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Tanzanian tour operators are losing hope regarding the government's delay in enforcing import duty exemptions on touring vehicles as the tourist season approaches.
During the 2018/19 budgetary session, Parliament amended the fifth annex of the East African Community Customs Management Act of 2004 to provide for an exemption from customs duties. Importing on various types of motor vehicles for the transport of tourists.
It was widely expected that licensed tour operators, as of July 1, 2018, would have started to import duty-free automobiles, buses, and land-based trucks as an essential measure to stimulate development. of the tourism industry.
Tourism is a key sector of the economy, as it is the country's largest source of foreign exchange, generating more than $ 2 billion a year, or 17 percent of GDP.
But nearly six months later, the exemption proved to be a promise in the air, the government still dragging its feet, prompting the Tanzanian Association of Tour Operators (TATO) to seek clarification.
Mr. Sirili Akko, Director General of TATO, recently wrote to the Minister of Finance to argue that some tour operators complained of being subject to import duties and that some of their vehicles were stuck in ports. because of controversial import rights.
"It is in this context that TATO decided to write to you asking for clarification on this particular problem. Does this mean that the exemption has not been carried out? Reads in part the letter signed by Mr. Akko.
Association President Wilbard Chambulo, who has more than 300 members across the country, said his members were trapped after throwing a number of old vehicles and waiting for them. to import those who are zero-rated and ready to carry tourists. the coming high season is expected to begin in mid-December 2018.
"Most of us are stranded while the government says nothing about exemption from import duties. We simply want the government to tell us whether the commitment was false or real, "Chambulo said.
TATO believes that the well-thought goal of removing import duties on various passenger vehicles is born from the interest shown by the government of the fifth phase to stimulate the development of the industry tourism.
Finance Minister Phillip Mpango has proposed an exemption from import duties on various passenger vehicles in the 2018/19 national budget presented to Parliament. He said one measure was essential to boost the development of a multi-billion dollar tourism sector.
"I propose to amend the Fifth Schedule of the African East African Community Customs Management Act 2004 to provide for an exemption of import duties on various types of motor vehicles for the carriage of tourists ", Presented Dr. Mpango to the National Assembly, in the country's capital, Dodoma.
He said the goal of the measure was to promote investment in the tourism sector, improve services, create jobs and increase government revenue.
The head of the TATO said that the members of the association were moved by the state's decision to remove the import duties, justifying the fact that the tax exemption was a sigh of relief, because it would save $ 9,727 per imported tourist vehicle.
"Imagine, before this relief, some tour operators imported a maximum of 100 new vehicles at the same time and paid $ 972,700 in import duties. Now, this money will be invested to develop a business with the goal of creating more jobs and income, "Chambulo said.
It is understood that TATO is always fighting for the promise to be kept. When the assembly approved the exemption, TATO members were grateful to the government for paying enough attention to their outcry, calling this decision a win-win solution for all parties.
Available records indicate that Tanzanian tour operators are subject to 37 different taxes, including business registration, entry fees, regulatory licensing fees, income taxes and annual fees for each tourist vehicle.
The TATO boss argued that the issue was not only how to pay a myriad of taxes and make profits, but also how and when to pay complex taxes.
"Tour operators need streamlined taxes to facilitate compliance because the cost of compliance is so high that it prevents voluntary compliance," explained Chambulo.
In fact, a study of the Tanzanian tourism sector indicates that the administrative burden of collecting license fees and collecting paperwork places a heavy burden on companies in terms of time and money.
A tour operator, for example, spends more than 4 months filling out regulatory documents. The tax and license formalities consume a total of 745 hours per year.
The joint report of the Tanzanian Tourism Confederation (TCT) and BEST-Dialogue indicates that the average cost per employee for performing the regulatory tasks of each local tour operator is 2.9 million Tanzanian shillings (1 USD 300) per year.
It is estimated that Tanzania hosts more than 1,000 travel agencies, but official data show that there are only 330 state-owned companies that comply with the tax system, probably because of the complexity of compliance .
This means that there could be 670 tourist agencies preparing briefcases in Tanzania. With annual licensing fees of $ 2,000, this means that the Treasury loses $ 1.34 million a year.
However, the Minister of Finance also promised in the budget speech that the government would put in place a single payment system that would allow businessmen to pay all taxes under one roof, for the purpose of their offer tax compliance without problems.
Dr. Mpango also removed various fees under the Occupational Safety and Health Authority (OSHA) regime, such as those imposed on the application forms for the registration of workplaces, taxes, fines for firefighting and rescue equipment, compliance permits and consultation fees of 500 000 Tsh ($ 222) and 450,000 Tsh ($ 200) respectively.
"The government will continue to examine various taxes and fees imposed by the institutions and parastatal agencies with a view to improving the business and investment environment," the minister told Parliament.
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