UGANDAN TOURISM FRATERNITY PROTESTS VAT PLANS
(Posted 25th June 2014)
As reported here the day following the budget reading in Uganda’s parliament earlier in the month, were immediate protests and objections raised by tourism stakeholders, but it took until yesterday before tourism trade associations formulated their response about the government’s plans to add 18 percent VAT on safari accommodation outside the greater metropolitan area of Kampala.
A regular source made the following statement available for further publication to underscore the opposition the tourism industry has against being hit by yet more taxes which could severely impact on the growth of the sector, still thought to be in its formative stages:
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PRESS RELEASE ON ISSUE – 18% VAT ON UPCOUNTRY HOTELS & LODGES
Uganda Tourism Association is the apex body of the private sector tourism associations in Uganda. UTA has a membership of the major tourism associations like Association of Uganda Tour Operators (AUTO), Uganda Hotel Owners Association (UHOA), Uganda Safari Guides Association (USAGA), The Uganda Travel Agents Association (TUGATA) and Uganda Community Tourism Association (UCOTA).
The tourism sector is one of the fastest growing sectors in Uganda at an annual growth rate of 21%.
According to the World Travel and Tourism Council (WTTC), tourism is;
*One of the country’s leading foreign exchange earners and it employs over 500,000 people (directly & indirectly) majority of whom are women and youths.
*Every Tourist arrival creates 2 jobs.
According to World Tourism and Travel Council (WTTC) forecasts for 2022, the tourism sector in Uganda is expected to:-
*Have attracted capital investment of UGX 494.5bn in 2011, which is expected to rise by 6.1% pa over the next ten years to UGX922.2bn.
*Support 715,000 jobs by 2022 (7.2% of total employment), an increase of 3.1% pa over the period
*Tourist arrivals are forecast to total 1,907,000, generating expenditure of UGX3, 767.4bn, an increase of 4.9% pa.
The proposed new VAT 18% tax imposed on upcountry accommodation facilities will lead to losses by Tour Operators / hoteliers who have already sent out itineraries/ pricing to their intending clients and it is impossible to revise the rates quoted, this may also lead to reduced number of tourists due to cancellations after the increase is imposed on them.
Please note that a confirmed safari is a contract between the destination tour operator and the agent abroad. The rate quoted cannot be changed as per the law. The Tourism Sector should be Zero rated since we already pay VAT on water and fuel.
Ush 5 Billion was allocated to Uganda Tourism Board for marketing and we thank Government.
However, we would like to add that this amount is minimal and cannot meet the marketing gap of Uganda as a country. It is with the above that we urge government to have a paradigm shift in the way they look at tourism. Tourism as an Export, government should consider increasing allocation of funds to the tourism sector for purposes of marketing and working on infrastructure like tourism roads such as the circuit around Bwindi Forest among others. As a result of poor roads, our vehicles are badly hence a big challenge to the sector players.
Uganda stands to lose $ 979 million if Government goes ahead to implement VAT on upcountry hotels because most of the tourist will cancel.
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