Stakeholders disagree on impact of VAT on tourism

Dar es Salaam. The largest online safari booking for African tourism, SafariBookings.com, says the booking requests it receives for the Tanzanian destination have declined by 13 per cent since the Value Added Tax was introduced 15 months ago.

SafariBookings.com co-owner Jeroen Beekwilder wrote in the company’s website that while Tanzania has been losing booking requests, Kenya and Uganda have seen an increase in the same by 15 per cent and 16 per cent respectively.

“Tanzanian tour operators have lost a significant percentage of business, while during the same period Kenyan operators have received a significant increase in booking requests,” Mr Beekwilder said.

But some members of the Tanzania Tour Operators association (Tato) disputed the figures saying bookings have, in fact, increased.

“The view of many of us is that Tanzania is now gaining from the ongoing political tensions in Kenya. We receive many of the tourists who had planned to go to Kenya but are now diverting to Tanzania because of similarities in tourist attractions,” a Tato member who asked not to be named said.

Many tourist investors claim the 18 per cent VAT, which came into effect last July has led to the increase of cost of tourist services in the country by between 5 and 10 per cent. SafariBookings on its part say some tour operators have increased the cost of their services by 18 per cent.

But investors in the tourism industry say that after failing to convince the government to keep the VAT exemptions in place they are now focusing on “factors that we can control” including reaping maximum benefits of the political tension in Kenya.

Services which had previously been exempt from VAT, but are now subject to it include ground transportation, guiding fees, park fees and camping fees.

Investors under tourism sector still enjoy tax exemption on import duty provided under East Africa Customs Management Act (EACCMA) but applies to specially designed vehicles for tourist’s transportation.

SafariBookings.com further says: “Our analysis showed that the average price per day for Tanzanian safari tours the year after the VAT introduction was 14.14 per cent higher than the previous year. In this period Tanzania saw an associated, relative decline of more than 13 per cent in booking requests.”

The same company adds that more research is required to determine if the SafariBookings.com figures represent a trend for all business generated by East African tour operators.