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.
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