25 Jun 2014

Ugandan Tourism Stakeholders Object intended VAT

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Following the reading of the Uganda budget in parliament earlier this very month, there were immediate protests as well as oppositions raised by different stakeholders in the tourism industry, however it took until just a day ago before the tourism trade associations prepared their response concerning the intentions of the government to add as much as 18% VAT on the safari accommodation located beyond greater metropolitan Kampala area.

budget-dayOne of the regular source availed the statement below for further publication to emphasize the disagreement the tourism sector has against being impacted by additional taxes that might severely affect the development of the industry that is still believed to be in its decisive stages:

The statement goes:

PRESS release concerning the 18% VAT on lodges and hotels upcountry

The Uganda Tourism Association -UTA is Uganda’s top most body of the private tourism industry associations. Uganda Tourism Association has membership of the key tourism associations such as Association of Uganda Tour Operators – AUTO, The Uganda Travel Agents Association – TUGATA, Uganda Hotel Owners Association – UHOA, Uganda Community Tourism Association – UCOTA as well as Uganda Safari Guides Association – USAGA

The tourism sector is among the fastest growing industries in Uganda with a yearly development rate of 21 percent.

In accordance with the World Travel & Tourism Council – WTTC, tourism is;

Among the country’s topmost foreign exchange earners, in addition employing more than 500,000 people directly and indirectly most of whom are youth plus women.

Each Tourist arrival offers two jobs.

In accordance with the World Tourism & Travel Council’s – WTTC projections for 2022, Uganda’s tourism industry is anticipated to:-

Have brought in a capital investment of 494.5 billion Uganda shillings back in 2011 that is projected to increase by 6.1% per year over the following ten years to add up to 922.2 billion Uganda shillings

By 2022 offer as many as 715,000 jobs which is a 7.2% of Uganda’s employment, a 3.1% increase per year over those years.

The Tourist arrivals are anticipated to be 1,907,000, creating expenditure of 3, 767.4 billion Uganda shillings, a 4.9% increase per year.

This proposed brand-new 18% VAT tax forced on accommodation facilities found upcountry is going to lead to severe losses to Tour Operators plus hoteliers that have already emailed out itineraries and prices to their clients and it is impracticable to change the prices quoted, this could as well result into decreased tourist numbers because of cancellations following the increase forced on them.

Please keep in mind that a confirmed safari is a legal contract between the tour agent in another country and the destination tour-operator. The price quoted can’t be changed as by the law. So the Tourism industry shouldn’t be rated since it already pays VAT on fuel plus water.

UGX5 Billion was assigned to Uganda Tourism Board for promotion and we appreciate Government.

Nevertheless, we wish to include that this sum is small and can’t meet the promotion gap of the entire country. It’s with the above that we call upon government to create paradigm shift in the direction they see tourism. This Tourism being an Export, the Uganda government must think about escalating fund allocation to the tourism industry to help in marketing as well as working on different infrastructure such as tourism roads like the circuit close to Bwindi Forest plus other. Because of the bad roads, our safari vehicles are terribly affected consequently a huge challenge to the players in the industry.

Uganda risks to lose USD979 million in the event that Government goes forward to force this VAT on accommodation upcountry since the majority of the tourist are likely to cancel their reservation.