Occupancies in upcountry Uganda hotels as a result of the VAT tax measure has taken a beating and dropped in some case to below 20 percent 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.
Uganda’s owners of upcountry hotels, safari lodges, and camps have breathed a sigh of relief when President Yoweri Kaguta Museveni, during the annual Investors Round Table meeting, directed his Finance Ministry and tax collectors to scrap Value Added Tax, which earlier in the year raised accommodation cost by 18 percent.
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.
It could not be established when the Presidential Directive will take effect, 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 first in official communications before hotels, lodges, and safari camps can stop charging their clients VAT.
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