By Ange Diogene Ntirushwa
As Rwanda’s tourism sector continues to face stiff competition from other destinations in the region that offer similar products, local industry players are pushing for a reduction in taxes levied on the sector if Destination Rwanda is to remain competitive.
“A reduction in taxes levied on tourism products would encourage more people to invest in the tourism sector,” says Greg Bakunzi, the managing director of Amahoro Tours, a Rwandan travel concern.
Bakunzi’s argurment is that if taxes are reduced, local tour operators would have more money to invest in marketing, which would eventually translate into more visitors to the country. This would also help start-ups to grow their businesses, he says.
A 2015 report released by the East African Tourism Platform says that even though the Rwandan government doesn’t tax game drives, tourist guiding, animal or bird watching, water safaris, tour ground transport and tour charter services, tour operators have pay an 18 per cent VAT on the profits they make.
The East African Tourism Platform’s report revealed that Tanzania doesn’t levy taxes its tourism sector while others still charge VAT. This disparity, according to the regional tourism promotion body, is making it difficult for tour operators to sell the East African Community as a single tourist destination, seeing that one cannot give a tourist a uniform quotation due to the differences in taxation.
For tourists to the region to get a seamless safari, tour operators suggest that East African Community member states need to push for a harmonised tax system.
In the last decade, international tourism receipts have been growing by an average of 12 per cent, which has forced many destinations across the world to pull all the stops to draw more visitors and millions of their cash.
But the many and different taxes levied on the sector mean that tour operator have to spend a significant amount of time trying to comply with the regulatory charges instead of concentrating on marketing their businesses.