Government scraps VAT levy on hotels outside Kampala

Uganda Tourism Board’s Edwin Muzahura (R), Cuthbert Baguma (L) and Uganda Hotel Owners Executive Director Samuel Balagadde at the press conference. Photo by Martin Ssebuyira

Kampala- Government has announced that it has reinstated exemption of Value Added Tax (VAT) on accommodation (hotels and lodges) outside Kampala in a move to promote Tourism.

The Secretary to the Treasury , Mr Keith Mukahanizi, made the announcement recently, saying the recently introduced 18 per cent VAT on accommodation facilities outside Kampala is now abolished.

“I wish to inform you that during the passing of the VAT Amendment Bill 2013/14, exemption on the supply of hotel accommodation in tourist lodges and hotels outside Kampala District was reinstated,” he said in a letter dated November 13.

Clients query abrupt price changes
During the East African Tourism Platform in Kampala on Thursday, the Uganda Hotel Owners Association chairperson, Hajj Mohamed Bulaimu Kibiringe, said the abrupt change in prices as result of VAT addition on accommodation had attracted legal probes by some of the clients who had made bookings in advance.

“We spend a lot of money travelling all over the world marketing Uganda as a prime destination that has finally been recognised,” he said.

Mr Boniface Byamukama, the chairperson Association of Tour Operators, said that government should now allocate more funds for marketing Uganda as a tourism destination like other countries in other regions and continue recognising the efforts of private sector but maintaining the exemption.

“We want government to abolish multiple taxation on hotel and lodging facilities, and implement a tourism levy which will directly support development of the sector,” he said.

Mr Edwin Muzahura, the head of marketing, Uganda Tourism Board (UTB), said that they are finally going to start grading all tourism destinations and hotels to put maximum standards for all facilities in the country.

He said UTB is to launch the awards benefiting all tourism stakeholders like the media, hotel owners, drivers and guides among others.