In parliament last week, Tanzania’s Finance Minister, Phillip Mpango proposed the scrapping of import duties on various tourist vehicles, in an effort to stimulate the development of the local tourism sector.
“I propose to amend the fifth schedule of the East African Community – Customs Management Act, 2004, in order to provide import duty exemption on various types of motor vehicles for transportation of tourists,” Mpango tabled before the National Assembly, in the country’s capital city, Dodoma.
The vehicles that would be imported duty free from July 1, when the amended law comes into force, are brought in by licensed tour operators and include motor cars, sight-seeing buses and overland trucks. These will need to meet specific conditions. “The objective of this measure is to promote investment in the tourism sector, improve services, create employment and increase government revenue,” Mpango told parliament.
Tourism is Tanzania’s largest foreign exchange earner, contributing more than 17% of the national gross domestic product (GDP), and over US$2b (€1.73b) of exchange earnings annually. This is the equivalent of 25% of all exchange earnings, according to government data.
Wilbard Chambulo, Chairman of the Tanzania Association of Tour Operators (TATO), said that the tax exemption is a sigh of relief to its members, and will save them US$9 727 (€8 399) for each imported tourist vehicle. “Imagine before this relief, some tour operators used to import up to 100 new vehicles at a go, and pay US$972 700 (€839 989) as import duty alone. Now this money would be invested to expand the company to create more jobs and revenues.”
Tour operators in Tanzania are said to be subjected to 37 different taxes, comprising business registration, regulatory licenses fees, entry fees, income taxes and duties for each tourist vehicle, per annum, among others. There are also immense time demands to comply with this intricate tax system – up to four months to complete regulatory paperwork. “Tour operators need streamlining of taxes to ease compliance because the cost of compliance is so high, and as such, it acts as an obstacle for voluntary compliance,” said Chambulo.
TATO CEO, Sirili Akko, is optimistic that if the budget would be endorsed by the Parliament and implemented the way it is, it would open up more opportunities for investors who in turn would unlock the tourism potential.
