Uganda expected to drop VAT and other taxes on hotels

Information is emerging from government circles that, following President Yoweri Kaguta Museveni’s directive to remove VAT from upcountry hotels and safari lodges last year, this may become reality in the next financial year.
Tourism, Wildlife and Antiquities Minister Prof. Ephraim Kamuntu is quoted to have said at a tourism function last week that the government is considering removing or substantially reducing a number of tax burdens on the hospitality and tourism industry to encourage sectoral growth.

Already is tourism, inspite of its long time relatively poor financial facilitation by government, contribution some 9 percent to the national GDP.

‘Tourism is the one sector which has the capacity to fast track additional employment opportunities, earn the country much needed foreign exchange and which can attract direct foreign investment and domestic investment in the sector. No other sector has this capacity and while we have to wait for several more years to see benefits from the oil industry, tourism can come to the rescue of our sputtering economy‘ commented the source which provided the information.

When the 18 percent VAT was added at short notice last year on upcountry hotels, did safari packages immediately cost more for the entire accommodation element and both sales for Uganda vacations and in particular upcountry hotel occupancies took an immediate dive.

The Executive Director of the Uganda Hotel Owners Association repeatedly said last year that some of their member’s occupancies had dropped as low as 17 percent, an unsustainable situation given the overheads of hotels, and the organisation together with the Uganda Tourism Association has lobbied ever since to have the measure reversed. President Museveni then last year took notice of the complaints and directed the Ministry of Finance to remove the tax measure but, as speculated at the time, it was to take until the presentation of the new 2017/18 budget before this could be accomplished.

Meanwhile have local tourism operators also requested the Ugandan government to extend similar measures as done in Kenya during the recently read budget, when it was proposed to remove taxes and duties from locally assembled safari vehicles. This measure is expected to spur growth in locally assembled specialised safari vehicles and make them cheaper to buy, improving on the quality of the fleets. ‘In Uganda we also need such a measure. Our safari vehicles are taxed and dutied and are prohibitively expensive. Therefore we have to match the Kenyan measures to remain competitive in the region. Our minister wants 4 million tourists in 2020 but truth told, unless we implement a wide range of tax breaks and create incentives for the sector, I am not sure how we will accomplish that over the next couple of years. Even back in your days as President of UTA I remember the constant demand to better facilitate tourism marketing, increase the Ministry budget and give incentives to the private sector. If all those things had been done in a timely manner, Uganda as a destination could be so much further ahead, do so much better. We have 10 parks and a dozen or so game reserves, forests, lakes, rivers, culture, heritage and so much more which should be magnets for tourists from around the world. Uganda has had so many accolades over the past years as best this and best that but our government has taken it all for granted. They need to put their money where their mouth is and then we shall exceed their projections even‘ then added another source also preferring not to be named.

Source: ATC News