Tour operators in Uganda have opposed the imposition of an 18% value added tax (VAT) on upcountry accommodation units saying that it will lead the industry to a crash course. In a bid to increase the national budget revenue by an estimated Shs6 billion, government announced a new VAT on upcountry accommodation which was effected immediately on July 1.
Members of the Association of Uganda Tour Operators (Auto) met at their offices in Kololo on Monday and warned that if implemented the new tax will cost Uganda around $6 million. “They’re looking to make an extra Shs6 billion but it is going to cost us a whooping $6 million (around Shs15 billion),” said the Auto chairman Mr Bonifence Byamukama. “Tourists have started cancelling their bookings because of an extra fee and definitely our neighbors are set to establish a huge competitive edge over us because Uganda is already the most expensive destination in East Africa.”
Speaking at the conference, the general manager Wild Places Mr Gary Segal regretted the government’s “lack of sensitivity” towards a key sector that is behind the resurrection of Uganda’s economic recovery. “It’s the job of government to market the country but they haven’t done so,” said Segal. “We spend a lot of money from our little profits to marketing and promotion of Uganda’s image which is severely affected by lots of negative activity, and to thank us for that you come and introduce a new tax to make business utterly unworkable.”
Uganda Lodges boss and Uganda Tourism Board member Amos Wekesa said that the classifications by the United Nations World Tourism Organisation state that tourism is zero rating and therefore tax free. “When you visit countries like South Africa and you happen to pay VAT for accommodation or product you’re asked to present the receipts at immigration while checking out and you’re refunding,” said Wekesa.
“Now, those are countries which are already offering better services, doing massive marketing and they’re cheaper than us. How do you compete?” The VAT imposition means that travelers heading to the Pearl of Africa will face higher prices not only on accommodation but also on food and drinks. Already a standard room at Mweya Safari Lodge has leaped from $320 to $364 following VAT imposition. Marasa, who own Mweya and a selection of other safari lodges including Para and Chobe, have had tens of cancellations from Germany and Indonesia due to the VAT.