Tanzania plans to reduce taxes on tourism activities to make the industry competitive.

Tour operators are subjected to 23 different taxes, 12 being business registration and regulatory licence fees, and 11 duties for each tourist vehicle per annum.

Natural Resources and Tourism Minister Lazaro Nyalandu said the government would reduce the taxes and levies to make Tanzania a leading tourist destination in Africa.

“Taxes make Tanzania a high-priced tourist destination. We are going to streamline them to stimulate the industry growth,” Mr Nyalandu told tour operators in Arusha last week.

He hinted that some national parks, local authorities and licence fees would either be reduced or abolished in order to lessen the tax burden on tour operators and tourists.
Sources say the industry is also likely to be exempted from paying the 18 per cent VAT, but the minister did not mention this.

This development comes in the wake of plans by the government to impose taxes on various sectors from January next year.

Tanzania hopes the number of tourist arrivals will reach 1.2 million this year, up from 1 million in 2013, earning the economy about $2.25 billion. Last year, tourism earnings were $1.88 billion.

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The recent statistics show that earnings from the tourism industry increased from $200 million in 1993 to $1.88 billion this year.

The numbers of visitors increased from 230,000 to one million.

The minister called on the players in the industry to help grow tourist numbers, pledging that the government would play its role of ensuring a conducive business environment.

According to a five-year marketing blueprint rolled out in 2013, Tanzania anticipates 2 million tourists by the close of 2017, raising revenues to $3.8 billion. 

Tanzania Association of Tour Operators chairman Willy Chambullo said it was cheaper to pay the penalty for doing business illegally than to comply with complex the tax regime.

The latest assessment of the Tanzanian tourism sector indicates that the administrative burdens of completing licence tax and levy paperwork raise the cost of doing businesses. For instance, a tour operator spends over four months to complete regulatory paperwork, whereas the tax and licence paperwork takes up 745 hours per year.

The report by Tanzania Confederation of Tourism and Best-AC, shows that average annual cost of personnel to complete regulatory paperwork per local tour operator is Tsh2.9 million ($1,795).

As a direct result, in Tanzania, where there are about 1,050 tour companies, only 300 firms comply with tax regime.

This means that there could be 750 tour firms operating illegally. Going by annual licensing fee of $2000, it means that the Treasury loses $1.5 million or Tsh2.4 billion annually.

Tanzania’s tourism sector is among the sectors with great economic potential. It provides a substantial foreign exchange earnings, employment and acts as a stimulant to other sectors like agriculture.  

The reported number of tourists who visited Tanzania in 2012 places the country on the map of leading African safari destinations with million-plus visitors per year.

Other competitive African destinations, tourist arrivals reaching a million or above are Kenya, Zimbabwe, Botswana, Namibia, Zambia and South Africa.