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Government mulls one stop shop for tourism tax issues

The minister for Natural Resources and Tourism, Dr Pindi Chana speaking in past event. PHOTO | COURTESY

By  Zephania Ubwani

What you need to know:

• While some tourism service operators consider the charges (taxes, fees and levies) to be “too high” others are bothered by the payment procedures

Arusha. A one stop shop for tax clearance in tourism and tourism-related services has been mulled.

This will, among others, ensure the visitors to the national parks and other sites are served promptly with minimum red tape.

“To address the anomaly, there will be a one stop shop for payment of all levies,” said the minister for Natural Resources and Tourism Pindi Chana.

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She told the heads of departments and agencies under the ministry that she was aware of complaints over the settlement for such charges. While some tourism service operators consider the charges (taxes, fees and levies) to be “too high” others are bothered by the payment procedures.

Dr Chana, who was speaking here this week, could not elaborate more on the proposed system but hinted it would be rolled out soon.

“The ministry has started to work on this. We will put in place a system where all categories of payments will be settled at one centre”, she said.

She said this was among the key decisions made at the 13th meeting of the Tanzania National Business Council (TNBC) in Dodoma.

The ministry was also going through laws and regulations with the aim to improve the Tourism Development Levy (TDL) payment system. The minister said the realignment of taxation in the hospitality sector will also involve the local government authorities.

The latter have often been blamed for imposing levies on the tourists traversing through their districts to the sites. Years’ long efforts to remove levies charged on the transiting tourists have been futile because the local councils could not act.

Dr Chana, however,said discussions were underway between her ministry and the Local Government and Regional Administration (Tamisemi) ministry over the issue.

The meeting, held under the framework of ‘the Ministerial Public Private Dialogue on Policy Reforms’, was aimed to improve business and investments in the sector.

By virtue of her position, she is the chairperson of the ministerial task force on the public private dialogue and policy reforms in the Tourism sector. Dr Chana challenged the senior officials in the ministry to come out with “strategic recommendations” which can take Tanzania’s tourism to another level.

During the day-long dialogue, the Tanzania Association of Tour Operators (Tato) reiterated their concerns on the multiple taxes.

The association’s chairman Wilbroad Chamburo said taxation in Tanzania’s tourism industry has remained high compared to her competitors in the region.

He cited the Tourist Agency Licensing Authority (Tala) licence pegged at $2,000 which, he said, was prohibitive to local tour operators.

“Tala tax is a burden to us” echoed Samuel Diah, the chairman of Tanzania Local Tour Operators (TLTO), a lobby for small scale operators.

He said taxes have pushed the local tour operators in a tighter corner compared to large companies with roots outside the country.

“We have to pay back loans yet their businesses were heavily impacted by Covid-19”, he explained.

Tato vice chairman Henry Kimambo attributed multiple taxation in the hospitality industry to a host of regulatory agencies.

Other speakers said high taxation has made Tanzania an expensive destination for tourists compared to the country’s close competitors.

These are largely manifested in the often disputed value added tax (VAT) and the concession fees.

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• Where We Work

Tanzania Economic Update: How to Transform Tourism into a More Sustainable, Resilient and Inclusive Sector

Stone Town, Zanzibar

Photo credit: Christian Morgan/World Bank.

STORY HIGHLIGHTS

• The latest Tanzania Economic Update highlights the huge untapped potential of the tourism sector to drive the country’s development agenda
• The new analysis discusses long-standing issues facing tourism in Tanzania as well as new challenges brought on by the COVID-19 pandemic
• The report says that the pandemic offers an opportunity for policy actions for the sector to recover in the near term and become a sustainable engine of private-sector-driven growth, social and economic inclusion, and climate adaptation and mitigation over the long term

DAR ES SALAAM, July 29, 2021— Tourism offers Tanzania the long-term potential to create good jobs, generate foreign exchange earnings, provide revenue to support the preservation and maintenance of natural and cultural heritage, and expand the tax base to finance development expenditures and poverty-reduction efforts.

The latest World Bank Tanzania Economic Update, Transforming Tourism: Toward a Sustainable, Resilient, and Inclusive Sector highlights tourism as central to the country’s economy, livelihoods and poverty reduction, particularly for women, who make up 72% of all workers in the tourism sector.

“Without tourism, the situation would be bad,” said Rehema Gabriel, a hotel attendant in Dar es Salaam. “I have been working in the tourism industry for eight years now, so I do not know what it would be like without it.”

The economic system around tourism had grown in value over the years and in 2019 was the largest foreign exchange earner, the second largest contributor to the gross domestic product (GDP) and the third largest contributor to employment, the report says. On the semiautonomous Zanzibar archipelago, the sector has also experienced rapid growth, accounting for almost 30% of the island’s GDP and for an estimated 15,000 direct and 50,000 indirect jobs. However, the report notes, only a small fraction of Tanzania’s natural and cultural endowments has been put to economic use through tourism development.

“Tourism offers countries like Tanzania, with abundant natural and cultural endowments, access to many foreign markets,” said Shaun Mann, World Bank Senior Private Sector Development Specialist and co-author of the Tanzania Economic Update. “But the absence of tourism revenues, as we have seen during this pandemic, compromises the integrity and viability of not only endowments, but also the economic, environmental and social ecosystems built up around those endowments.”

Amid the ongoing COVID-19 (coronavirus) pandemic, the World Bank estimates that Tanzania’s GDP growth decelerated to 2.0% in 2020. Business slowed across a wide range of sectors and firms, especially export-oriented sectors such as tourism and manufacturing. The report highlights the impact of the crisis on tourism specifically, which has had consequences beyond just the industry, given the many other sectors that support, and are supported by, tourism. The 72% drop in the sector’s revenues in 2020 (from 2019 levels) closed businesses and caused layoffs.

Zanzibar’s economy was even more severely impacted with GDP growth slowing to an estimated 1.3%, driven by a collapse of the tourism industry. As the hospitality industry shut down between March and September 2020, occupancy rates dropped to close to zero. While the Zanzibar tourism sector started slowly rebounding in the last quarter of 2020, with tourist inflows in December 2020 reaching almost 80% of those in 2019, receipts from tourism fell by 38% for the year.

As the tourism sector transitions gradually into recovery mode with the rest of the world, the report urges authorities to look toward its future resilience by addressing long running challenges that could help position Tanzania on a higher and more inclusive growth trajectory. Areas of focus include destination planning and management, product and market diversification, more inclusive local value chains, an improved business and investment climate and new business models for investment that are built on partnership and shared value creation.

Tanzania is a globally recognized destination for nature-based tourism, a competitive market segment in eastern and southern Africa. Beyond attracting tourists, the country’s landscapes and seascapes produce a wide range of ecosystem services, including carbon sequestration and biodiversity co-benefits that are not efficiently priced and often generate little or no financial return. The global climate crisis has created significant demand for investment in these forms of natural capital, and Tanzania is well positioned to take advantage of nature-positive investment opportunities. The additional revenue derived from global climate programs could be an opportunity to ease the government’s fiscal constraints while also supporting the livelihoods of local communities.

“While restoring the trade and financial flows associated with tourism is an urgent priority, the disruption of the sector has created an opportunity to realign tourism development with economic, social, and environmental resilience,” said Marina Bakanova, World Bank Senior Economist, and co-author of the report. “The pandemic has created an opportunity to implement long-discussed structural reforms in the sector and use tourism as a leading example of improvement of the overall business climate for private investment.”

The authors suggest five priorities for a sustainable and inclusive recovery that lay the foundation for the long-term transformation of the tourism sector:

• Creating an efficient, reliable, and transparent business environment to reduce red tape and multiple distortions and inefficiencies, hindering decisions on private investments, domestic and foreign
• Establishing an information-management system that consolidates data from tourists and firms, enabling policymakers to improve sectoral planning and identify viable investment opportunities
• Ensuring that firms across the sector, as well as those in downstream value chains, have access to affordable transitional finance
• Consistently promoting, monitoring, and reporting on adherence to health and safety protocols.
• Developing co-investment and partnership arrangements to support nature-based landscape and seascape management
• Press Release: Tanzania has an Opportunity to Ignite Inclusive Economic Growth by Transforming its Tourism Sector
• Report: 16th Tanzania Economic Update: ‘Transforming Tourism: Toward a Sustainable, Resilient, and Inclusive Sector’
• Video: Launch event: 16th Tanzania Economic Update
• The World Bank in Tanzania
• The World Bank in Eastern and Southern Africa
• The World Bank in Africa

• culture and art
• miscellaneous

Ministry to use tourism levy for improved services

Africa-Press – Tanzania . TOURISM Development Levy (TDL) will be used effectively to develop wildlife tourism and increase the number of tourists visiting the attractions in the country. Deputy Minister for Tourism and Natural Resources, Ms Mary Masanja said the target is to reach five million tourists a year by 2025.

To achieve this, the deputy minister said there are a number of plans including the effective use of tourism development levy in improving infrastructures and other services. She gave the assurance here when answering Mohammed Jumah Soud (Donge-CCM), who wanted to know how TDL is being used to support Wildlife Development Fund as well as the tourism sector to increase the number of tourists vising the attractions.

Ms Masanja said TDL was introduced in 2008 to develop tourism products, to control and monitor the standards and quality of tourism industry and business, promotions of tourism attractions and capacity building for the sector to conduct research whose findings will be used to improve the sector performance.

However, after amendment of the financial services in 2020, TDL collection levies are now carried jointly by the ministry and the Tanzania Revenue Authority and the revenue collected is deposited in government coffers. On the part of wildlife, she said Wildlife Conservation Fund is in place and it caters across a number of wildlife protection and conservation issues which are within the national parks and outside the scope.

December last year, the ministry of Natural Resources and Tourism handed over a newly reviewed tourist Bed Night Levy to the Tanzania Revenue Authority (TRA) expected to provide a list of registered tourism accommodation facilities liable to pay charges. The levy is in line with the Tourism Act no. 29 of 2008, 59 (2) together with the Tourism Development Levy (TDL) Regulations that started enforcement immediately after appearing in the government gazette in October 1, 2013.

TRA has been using accommodation list introduced in 2015 for collection of Bed Night Levy for 1,200 facilities that were available that time. The updated TDL came into effect after the government learnt that the 2015 list is out-dated because the number of accommodation facilities has increased after recognizing 577 new accommodation services providers making a total of 1815 accommodations facilities countrywide that are supposed to pay Bed Night Levy.

During the event, the government put its plans to review all accommodation facilities in the country with the aim of expanding the range for TRA to collect tax.

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In 2023, tourist arrivals to Tanzania increased by 24.3% to a record-breaking 1,808,205, from 1,454,920 tourists in 2022, 922,692 in 2021, and 616,491 in 2020.

Tanzania’s tourism receipts reached a record-high USD 3,368.7 million in 2023, compared to USD 2,527.8 million in 2022 (USD 1,310.3 million in 2021). This increase is consistent with the rise in the number of tourist arrivals.

In 2020, revenues were down to USD 1 billion as it was severely affected by the Covid-19 pandemic and its impact on international travel, from a peak of USD 2.6 billion in revenues and 1.5 million arrivals in 2019.

The sector’s contribution to GDP fell from 10.6% in 2019 to 5.3% in 2020 and climbed to 5.7% in 2021. 

However, given the ongoing fast recovery of the sector, the Tanzania National Business Council (TNBC) forecast that the share of tourism in the country’s GDP will reach 19.5% in 2025/26.

Europe traditionally accounts for the largest share of arrivals, followed by Asia and the Pacific, the Americas, Africa, and the Middle East.

Tanzania´s hotel occupancy rate was estimated at 53.8% in December 2019 compared to 44.9% in December 2018.

The increase in tourist arrivals in 2023 was attributed to the rebound of travel activity post-COVID. Additionally, it was driven by the continued efforts of the Tanzanian government to promote tourism attractions within and outside the country.

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In April 2022 Tanzania’s President Samia Suluhu Hassan unveiled the “The Royal Tour” documentary while promoting FDIs during her official visit to the US.

Filmed throughout Tanzania in 2021, it features Emmy Award-winning journalist Peter Greenberg traveling to Tanzania with President Hassan.

She’s the ultimate guide for a week, exhibiting Tanzania’s history, culture, environment, food, and music, as well as telling the stories of Tanzania’s hidden jewels.

Source Markets

In 2022, the United States of America recorded the highest number of arrivals from the rest of the world at 100,600 followed by France (100,371), Germany (67,718), the United Kingdom (60,116) and Poland (46,431).

Meanwhile, arrivals from Africa were from Kenya (166,324) Burundi (100,851), Zambia (46,787), Malawi (44,438) and Rwanda (44,288).

Tourist arrivals from the top 10 countries out of 214 account for 53.2% of all arrivals.

Tanzania Tourism Offer

Tanzania’s incredibly rich natural tourism offer earned it the title of “Africa’s Leading Destination” in 2021.

The natural attractions fall into two main categories: wildlife and beach.

Tanzania Wildlife & Beaches

Tanzania’s wildlife resources are considered among the finest in the world. Tanzania is the only country, which has allocated more than 25% of its total area to wildlife national parks and protected areas.

There are 16 National Parks in Tanzania, 28 Game Reserves, 44 Game controlled areas, 1 conservation area, and 2 Marine Parks.

Tanzania boasts many of Africa’s most renewed destinations; in the north the Serengeti plains, the Ngorongoro Crater, Lake Manyara, and Mount Kilimanjaro, and in the south Mikumi and Ruaha National Parks and the Selous Game Reserve.

According to a survey conducted by SafariBookings.com, Tanzania’s Serengeti National Park was voted Africa’s best safari destination for 2020, followed by Mana Pools (Zimbabwe), Mala Mala (South Africa), Okavango Delta (Botswana), and Lower Zambezi (Zambia).

Mount Kilimanjaro was declared Africa’s leading tourist attraction in 2016 during the World Travel Awards Africa and the Indian Ocean Gala Ceremony in Zanzibar.

Other additional natural attractions include the white sandy beaches of the Zanzibar archipelago, those north and south of Dar es Salaam, and excellent deep-sea fishing at the Mafia and Pemba Islands.

Tanzania Hunting

Tanzania is prized for its superb trophy hunting (sport hunting or safari hunting).

Hunting in Tanzania is presently permitted and regulated by the Wildlife Conservation Act of 2009, and its subsidiary regulations.

The hunting industry has grown considerably in the last two decades and Tanzania is among the leading hunting destinations in the world.

Hunting and Forestry jointly contribute 2 to 3 % of the GDP of Tanzania. Given there is such commitment to the conservation and protection of wildlife, it may be surprising to note that, unlike neighboring Kenya, hunting still occurs in Tanzania.

However, there is no contradiction, as hunting in Tanzania is part of the wildlife conservation process, as it is done in a much-planned manner. Counts of wildlife are taken regularly and hunting licenses are issued accordingly.

Investments in the Tanzanian Tourism Sector

The Tanzanian Government is engaged in developing and promoting sustainable growth in the travel and tourism sector in Tanzania, to preserve its natural and cultural resources.

The Government, therefore, is focused on attracting high-income tourists who are less likely to spoil the culture and the natural environment.

Last Update: 23rd February 2024

Sources: Bank of Tanzania (BoT), Statista, Tanzania Immigration Department, Tanzania National Bureau of Statistics (NBS), World Bank (WB).

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