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The East African : July 14th 2014
The EastAfrican BUSINESS JULY 12-18,2014 STIMULATING GROWTH Dar to cut taxes in tourism industry Tou≥ ope≥ato≥s a≥e cu≥≥ently subjected to 23 di≠e≥ent taxes By ADAM IHUCHA Special Correspondent the industry competitive. Tour operators are subjected to T 23 different taxes, 12 being business registration and regulatory licence fees, and 11 duties for each tourist vehicle per annum. Natural Resources and Tourism Minister Lazaro Nyalandu said the government would reduce the taxes and levies to make Tanzania a leading tourist destination in Africa. “Taxes make Tanzania a high- priced tourist destination. We are going to streamline them to stimulate the industry growth,” Mr Nyalandu told tour operators in Arusha last week. He hinted that some national parks, local authorities and licence fees would either be reduced or abolished in order to lessen the tax burden on tour operators and tourists. Sources say the industry is also likely to be exempted from paying the 18 per cent VAT, but the minister did not mention this. This development comes in the wake of plans by the government to impose taxes on various sectors from January next year. Tanzania hopes the number of tourist arrivals will reach 1.2 million this year, up from 1 million in 2013, earning the economy about $2.25 billion. Last year, tourism earnings were $1.88 billion. The recent statistics show that earnings from the tourism industry increased from $200 million in 1993 to $1.88 billion this year. The numbers of visitors increased from 230,000 to one million. The minister called on the play- ers in the industry to help grow tourist numbers, pledging that the Tourists take pictures of a leopard in Serengeti Park. Picture: File government would play its role of ensuring a conducive business environment. According to a five-year market- ing blueprint rolled out in 2013, Tanzania anticipates 2 million tourists by the close of 2017, raising revenues to $3.8 billion. Tanzania Association of Tour Operators chairman Willy Chambullo said it was cheaper to pay the penalty for doing business illegally than to comply with complex the tax regime. The latest assessment of the Tan- zanian tourism sector indicates that the administrative burdens of completing licence tax and levy paperwork raise the cost of doing businesses. For instance, a tour operator spends over four months to complete regulatory paperwork, 1.2m SCOLA KAMAU Special Correspondent The Coalition of the Willing has set August 30 as the deadline a memorandum of understanding with engineering, procurement and construction contractors should be signed to pave the way for the construction of the standard gauge railway line (SGR). Kenya, Uganda, Rwanda, Burundi, Ethiopia and South Sudan agreed during the recent Ministerial Meeting of the Northern Corridor Integration Projects, that the projects must start by October 2014 in order to meet the March 2018 deadline. But just three months to the deadline of com- mencement of all sections of the SGR, some countries are still at the tendering stage. Kenya and Uganda have been tasked to im- mediately begin construction of the NairobiMalaba and Kisumu-Malaba-Kampala sections. whereas the tax and licence paperwork takes up 745 hours per year. The report by Tanzania Confed- eration of Tourism and Best-AC, shows that average annual cost of personnel to complete regulatory paperwork per local tour operator is Tsh2.9 million ($1,795). As a direct result, in Tanzania, where there are about 1,050 tour companies, only 300 firms comply with tax regime. This means that there could be 750 tour firms operating illegally. Going by annual licensing fee of $2000, it means that the Treasury loses $1.5 million or Tsh 2.4 billion annually. Tanzania’s tourism sector is among the sectors with great economic potential. It provides a substantial foreign exchange earnings, employment and acts as a stimulant to other sectors like agriculture. The reported number of tourists The number of tourist arrivals expected by the end of this year who visited Tanzania in 2012 places the country on the map of leading African safari destinations with million-plus visitors per year. ATTRACTIONS Tourism attractions in Tanzania include Africa’s highest mountain, Kilimanjaro, and wildlife-rich national parks such as the Serengeti. Serengeti National Park is World Heritage Site and was recently proclaimed one of the seven new wonders of the world. Serengeti is famed for its annual migration, when some six million hooves pound the open plains, as more than 200,000 zebra and 300,000 Thomson’s gazelle join the wildebeest’s trek in savanah of fresh grazing. However, Tanzania has become a target for poachers, and conservationists have warned that at the current rate at which elephants are being killed for their ivory, the entire population could die out by the end of the decade. Other competitive African des- tinations, tourist arrivals reaching a million or above are Kenya, Zimbabwe, Botswana, Namibia, Zambia and South Africa. CoW now sets SGR cont≥act signing deadline In addition, Uganda and Rwanda have been asked to fast-track the preliminary engineering design study for the Kampala-Kigali section. The Mombasa-Nai- robi section has begun and South Sudan has signed an MoU for an engineering, procurement and construction contract for the Nimule-Juba section. Ministers from the A railway line in Kenya. Picture: File five countries recommended that financing for the projects be expedited. China in May this gave Kenya Ksh327 billion ($3.8 billion) to fund the building of the SGR line between Mombasa and Nairobi. China will finance 85 per cent of the total cost through Export and Import (Exim) Bank of China while Kenya will pay the remaining 15 per cent through the railway levy charged on imported goods. But the East African Business Council has termed Kenya’s proposed 1.5 per cent development levy on all goods from member states as unfair. Henry Rotich, the Kenyan National Treasury Cabinet Secretary, had announced the introduction of the 1.5 per cent levy on all imports into Kenya to fund the construction of the new railway. The Kenya Revenue Authority officials said although there were ongoing discussions to exempt goods from within the region but slap a 2.25 per cent levy on goods from outside the region. On the Uganda and Rwanda side, progress seems to be faster with Gauff Ingenieure ,a German infrastructure consultant, having been awarded an $8.6 million contract to design the SGR line linking Kampala with Kigali. anzania plans to reduce taxes on tourism activities to make 45 Bank moves to en≥ol ATM use≥s By BERNA NAMATA Special Correspondent THE LAUNCH of instant ATM card issuance in Rwanda by Equity Bank has created a new battlefront for customers, which could increase the uptake of plastic money services. It previously took an aver- age of two weeks to have a card processed but the Equity Autobranch Visa Card also comes with many utilities including Europay, MasterCard and Visa technology, which ensures security and global reach of the chip cards. The Autobranch Visa card ena- bles customers to pay for goods and services at merchant outlets such as supermarkets, fuel stations, hotels, restaurants and shops. “In order to remain relevant in the rapidly changing financial services industry; we have to ensure that we cater for all the unique needs of our customers,” said Equity Bank Rwanda managing director Samuel Kirubi. The use of electronic payments in Rwanda is still low compared with neighbouring countries. Central bank figures show that between 2012 and 2013, the number of ATMs increased by 14 per cent from 292 to 333 while the number of points of sale terminals increased by 42 per cent from 666 to 946. The number of credit cards increased by 102 per cent from 418 to 845 during the same period. Limited public awareness Industry stakeholders attribute this to limited public awareness but acquiring a credit card is still expensive for ordinary Rwandans with the cheapest being Rwf3500 ($5.1). “Uptake has been slow, Rwanda has good security, which I wish Kenya had. People still carry bags with money on the street. Because of insecurity in other countries nobody wants to carry cash, so they use cards,” Equity Bank Rwanda ICT and channels solutions manager Paul Sewe Omany said. Mr Omany said electronic pay- ments would gradually pick up with customer education. The value of transactions done through cards increased by 44 per cent from Rwf180.6 billion ($262.07m) in 2012 to Rwf 260.6 billion ($377.2m) in 2013. The government has since 2011 been pushing for electronic payments after signing agreement with Visa International to upgrade the country’s electronic payments infrastructure. Part of the plan is to make cash readily available to visiting tourists and business travellers by connecting the country’s ATMs to Visa’s global network, opening up access to more than 15,500 banks and nearly two billion cards.
July 7th 2014
July 21st 2014