Uganda tour firms want VAT axed

KAMPALA, UGANDA - Operators within Uganda’s tourism industry have asked the government to totally abolish the 18% VAT on up country hotels and lodges since the Uganda Tourism Board (UTB) will soon implement a tourism levy on January 1st 2014.The operators Uganda Hotel Owners’ Association (UHOA) and the Association of Uganda Tour Operators (AUTO) also want the government to allocate more funds to marketing Uganda as a tourism destination like other countries in the region.

“We’re grateful to the government for having considered our appeal to review charging of VAT on accommodation for upcountry lodges and hotels for at least a year.
“But what we’re saying is that the government should abolish the multiple taxation on hotel/lodging facilities and services and instead implement the tourism levy which directly support development in this sector,” Samuel Balagadde the Executive Director of the Uganda Hotel Owners’ Association said in Kampala last week.
Balagadde said the government should continue recognizing the efforts of the private sector in promoting tourism and maintain the exemption of VAT on accommodation for upcountry lodges.
This he says will protect Uganda’s tourism market and stimulate further development in the sector.

In the reading of the 2013/14 national budget, finance minister Maria Kiwanuka instituted an 18% VAT tax on all hotel and lodge accommodations in upcountry Uganda. However, the parliament budget committee refused to confirm this tax following tough agitation from the tourism private sector.
The tax waiver was later confirmed by the Ministry of Finance permanent secretary Keith Muhakanizi in a letter he wrote to AUTO and UHOA.
“I wish to inform you that exemption of VAT on accommodation for hotels and lodges outside Kampala District was reinstated during the passing of the VAT (Amendment Bill 2013/14),” Muhakanizi’s letter read in part.
Bulaimu Kibirige, the Chairman UHOA said it should be noted that tour operators normally sign contracts with foreign tour companies for two to three years based on agreed rates.
“Similarly, providers of accommodation like hotels set their prices in brochures and Websites.
 The abrupt change in prices as a result of the VAT addition on accommodation had resulted into legal actions by clients who had made bookings in advance,” Kibirige said.

Barbra Adoso the Vice President of the Association of Uganda tour Operators said foreign tour operators make expensive brochures and undertake very expensive marketing strategies to market their packages.
“We too spend a lot of money traveling all over the world marketing Uganda as a prime destination at our own expense,” she said.
Kibirige said Uganda is still largely an unknown destination and the tourist numbers are still minimal to other East African states.
“We’re committed to partner with the government in strategic marketing of the country’s diverse products to attract leisure travelers,” Balagadde said.
Balagadde said the private sector can work with the government to shape the country image abroad that has been spoilt due to public protests.