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Uganda Civil Aviation Authority (CAA) wants VAT Exemption On Airport Service Charge

The Civil Aviation Authority (CAA) has asked the Uganda Revenue Authority to exempt it from paying Value Added Tax (VAT) on the airport service charge. Samalie Kiseka, the director finance at the CAA, said airlines were not given sufficient time to prepare for the tax.

She added that many airlines had sold tickets to passengers without charging VAT. The passenger service charge is charged on the airlines ticket. "We have had complaints from airlines and operators that it is going to affect the number of passengers they handle and it will in the end affect tourism," Kiseka said.

When the airport was still under the Government, airport tax was collected under the Directorate of the Civil Aviation as land revenue to the Government from passengers embarking from the airport. Kiseka said since the CAA is an autonomous entity collecting its revenue to sustain itself, what used to be airport tax was now being collected as an airport service charge on which URA has introduced VAT.

Speaking at the closure of the first public accountants' economic forum at Entebbe Imperial Resort Beach Hotel recently, Kisekka noted that charging VAT on airport service charge is against international guidelines governing international airports.

"The guidelines governing the international airport service charge globally is that it is supposed to be used for funding facilities the airport provides to passengers such as security, immigration and bonding ranges," she said. According to the international guidelines, airport service charge, even if it is collected by the state or an authority, must be tax free.

"In the East African region, when you go to Rwanda you are not taxed, in Tanzania it is tax free, in Burundi and Kenya is also free, except that in Kenya they charge a commission of Ksh2 for collection, which is handed over to the government," she added.

"We are still negotiating with URA to see how best this is going to be applied, but it will be better if the international rules are followed," Kiseka added.

Amos Wekesa, a member of the Uganda tourism board, observed that there is still need to promote Uganda's tourism by ensuring favourable conditions for tourists.

By Agnes Nantambi
The New Vision Newspaper

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