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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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Tourism share of GDP set to hit 20 percent in 2025

By  Zephania Ubwani

What you need to know:

Projections by the industry players show that tourism will register a 6.2 percent growth between now and 2025.

Arusha. Tourism share in Tanzania’s gross domestic product (GDP) will reach as high as 19.5 percent in 2025/26.

The fastest growing sector in the economy has been contributing 17.5 percent and 30 percent of forex earnings.

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“In that case, the tourism share in the GDP will reach as high as 19.5 percent in 2025/26,” said Godwill Wanga, the CEO of Tanzania National Business Council (TNBC).

He revealed this in Arusha during a recent public- private sector dialogue on policy reforms for the tourism industry. Dr. Wanga said tourism would continue to remain the leading export sector in the economy provided some challenges are addressed.

Matters that should be sorted out include a string of taxes and levies and uncessessary red tape in investment registration.

He outlined new investment frontiers such as the development of the permanent tented camps (PTC) in the protected areas. This, according to him, is an investment category whereby the tourism concession is given to an investor for PTC.

“Here, all tents for the visitors and staff accommodation, shops and other facilities shall be allowed to be located in this area,” he said.

The area, the TNBC executive director explained, shall not exceed two square kilometres of the approved site plan.

For the Hot Balloon Operation Base Camp, the area shall not exceed 500 kilometre square of the approved design layout.

PCT operators will have to pay $20,000 per annum to the Tanzania National Parks (Tanapa) for those set up in their sites.

Dr Wanga also dwelled on what he described as ‘high end investments’ during a dialogue attended by the Natural Resources and Tourism ministry top brass. “This is an investment category whereby the tourism concession area is given to an investor for the development of a hotel or lodge,” he pointed out.

Here all the permanent buildings for visitors, staff accommodation, shops and other facilities shall be allowed to be located there.

The area shall not exceed three square kilometres of the hotel site plan. Hotels will pay Tanapa $50,000 per year.

He called for streamlining of the taxation within the sector so as to make them more facilitation to the tourism promotion.

The government revenue components include the Tourism Development Levy (TDL) which contribute 62.4 percent and Tanzania Tourism Business License (TTBL) 37.5 percent.

Taxation on the tourism sector also applies to Value Added Tax (VAT) on tourism services,rent, Skills Development Levy (SDL) and service levy, among others.

Speaking during the dialogue, the minister for Natural Resources and Tourism Pindi Chana said the ministry was keen to improve the TDL payment system.

According to her, the streamlining of taxation in the tourism industry will involve the local government authorities.

Despite the recent impact of Covid-19, the government is confident that the country will attract five million visitors come 2025, earning the economy a record $6 billion

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VAT introduction to impact growth in Tanzania’s tourism industry

Tanzania’s efforts to improve its infrastructure have led to a search for new revenue streams, which may impact growth in the tourism sector over the near term.

As part of a package of reforms aimed at funding an overhaul of the road, rail and air networks, in July the government removed a value-added tax (VAT) exemption for tourism services, which are now subject to 18% VAT. Financial services saw the withdrawal of a similar dispensation, and vehicle registration fees were raised as well.

According to public statements from Philip Mpango, minister of finance and planning, tax revenues as a percentage of GDP are expected to rise – partly as a result of the VAT levy – from 12.6% in FY 2015/16 to 13.8% in FY 2016/17.

The need for new revenue streams is clear given the size of the capital outlays in the government’s latest budget, which outlines plans to increase spending by nearly one-third and forecasts the fiscal deficit expanding slightly to 4.5% of GDP.

Infrastructure push

Under the current plan, one-quarter of the total budget, or TZS5.47trn ($2.51bn), is allocated to infrastructure projects, with TZS2.18trn ($1bn) earmarked for road construction and rehabilitation, and TZS2.49trn ($1.1bn) for various projects to boost connectivity, including rail, port and airport upgrades.

Improving the condition of Tanzania’s transport networks would provide a range of benefits for a number of key sectors, including tourism.

“Poor roads and power shortages make tourists feel uncomfortable and erode the competitiveness of the destination,” Damas Mfugale, former chairman of the Hotel Association of Tanzania, told local media earlier this year.

Tanzania has roughly 86,000 km of roads, of which less than a quarter are paved, leading to access problems during inclement weather. Limited road networks beyond the popular sites in northern Tanzania have also dampened visitor traffic to less well-travelled parts of the country.

To this end, authorities at Ruaha National Park – the largest national park, spanning some 20 sq km of central Tanzania – recently appealed to the government to modernise the park’s access roads.

“Most roads leading to the park are in a poor condition, to the extent that visitors fail to reach the game reserve,” Maronda Maronda, acting chief park warden, told local media at the end of November.

Higher-priced tourism

The levying of VAT on tourism services – which will increase the costs of tours, game drives and safaris – has raised concern among domestic and international stakeholders in the tourism industry.

The Tanzania Association of Tour Operators, for example, estimated that the higher prices had resulted in at least 8000 visitor cancellations and $660,000 in lost revenue as of early July.

The country has also faced pushback from the European Travel Agents’ and Tour Operators’ Associations. Representing some 70,000 travel agents and tour operators in 27 European countries, the group threatened to rebook its customers to other African destinations – including neighbouring Kenya, which does not impose a VAT on tourism services – if the exemption was not reinstated.

The private sector’s concerns come amid what has been a gradual decade-long increase in tourist numbers, with international arrivals increasing by nearly 90% since 2004 to reach 1.1m in 2015.

The sector is also the country’s highest foreign exchange earner, contributing TZS10.9trn ($5.03bn) to GDP last year, or 11.4%, according to the 2016 World Travel & Tourism Council (WTTC) report on Tanzania. The WTTC forecasts that this growth will remain steady over the next 10 years, maintaining an average growth rate of 7.1% per annum to reach 11.6% of GDP in 2026.

Visitors are drawn by a wide range of attractions, including Tanzania’s 16 national parks, 31 game reserves, 33 wildlife management areas and six nature reserves – which include iconic sites like Mount Kilimanjaro, Zanzibar and Serengeti National Park – as well as 1424 km of coastline on the Indian Ocean.

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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.

“The Royal Tour” Documentary

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.

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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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