Tanzania’s safari industry has been thrown into turmoil by an 18% Value Added Tax (VAT) slapped onto previously exempt tourism services. And everyone has been caught out. Tour operators are shocked; thousands of safari-goers have been hit with unexpected charges; and park authorities are in disarray.
How would you feel if you booked an adventure-of-a-lifetime holiday and paid for it upfront, only to receive an email before you left, requesting an additional amount worth hundreds (even thousands) of dollars?
Not happy? Well, spare a thought for thousands of people who had carefully saved their holiday money, booked and paid for a Tanzanian safari, and are now confronted with these VAT changes.
What the changes in VAT mean?
VAT is a consumption tax, comparable to the sales tax used in the US. The unexpected lifting of the VAT exemption means many tourist services have now been hit with an extra 18% charge. These services include ground transportation, guiding services, water safaris, birding, normal camping fees and special camping fees – that tented camps have to pay. (VAT already applied to accommodation, so that has not changed.) Accommodations offering packages that include wildlife viewing will also have to charge VAT on those activities.
Tour operators were given only a few short weeks to adapt to these new charges. The charges were proposed in June and became effective from July 1, 2016. Too bad for people who had already paid for their vacation (safaris are typically paid upfront months in advance). Unable to absorb such a major tax on their services, many tour operators are turning to clients and asking for an extra payment, after bookings were supposedly finalized.
Thousands of safari clients affected
SafariBookings.com, an online marketplace for African safaris, is being bombarded by emails from concerned clients that have received requests from their tour operators to pay an additional amount.
Jackie Warnock from Australia has a 13-day safari booked for August 2016 in Tanzania, and paid for it back in March. Her party were contacted with a request for an extra US$135 per person due to the VAT changes.
Ms Warnock says, “I was initially concerned that we should not be subject to extra charges when we had paid several months in advance. However ‘this is Africa’ so things can be unpredictable”. Ms Warner believes tour operators should not be held responsible, pointing out that her operator had been professional and helpful. Instead, she apportions blame at the feet of the government.
“It’s disappointing how the Tanzanian Government has handled this,” she said. “It has set up the tour operator as the ‘fall guy’. There has to be a lead in time so that operators can prepare themselves [to changes such as these] and allow clients who have already paid to be protected. It could result in a backlash against Tanzania with people choosing Kenya or cheaper safaris in South Africa.”
Sudden changes cause upheaval in the safari industry
In the safari industry itself, the brutal schedule of these changes has caused a host of problems; for example, most camping and Kilimanjaro operators are not even VAT-registered because their services were previously VAT exempt. They are therefore unable to issue VAT receipts to their clients as there was no time to apply for registration before the changes came into effect.
Tanzania receives over a million visitors every year – tourism is a prime revenue stream for the country, generating a substantial part of the country’s gross domestic product. Neighbouring Kenya offers substantially cheaper safaris and many iconic safari destinations, so there is a fear of long-term damage to the industry in Tanzania.
Have you been caught out by these changes?
If you have a paid-up safari to Tanzania, note that the changes to VAT do not apply to your safari as a whole, but rather the services mentioned above. If your tour operators asks for an additional payment, be sure and request a full breakdown on where and what you are paying. The additional cost may include the 18% VAT on park fees, transportations, guiding service and camping fees. It should not include other safari services.
If you are unlucky enough to have been caught out by these changes to Tanzania’s VAT regulations in the safari industry, please see https://www.safaribookings.com/blog/350 for advice on what to do when your tour operator requests an extra payment.