Tour operators have warned that they may reduce their services due to the reinstatement of the tax on hotel accommodation, a move that could undermine the tourism industry.
They are now asking government to halt its decision of implementing the Value Added Tax on hotel accommodation, arguing that they might close their businesses, leading to job loss.
In June, Finance minister Maria Kiwanuka announced that the value addition tax exemption for hotel accommodation will be withdrawn. VAT in Uganda presently stands at 18 per cent and if the proposal is passed by Parliament into law, the cost of hotel accommodation in the country could rise by a corresponding figure.
Speaking to the Daily Monitor, Mr Geoffrey Baluku, the Secretary of the Association of Uganda Tour Operators (AUTO), said: “The impact of this to tour operators is immense as they will incur losses estimated between 3per cent to 9 per cent which is likely to lead to closure and bankruptcy of the tour operators in Uganda.” AUTO is Uganda’s leading tourism trade association, with over 100 members countrywide.
“It is not possible for tour operators to ask our confirmed clients to pay an increase of 18 per cent accommodation rates, as most of our tours were confirmed way back. Therefore, we shall simply have no money to pay this increase,” Baluku said.
In South Africa, VAT is reclaimed at the point of departure, while Tanzania and other East African countries have halted imposing VAT. In Kenya, the transportation of tourist has been exempted from VAT but will now have to pay, something tour operators are opposing.
By Dorothy Nakaweesi The Monitor News paper 18-July-2013