Published on : Friday, June 22, 2018
In the 2018-2019 budget tabled in parliament , the Finance Minister, Dr. Phillip Mpango proposed to scrap off import duty on various tourist’s vehicles in an effort to stimulate the development of key sector of the economy.
Tourism is Tanzania’s largest foreign exchange earner, contributing an average of $2 plus billion annually, which is equivalent to 25 percent of all exchange earnings, the government data indicate.
Tourism also contributes to more than 17 percent of the national gross domestic product (GPD), creating more than 1.5 million jobs.
The vehicles that would be imported duty-free in July 1, 2018 once the amended law comes into force include Motor Cars, Sight Seeing buses and overland trucks, which are imported by, licensed tour operators and must meet specific conditions.
Chairman of Tanzania Association of Tour Operators (TATO), Wilbard Chambulo was moved by the state to waive the import duty, saying the tax exemption is a sigh of relief to its members, as it will save them $9,727 for each imported tourist vehicle.
It is understood, TATO had fought consistently for this to happen, and now its chief is grateful to the government for being considerate to their consistent scream, terming this move as a win-win deal.
Available records indicate that tour operators in Tanzania are subjected to 37 different taxes, comprising business registration, regulatory licenses fees, entry fees, income taxes and duties for each tourist vehicle per annum, among others.
The TATO chairman argued that the contentious issue is not only how to pay myriad taxes and make profits, but also the modality and time spent in complying with intricate taxes.
Indeed, a study on Tanzanian tourism sector indicates that the administrative burdens of completing license tax and levy paperwork place a heavy cost on businesses in terms of time and money.
For instance, tour operator spends over four months to complete regulatory paperwork, whereas in tax and license paperwork consume his or her a total of 745 hours per year.
The report done by Tanzania Confederation of Tourism (TCT) and BEST- Dialogue, shows that average annual cost of personnel to complete regulatory paperwork per local tour operator is Tsh 2.9 million ($1,300) per year.
Tanzania is estimated a home to over 1,000 tour companies, but official data shows that there are as few as 330 formal firms complying with tax regime, which is likely to be due to the complexities of compliance.
This means that there could be 670 briefcase tour firms operating in Tanzania. Going by the annual license fee of $2000, it means that treasury loses $1.34 million annually.
However, the Finance Minister, Dr. Mpango also promised through the budget speech that the government is to introduce a single payment system where businessmen would be paying all taxes under one roof to offer them a hassle-free taxes compliance.
Dr. Mpango also scrapped off the various fees under Occupational, safety and Health Authority (OSHA) such as fees imposed on application form for registration of working places, levies, fines related to fire and rescue equipment, compliance license and consultancy fees of shillings 500,000/- ($222) and 450,000 respectively ($200).
Tags: Tanzania, tax relief