New VAT to Hamper Safari Tourism in Tanzania

As of July 1st Tanzania instated a new value-added-tax of 18% that went into effect on travel services that had been previously exempt from the tax. As a result, tourists who had booked and paid for their trips are now being asked for more money to cover the new tax on things like entry into the national parks and accommodations. This change could damage an important source of revenue for Tanzania.
The surprise was in the short notice given by the Tanzania government to the safari industry and tourists. One safari operator said they were notified of the new VAT on June 23. Some park authorities haven’t had enough time to implement the charges and provide adequate receipts. While others are concerned that the additional tax will price Tanzanian safaris out of the marketplace and that tourists will go elsewhere for better deals.
Serengeti Watch reports that “Members of the Tanzanian Tour Operators Association have reported that 8,000 tourists have so far cancelled their planned trips due to the tax. They point out it will cost tourists 25% more than similar destinations and result in a drop in tourism revenue. A group of travel agents in the EU warn that it could cut numbers of European tourists to Tanzania by 50 per cent. This would mean two trillion shillings in lost revenue, about $89 million.”
Most likely the smaller lodges, safari groups and tour operators will be the ones to suffer as they cannot absorb large numbers of cancellations.