Small and medium-sized tour operators in Tanzania are up in arms over the government’s enforcement of value added tax, which they claim will push them out of business.

While the operators said they are not opposed to the tax, they said the government should consider how it is administered.

The bone of contention is that in December 2017, the government reviewed the tourism licence popularly known as “Tala” in order to bring small informal players into the formal sector as it sought to expand its tax base.

But the small tour operators now say Section 15(b) of the country’s VAT Act, 2014, is punitive and cumbersome. In particular, they are against the section that states, “The value added tax imposed on a taxable supply shall become payable at the earliest time when the consideration for the supply is received, in whole or in part.’’

The Tanzania Association of Tour Operators (Tato) and the Hotels Association of Tanzania (HAT) argue that the payment of the tax in advance is not conducive to business especially for some of their members who lack basic accounting knowledge.

Sirili Akko, Tato’s chief executive told The EastAfrican that, “most of the smaller tour operators and hoteliers are at a loss due to a lack of competent staff, so they don’t know how to comply with the VAT regime.”

The meeting passed a resolution to set up a technical committee to present their petition and proposals to the Finance Ministry.

The Tanzania National Parks’ online portal was cited as a major problem as it deducts money from tour operators' accounts without issuing EFD invoices, denying them VAT refunds. Deposits create a gap between VAT payment and VAT claims, badly affecting cash flow.