New Value Added Tax on Accommodation Raises Tour costs for Uganda Tours
The New Value Added Tax on accommodation in Uganda has led to any increase on tour costs for Uganda tours and safari packages.
Up on reading the 2013/14 annual Uganda government budget, new taxes were introduced on all accommodation facilities (18% Value Added Tax) with effect from July 2013.
And we have been receiving numerous emails from the lodges with credit notes and revised invoices for all the bookings. Of course this puts us in a very awkward position with our already confirmed clients’ bookings but the government won’t just give up to relent on their decision. We have been trying all ways to absorb the increase but it’s just to big for us.
Future safaris booked will have the new 18% Value Added Tax included in the price quote to our clients – since the present increase was a surprise move and caught the hospitality industry and tourism sector off-guard and since there was no preparing for it we will have to add a surcharge covering the amount of the 18% Value Added Tax. Sadly there is no extra value for the Tourist – however there is for the cash-strapped Ugandan government.
This will mean significant higher costs to visitors of up-country park lodges – and certainly there is not going to be a free lunch for anyone – not only will tourists pay more, convention, conference attendees will also incur the new charges.
Taxes exist in every country including Uganda – some countries allow mechanisms for a refund of taxes paid as visitors leave the country – sorry, your taxes are going to stay in Uganda and hopefully will be put to good use improving the infrastructure and other needed areas of the Pearl of Africa.
Leading stakeholders have in recent days gone on rare record in the media over these actions, accusing government of not just mere lipservice towards the sector but of creating a work environment radically opposed to the often talked about an “enabling environment,” a phrase often used to self glorify economic advances even if glaringly absent.
“What they have done is create a disabling environment for the tourism industry. The tourist board which is supposed to promote the country, got a paltry 250 million Uganda shillings. What the hell are they thinking that can do other than pay rent and utilities and maybe staff?” ranted another regular source, for obvious reasons wishing to remain anonymous.
“This will lead to job losses in the sector and will only make an already tough situation more difficult. Others of our neighbors treat tourism as a priority sector, and here it is almost as if we are punished. Maybe they want to reduce tourism so that oil exploration can go ahead without us raising issues like in Murchison, where they want to pump oil in a wildlife park. We are completely at a loss to understand how a sector with the biggest potential for immediate job creation, FDI and forex earnings can be treated so badly. This is unacceptable, completely unacceptable,” said yet a third source met on Friday, all expressing their utter frustration with the turn of events.
Leading lodge operator in the country claimed, also on condition of anonymity, that their occupancies will suffer as a result of the tariff increases. It could not be immediately ascertained how the new VAT addition will affect conference participants now heading to Uganda for the Routes Africa meeting and other conferences, as their accommodation cost is also bound to increase by 18 percent.
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