It is now official that all hotels and lodges up country have been exempted from the 18% VAT that had been proposed in the middle of this year. This comes after an official letter from the Permanent Secretary to the Treasury was delivered making it clear that this hugely controversial VAT had been scrapped at last.
Tourism stakeholders expressed their gratitude and applauded the efforts of their respective associations together with the Uganda Tourism Board who ensured that there is made repeated representations to parliament and to government to have this tax measure cancel because it would make accommodation package safaris across Uganda so very expensive and for that reason the foreign tour companies were refusing to pay up as the tax because it was not included in any existing quotations for safari services.
At the time of VAT’s introduction by the Minister of Finance in her budget speech, the tourism industry had forecast a huge decline in the numbers tourists’ arrivals in the country together with a number of cancellations of pre booked tours which was in fact seen. There were no other issues such as destination appeal or quality service delivery by hotels and safari operators, but just the raised cost of visits to Uganda which was not right.
Beyond Uganda, Kenya though stakeholders has continued to struggle with a number of tourism products and services because it was subjected to VAT which is even less as it is 16%. Hopefully they will follow Uganda as an example and throw the idea out of the window, then lobby their own government to once again restore good level playing fields along side the pricing of tourism services, then later eliminate the VAT.