he noted that the government has vowed to invest more on development expenditure rather than recurrent expenditure, hence there is a need of money to fund free education, build infrastructure and offer health services. He said tourism being the sector that earns the country highest percentage of foreign currency, the decision had to be taken.

He allayed fears expressed by sections of tourism stakeholders that the VAT imposed on tourism services would lower the number of tourists and subsequently the funds emanating from them. "Some people are against that, but it is only 18 percent.

Out of 100 dollars they pay us 18 dollars extra. They claim tourists will not come to Tanzania, I assure you they will come; where will they go?" he questioned.

Expounding on that, Professor Maghembe said Tanzania national parks are highly rated, out of 50 best parks in Africa, 10 are from Tanzania due to natural beauty and efforts put in to conserve the same, hence many people would like to come and enjoy the attractions.

He promised that part of the funds generated from tourism activities from now would be invested in promoting Tanzania tourist attractions worldwide, through international television channels.

He said that will bring in more tourists and country earn substantial earnings so that tourism sector contributes bigger percentage to the country's coffers. He brushed aside claims that Kenya and Uganda were earning more from tourism, clarifying that it is Tanzania at the top.

He said Kenya has two million tourists per year, Uganda 1.5 and Tanzania about one million, but the latter earns more foreign exchange since tourists spend more days in Tanzania than in the two states.

Professor Maghembe said parks are going to be improved by getting rid of poachers, stopping cattle and people from intruding. Tanzania Tour Operators (TATO), Kilimanjaro Association of Tour Operators (KIATO) had requested the government to reverse its decision on VAT charge, claiming a crisis was looming and that tour companies would die gradually as they would fail to shoulder costs.

Presenting 2016/17 budget proposals last Thursday to Parliament, the Minister for Finance and Planning, Dr Philip 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.

TANZANIA: Scrap Value-Added Tax Charge, Tour Operators Demand

Tanzania Tourism operators have raised their voice over the Value-Added Tax (VAT) on tourism services announced in the national budget proposal last week in Parliament, and which they want it scrapped.

Unveiling the 2016/2017 government budget proposals in Dodoma, the Finance and Planning Minister, Dr Phillip 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.

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

The umbrella organizations, according to Akko, 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 licence fees as well as 11 duties for each tourist vehicle per annum, and nine others.

According to him, Kenya had imposed VAT on tourism services in 2015 but it has rescinded the move this year after learning it was counterproductive.

"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.

Entry to national parks (park fees) is now VAT exempt and the same applies to commissions paid to tour operators.

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

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

Tourism is the leading sector in generating foreign exchange for Tanzania. Available statistics indicate that it attracted 1.1 million tourists in 2015 and an income of 1.93 billion US dollars, lower from 2 billion US dollars earned in 2014 with 1.2 million tourists.