On July 1, the Tanzanian government began charging an
18% valued added tax (VAT) on many previously exempt tourist services, including
ground transportation, park fees, water safaris, guiding fees, camping fees and
According to SafariBookings.com, an online marketplace for
African safari tours that includes over 1,750 operators, the new tax has
“caused chaos in the safari industry, forcing tour operators to charge clients
up to 18% extra for safaris that had already been paid.”
The Tanzania Association of Tour Operators (TATO) has expressed serious concerns on the cross-cutting negative consequences of the tax measures on the tourism industry, which currently contributes more than 17% of the country's GDP.
At issue is the short notice given by the Tanzanian
government, which introduced the change as part of the 2016 finance bill on
June 3, passed it on June 23 and implemented it July 1.
“As most safaris are paid for months in advance, this short
notice didn't give tour operators the opportunity to add VAT on top of their
usual rates,” said SafariBookings.com in a statement.
As a VAT had previously been charged for accommodations,
tours that use accommodations are seeing a 5% to 10% price increase, while camping
and Kilimanjaro tours are now 18% more expensive.
Some operators are not even VAT-registered, because they had
previously been exempt from the tax.
said that it has been “bombarded” by emails from clients who’ve been informed
that their safaris are now hundreds to thousands of dollars more expensive.
While tourism in Tanzania has been rising steadily, according
to the World Bank — growing from 566,000 international arrivals in 2004 to more
than 1.1 million in 2014 — SafariBookings.com’s Wouter Vergeer worries that the
new VAT charges could negatively impact the industry.
“Neighboring Kenya offers substantially cheaper safaris and
many great safari destinations, so a real fear is the long-term damage this
could do to the industry in Tanzania.”
TATO agreed and said Tanzania country competitiveness is undoubtedly lowered against Kenya.
"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. Tanzania should avoid the same mistake, otherwise our neighbors will capitalize and have a free ride on our mistakes," said Sirili Akko, TATO executive secretary.
According to Akko, the newly introduced VAT will hamper the government's goal of increasing tourist numbers to 2 million in 2017. Akko said he fears it will be very difficult to rebuild the reputation as reliable safari destination after this VAT has been trialled.
"It makes little sense to exempt transportation services and charge VAT on tourist guiding, game driving, water safaris, animal- or bird-watching and park fees while the whole tourism business is about transporting people or tourists to the national parks," he said. "It is practically not possible to draw a line between transportation and other tourist services. Furthermore, park fees are also a form of tax or levy, and it makes no sense charging VAT (tax) on tax."
However, minister for agriculture, livestock and fisheries Charles Tizeba recently said in Dar es Salaam that key stakeholders in the sector were consulted before the new tax was introduced and were satisfied that it would not cripple the sector, which is leading in foreign exchange earnings in Tanzania.
Dorine Reinstein contributed to this report.
This report was updated to include statements from TATO and from Tanzania's minister for agriculture, livestock and fisheries.