Africa > East Africa > Uganda > Presidential intervention expected to save upcountry hotels from ruin

Uganda: Presidential intervention expected to save upcountry hotels from ruin

2016/11/11

Uganda's owners of upcountry hotels, safari lodges, and camps have breathed a sigh of relief at the same time as President Yoweri Kaguta Museveni, during the annual Investors Round Table conference, directed his Finance Ministry and tax collectors to scrap Price Added Tax, which before in the year raised accommodation cost by 18 %.

The President correctly pointed out that if tourism is to be an invisible export, it has to be treated like exporting coffee, i.e., without levying VAT on such services.

Occupancies in upcountry hotels as a result of the tax measure had taken a beating and dropped in some case to below 20 % on average as tourists voted with their feet and chose cheaper safari destinations. This in particular benefitted neighboring Kenya where at the same time VAT on tourism service was scrapped as Uganda in a misguided move slapped it on the industry.

It could not be established at the same time as the Presidential Directive will take result, and there has been instant speculation that it may take until the reading of the 2017/18 budget to make the necessary legislative changes.

Hotel operators in turn expressed their hope that the Uganda Revenue Authority will heed the Presidential Directive and halt the collection of VAT on upcountry hotel bills though confirmation on such measures must be received initial in official communications before hotels, lodges, and safari camps can stop charging their clients VAT.

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