World Tourism and Trade Council warns against tax exemptions in Tanzania

David Scowsill, CEO and President of The World Travel & Tourism Council (WTTC), the global forum for business leaders and authority on the economic and social benefits of Travel & Tourism, says:-

“If tourism services in Tanzania are going to be subject to a substantial increase in VAT in the next VAT Bill, this will have a detrimental impact on the country’s economic growth. WTTC’s research shows that taxation on tourism of this kind results in job losses and a curbing in demand and as in other countries and regions around the world, this would be counter-productive to the Tanzanian economy.

We appreciate that revenue needs to be raised. However, if the VAT exemptions are to be removed for Tourism Services in the new VAT Bill, this will negatively affect the Tourism industry in many ways, including game drives, park entry fees, tourist guiding, water sports and tourist air charter services.

Travel & Tourism is a major pillar of the Tanzanian economy contributing to economic growth and job creation. The Industry contributes TZ S6,899.5bn or 12.9% of total GDP and accounts for 1.2million jobs or 11.2% of total employment. It is essential that the Industry is nurtured and protected. However, the need to maintain the ‘Exemptions on Tourism Services’ in the next VAT Bill seems to be falling on ‘deaf ears’. However, if the exemptions on tourism services are removed, Tanzania should expect a resulting loss in sales/bookings, a cancellation of bookings and a loss of jobs. This is completely counter-intuitive to the purpose of raising money and boosting the Tanzanian economy. WTTC strongly urges the Tanzanian Government to reconsider, and not go ahead with, removing the VAT exemption for tourism.”

Tanzania was hoping the tax exemption will help boost tourism and lead to an increase in demand for Tanzania safaris and other tourism packages the country offers.