Tourism players have expressed concerns that government plans to impose Value Added Tax on tourism services will handicap the growth of the sector which currently leads in foreign exchange earnings.
TATO (Tanzania Association of Tour Operators) Executive Secretary, Sirili Akko, stressed TATO’S concern about the cross-cutting negative consequences of the tax measures on the tourism industry, which generates more than 17 per cent of the Gross Domestic Product (GDP). TATO and a number of leading tourism players are worried that they might lose their business to Kenya and other tourist destinations, where VAT in tourism is zero-rated. VAT on the tourism services in Tanzania will make the country a more expensive tourist destination and place the Tanzanian tourism industry at a disadvantage.
This is in conflict with the government’s goal to boost tourist numbers to 2 million by 2017. It should also be noted that to date Tanzania is still short of its 2016 target, as compared to the 2013/4 tourist figures.