Experts urge govt to scrap VAT on tourism, banking

Thursday June 15 2017

By Alfred Zacharia @TheCitizenTz

Dar es Salaam. The The government has been advised to remove value-added tax (VAT) on tourism and banking in the coming financial year.

Tax experts said banks and tourism businesses had been hit by VAT that was introduced last year.

The director and partner for tax services at PricewaterhouseCoopers, Mr Joseph Lyimo, said reducing or exempting VAT would spur growth in banks and tourism business. He was speaking during the monthly meeting organised by the CEO Roundtable of Tanzania for business leaders.

“There is a liquidity squeeze in the market. Some banks have high non-performing loans, three lenders have close up shop and businesses generally are failing. Business confidence has fallen in hotels and tourism.” Mr Lyimo said although the issues had not appeared in the finance bill read by Finance and Planning minister Philip Mpango he wished the matters included in the Finance Act.

According to him, the financial sector is a hope for operators of small, medium and large enterprises. However, CEOs are happy with some tax measures including zero rating VAT on ancillary transport services and VAT exemption on capital goods for key industries.

CEO Roundtable chairman Ali Mufuruki said tax reforms would create a conducive environment for investors. “We believe the removal of VAT on ancillary transport services will encourage landlocked countries to utilise Tanzania’s ports once again,” he said. “


The introduction of VAT exemption on capital goods in key industries will encourage local investments.” Presenting his budget in Parliament in Dodoma last week, Finance and Planning minister Philip Mpango said zero-rating VAT on ancillary transport services in relation to goods in transit was aimed at reducing the costs incurred by transporters when using the local ports and make them affordable and competitive.

“It will therefore increase employment opportunities and government revenue.”