Tanzania faces blowback from its recent VAT introduction. All-important safari industry struggling to maintain its leading position in East Africa.
At SafariBookings.com – the largest online marketplace for African Safari Tours - we noticed a remarkable decline in Tanzanian booking requests. This highlights the damage caused by the introduction of the Tanzania VAT (Value-Added Tax), to the country’s tourism industry. Tanzanian tour operators have lost a significant percentage of business. During the same period Kenyan operators have received a significant increase in booking requests.
About 15 months ago, the Tanzanian Government shocked its safari industry by introducing an 18% VAT on tourist services. Services which had previously been exempt from the tax, are now subject to the Tanzania VAT. This includes ground transportation, guiding fees, park fees and camping fees.
Many Tanzania safari tours that include lodge or hotel accommodation might become 5 to 10% more expensive due to the VAT introduction. The price of Camping Tours and Kilimanjaro Tours were expected to rise by a massive 18%. The Tanzania Association of Tour Operators (TATO) fears that a cost increase, passed on to clients, translates to long-term damage to the Tanzanian safari industry.
Tanzania ‘lost’ more than 13% of their booking requests due to new Tanzania VAT
At SafariBookings.com we analyzed the booking requests that we received from clients. We looked at bookings before and after the imposition of the VAT on tourist services in Tanzania. This comparison gave us an insight into the effect of the tax on the safari industry in East Africa. More than 135,000 requests were included in our analysis. The results support the fears of TATO. There is clear evidence that the tax is causing damage to the safari industry in Tanzania.
Our analysis shows that the average price per day for Tanzanian safari tours the year after the VAT introduction was 14.14% higher. In this period Tanzania saw an associated, relative decline of more than 13% in booking requests.
Kenya and Uganda gained 15% and 16% more requests
During the same period, the number of requests for operators in Kenya increased relatively by 14.92%. In absolute numbers, because SafariBookings.com grew by almost 25%, booking requests increased by a staggering 42.25%.
Mr Fred Kaigua, CEO of the Kenya Association of Tour Operators (KATO), believes that the introduction of the VAT in the Tanzanian safari tour industry only tells part of the story.
Mr Kaigua asserts three internal factors that also contributed to Kenya’s increase in booking requests: improved security; a government-led tourism recovery strategy; and the waiving of VAT on tours.
Tour operators in Uganda, the other major Eastern African safari country, also saw a very significant relative increase in booking requests of 16.33%.
Based on these numbers, it appears that Kenyan and Ugandan tour operators were the real beneficiaries from the VAT rise. Further research is required to determine if the SafariBookings.com figures represent a trend for all business generated by East African tour operators.