Tanzania Value Added Tax Spreads to National Parks

TANZANIA implementing the Tanzania government’s decision to impose taxes on tourist services, wildlife parks authorities have reviewed entry fees for tourists and tour operator services effectively July 1, amid protest from tourist and travel trade stakeholders.

Ngorongoro Conservation Area Authority had increased Value Added Tax (VAT) on tourism services within its conserved area, the leading and most attractive wildlife area in East Africa. The conservation authority had pegged the entry fee at US$60 per tourist entering the Conservation Area a day, while the Tanzania National Parks management had reviewed park entry fees to accommodate the much-protested VAT.

Other than entry fees, Tanzania National Parks had added VAT to all tourism services falling under its management jurisdiction as to comply with Tanzania government’s decision to extract more money from tourism through taxes.

Previous park entry fees ranged from US$30 to US$100 charged to a foreign tourist on daily basis in 3 categories of the parks which are Premium, Gold, and Silver. Premium Parks are the Serengeti National Park in northern Tanzania where a foreign tourist was paying US$60 per day spent inside the park, Mount Kilimanjaro also in northern Tanzania had a visitor paying US$70 per day spent on the mountain, while Gombe and Mahale Chimpanzee parks in Western Tanzania had a daily fee of US$100 and US$80 respectively.

Gold parks are the Tarangire, Arusha, and Lake Manyara - all in Northern Tanzania where visitors have been paying US$45 day.Silver parks, or the less-visited ones, are located in the Southern Tanzania tourist circuit and Lake Victoria. Visitors to these parks have been paying a daily fee of US$30 each.

From Friday this week (July 1), foreign tourists visiting Tanzania will be charged VAT to be added to the previous and the existing fees mentioned above based on each category of the park where the visitor has been booked. The VAT will as well be imposed on all other tourism services offered inside the parks, including accommodation, beverage, and vehicle movements inside the parks.

A public notice that was issued by the Tanzania National Parks and seen by NCA this week was quoted as saying, “The Management of Tanzania National Parks would like to inform all our esteemed customers that the Finance Act 2016 has withdrawn exemptions of VAT in tourism services.

“In order to comply with the 2016 Finance Bill, the management will start charging VAT at the rate of 18 percent in all tourism services and products in the National Parks.”

Tanzania tourism operators have raised their voice over the Value Added Tax on tourism services announced in the national budget, which they want scrapped.

Tanzanian Finance and Planning Minister, Dr. Phillip Mpango, said the government had imposed 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 the tourism industry would be counterproductive and will hamper growth of the sector which contributes to nearly 17 percent of Tanzania’s economy.

Mr. Akko had 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 license fees as well as 11 duties for each tourist vehicle per annum, and 9 others.

Kenya had imposed VAT on tourism services in 2015 but scrapped it this year after learning of its negative and counterproductive results. "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.

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

First-ever Tanzanian made Helicopter to Start Flying Soon

 

Tanzania has begun building its own helicopters that will be taking to the skies soon. A Tanzanian made two seater chopper is in its final stages of production and will start flying trials once it granted permission by the Tanzania Civil Aviation Authority.

Arusha Technical College, department of Mechanical and Engineering initiated the program so as to build affordable choppers for Tanzanians to ease the country’s transport woes.

“We are complementing President Magufuli’s industrialisation policy in pioneering the first locally made helicopters that will be available to ordinary residents at affordable prices,” explained the man behind the ATC chopper project, Engineer Abdi Mjema. Initiated two months ago with the aim of using the chopper for surveillance, rescue and agricultural purposes but reframed for people transportation.

Now at 50 percent completion the pioneer air craft has a chassis as well as airframe ready and also the popular gasoline powered VW flat engine board that is also used to make the “Robinson” helicopters in the US, but the craft will be ready in three weeks’ time.

“Once we get the aviation authority approval, we shall complete the most sensitive part of the helicopter mounting the main rotor” said the engineer. Arusha city in the northern region of Tanzania is looking to make history as the first region to fly the first-ever Tanzanian manufactured helicopter in July 2016.

With a flying ceiling of 400 to begin with, due to the high altitude in the mountainous region and a non-pressurised cabin, the Prototype ATC helicopter will change things for the East African nation. The engineers will increase the flying height to reach the normal commercial chopper 8,000 feet above sea level heights with more complete and accomplished models.

According to the college, it can produce up to 20 choppers in a year when the project gets a nod from higher authorities.

“The Tanzania-made helicopters will fly before 2020  and specifically 2018, which is two years from now,” said Engineer Mjema

Tanzania Tourist Board Launches E-Marketing Campaign to Bolster Country's Tourism Industry

Tanzania Tourist Board (TTB) has embarked on global e-marketing campaign by developing a modern destination online tourism portal and Application.

Launching the online system in Dar es Salaam, TTB Acting Marketing Director, Mr Philip Chitaunga, said the online services will help much on promoting the tourism attractions existing in the country.

"Due to the growth of technology globally, especially internet, many tourists prefer using online systems to access tourism information and it is the reason why we decide to come up with the application and the website," he said.

Following the introduced online portal, many tourism firms especially Small and Medium-sized Entrepreneurs (SMEs) will be supported to increase their earnings and conduct their business more easily.

Moreover, the portal will serve as tool for directly accessing tourist markets as well as online payment, a move that will allow tourists to directly pay for the service providers in the country and enable government pocket its rightful revenue income as well as tourism agents.

"The Tanzania Tourism App, contains detailed information on various tourist destinations in Tanzania, among other things the App gives includes an overview of what Tanzania can offer as unique tourist destination in Africa, things to do, hospitality services and how to plan their trips just to mention a few," he noted.

According to him, the introduction of e-marketing campaign is expected to bolster the tourism industry in the country as well as make it more a foreign exchange spinner.

He, however, urged Tanzanians to use both products when scheduling their local tourism visits during their holidays, as the products were not designed for foreigners alone.

Tanzania: Tourism Players Worry About VAT On Services

Tourism players have expressed concerns over government plans to impose Value Added Tax on tourism services saying the move will be inimical to growth of the sector which currently leads in foreign exchange earnings.

Tanzania Association of Tour Operators (TATO) Executive Secretary, Sirili Akko, said in a statement that the VAT plans for tourism industry would be counterproductive and will hamper growth of the sector which contributes to more than 17 per cent of the total economic output. "... the Tanzania Association of Tour Operators (TATO) wishes to express serious concerns on the cross cutting negative consequences of the tax measures on the tourism industry which currently contributes more than 17 per cent of the Gross Domestic Product (GDP)," he said in the statement.

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. "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.

"This works against the government goal of increasing tourist numbers to 2 million in 2017. It is also worth to note that so far Tanzania is still below the target in 2016 in comparison with the 2013/4 tourists numbers.

According to him, Kenya had imposed VAT on tourism services in 2015 but rescinded the move after learning it was counterproductive. Since then the neighbouring country seems to be regaining their competitiveness in the sector.

"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, otherwise our neighbours will capitalize and have a free ride on our mistakes."

Unveiling the 2016/2017 government budget proposals in Parliament in Dodoma on Wednesday, 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.

The TATO Executive Officer said the organisation 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.

"The nature of tourism business does not allow risking the trust gained at the high cost of time and resources. It will be very difficult to rebuild the reputation as reliable safari destination after a year of trial if we allow this current move."

"We, wish to further explain that the impact will go down to the social cohesion as it will affect employment and entire value chain particularly from ordinary people's point view.

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.

Tanzania Tourism Hit Hard

 

Tourism stands the leading economic sector in Tanzania, but it has been hit hard by multiple taxes imposed on tourist services through the annual budget tabled to the Tanzanian parliament on Wednesday of this week.

The unfriendly tourist budget that was set for implementation from July of this year, to end in June of next year, has not identified tourism among the key priority sectors that would speed up the Tanzanian economy, hence poverty reduction among the Tanzanian people.

In his budget speech that was televised live across Tanzania on Wednesday, Tanzania’s Finance Minister, Dr. Phillip Mpango, imposed a value added tax (VAT) on tourism services, including supplies of tourist guiding, game driving, water safaris, animal and bird watching, park fees, and ground transport services.

 “This measure was put in abeyance during the inception of the new VAT Act in July 2015 in order to provide for the operators to conclude their contractual obligations entered with tourists in a year,” Dr. Mpango said. The Value Added Tax has been imposed on similar services in neighboring countries like Kenya, Rwanda, and South Africa, he added.

But tourism industry players are worried they will lose their business to other African safari destinations.

A section of tourist investors said it was wrong to impose VAT on tourist services, pointing out that usually tourists do not take anything out of the country; they just come to gaze at wildlife and leave. The safari operators warned that VAT on tourism will make Tanzania a very expensive destination, and foreigners may start opting for other countries where prices for safaris are much cheaper.

Local tourist hotel operators pay about 55 different government taxes and levies in different categories.

Tourism-related segments that will be subject to Value Added Tax include tour guided game viewing, water and sea sports, animal and bird watching, accommodation, park fees, tourist chatter services, ground transport, and transit services. For the operators, however, the move will be a hard hit to the Tanzania tourism industry, making the destination uncompetitive. They said potential tourists could cancel their trips to Tanzania.

Kenya, Tanzania’s leading safari destination, has to this end allocated KSh 4.5 billion (US$45 million) for tourism promotion activities, in addition to some tax incentives that will be announced shortly.

Kenyan Finance Minister Henry Rotich proposed to remove the Value Added Tax (VAT) on park entrance fees in his annual budget speech.

Four East African nations tabled their annual budget speeches on Wednesday.

Tanzania’s tourism sector is a key economic sector and had attracted one million tourists last year who generated US$2.04 billion against the US$1.9 billion gained the previous year. Tanzania Tourist Board had so far predicted to see over two million tourists visiting Tanzania next year.

Moshi - Tanzania: State to Double Jobs, Augment Tourism Earnings

The Government has stated that the Kilimanjaro Tourism and Industry Fair (KILIFAIR) is a shot in the arm in the tourism sector in the country, anticipating that its spillover effect will increase tourists, jobs in the sector and bring more foreign currency for the Government.

Launching the event at Ushirika Ground here, the Minister for Natural Resources and Tourism, Professor Abdallah Maghembe, said he was amazed by a high turnout of exhibitors, including many foreign tourist agents, who he said will act as ambassadors abroad.

"This is a big shot in the arm for the tourism sector. It is a fantastic fair this year. I did not expect to see even half of what I see here of the exhibitors, but I am also satisfied by quality of what you show," the minister said of more than 250 exhibitors in the threeday fair.

Professor Maghembe noted that few tourists have been coming to Tanzania and the fair is setting a new tone as each tourist company and agent who attended the fair would in turn bring many sightseers from Europe, America and other continents.

"I thank you (exhibitors) that you have come not only for exhibition but also to see the beauty of the country. These are companies that bring tourists from Europe; they will do a lot for us.

Currently the Tourism sector creates 1.5 million jobs; I am upbeat that in three years or so job opportunities will double to three million. It contributes a bit more than 20 per cent to the country's coffers, I want it up to 40 per cent," said the minister.

Responding to KILIFAIR 2016 organisers, Minister Maghembe announced that there would be a waiver of entrance fees to national parks for exhibitors in the next KILIFAIR, as a way to attract more exhibitors and tourists in the country.

Mr Maghembe said the Government is interested in receiving high-end tourists who can contribute much to the economy through different payments they make. He said from January to December 2015, Tanzania received 1.5 million tourists while Dubai attracts up to 25 million tourists.

He said KILIFAIR would act as a bridge, increase exhibitors next year, but see to it that many more of tourists will go to see attractions in the country's national parks. The minister promised to discuss with the Moshi Co-operative University (MoCU) so that its sports ground would be a permanent place to hold the yearly event.

The KILIFAIR Promotion Company Co-Director, Mr Dominic Shoo, said the event under the motto 'Boosting Tanzania Tourism' provides a networking platform for stakeholders from around the globe to share experiences, establish new business relations and improve existing contacts.

Mr Shoo had asked the minister to spare the exhibitors from paying an approximate 60 US Dollars entrance fee to the national parks, saying they were the ones going to promote the country and bring in many tourists who would pay the fees.

The event has attracted more than 250 exhibitors. There are more than 150 tour companies from countries such as USA, Canada, South Africa and some European ones which are here to find partners for business in the country.

Elephants Could Disappear from Tanzania World Heritage Site Within Six Years

 

One of Africa’s oldest reserves could see its elephant population decimated by 2022 if urgent measures are not taken to stem industrial-scale poaching, according to a new analysis by WWF.

Selous Game Reserve, Tanzania’s largest protected area, was home to one of the greatest concentrations of African elephants on the continent, but rampant ivory poaching has seen the population reduced by 90 per cent in fewer than 40 years. Nearly 110,000 elephants once roamed the savannahs, wetlands and forests of Selous, but now only about 15,000 remain in the ecosystem.

The analysis, produced for WWF by Dalberg Global Development Advisors, shows how the loss of Selous’ elephants would have a negative effect on Tanzania’s nature based economy, putting the livelihoods of 1.2 million people at risk. Travel and tourism in Selous generate US$6 million annually, and the industry represents a combined yearly contribution of US$5 billion to the GDP of Tanzania, which holds world renowned assets such as Mount Kilimanjaro and Serengeti National Park.

“Selous is the only natural World Heritage site in southern Tanzania and one of the largest wilderness areas left in Africa. Its value to Tanzania - and indeed to the rest of the world - is dependent on its large wildlife populations and pristine ecosystems,” said WWF-Tanzania Country Director Amani Ngusaru.

In 2014, UNESCO placed Selous on its List of World Heritage in Danger due to the severity of elephant poaching. At the recent peak of the crisis, an average of six Selous elephants were being gunned down by criminal syndicates each day.

UNESCO also has expressed concerns about other potentially harmful industrial activities threatening the reserve, such as mining, oil and gas exploration, and dam construction. Selous’ status will be on the global agenda again at the annual meeting of the World Heritage Committee next month.

In order for Selous to be removed from UNESCO’s in danger list, WWF is calling for greater effort in combatting wildlife crime, an assessment of the impacts of proposed industrial activities, investment in sustainable tourism infrastructure, and an equitable distribution of benefits to nearby communities.

“Achieving zero elephant poaching is the first step to setting Selous on a path toward fulfilling its sustainable development potential. Together, we must ensure that this natural treasure is protected from harm,” Ngusaru said.