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Hoteliers ask for tax relief

Susan Muhwezi, the chairperson of UHOA

Susan Muhwezi, the chairperson of UHOA

The Ugandan tourism fraternity and the Uganda Tourism Board are lobbying parliament to harmonize taxes and levies in the industry, which players say are too many and confusing, writes JUSTUS LYATUU.

Industry players led by the Uganda Hotel Owners Association (UHOA) met members of parliament from the Committee of Tourism, Trade and Industry to push for legislation that will reduce and harmonize all levies charged in the industry.

The meeting was held at Golden Tulip hotel, Kampala recently. They expressed concerns over different taxes and tariffs imposed on tourism, which they said have made Ugandan tourism industry non-competitive.

Susan Muhwezi, the chairperson of UHOA, speaking during the Tourism Konnect forum, organized by UTB, explained that members are paying up to 13 different types of taxes in addition to paying several and different types of licences annually.

Tourism Konnect is a monthly stakeholder event hosted by the UTB aimed to create a platform for strategic discussion and knowledge exchange within the tourism sector and its value chain.

The event brings together various stakeholders such as media, government ministries, departments and agencies, tourism players, development partners and investors among others.

Muhwezi said hoteliers pay corporation tax, withholding tax; value added tax (VAT), hotel tax - $2 per room per night, local service tax, which varies per hotel, service charge, fees to trade unions and occupational safety and health levy of Shs 2m per star.

Others include copyright license fees for music and movies and ground rent. The industry is paying trading licence, restaurant licence, bar licence, swimming pool licence, operations licence, liquor licence and entertainment licence. These vary from each local government council.

“Despite the heavy taxation burden already borne by the sector, four new taxes and licences are in the process of being levied on the hotel sector. These include: tourism licence and tourism development levy,” she said.

Muhwezi added: “We also pay statutory fees like the National Social Security Fund (NSSF) and Pay-As-You- Earn (PAYE). This brings the total number of taxes paid by the hotel to 26. Despite all these challenges, the hotel sector still remains the biggest employer and taxpayer in the tourism industry in Uganda.”

In addition to the high tax burden, hotels must also pay the monthly overhead costs that are constant like the repayments of the loans for building the hotel – (25 per cent – 28 per cent), electricity that is on 24/7 and cost of running generators for the case of upcountry hotels, where electricity supply is not reliable.

“Our government cannot continue milking a cow they are not feeding, and we as the hotel sector would like to see incentives availed to our members to ease the cost of doing business,” Muhwezi said.

Industry players propose a review of the VAT to make all upcountry hotels zero-rated for five years, consolidate the 26 taxes into five or six to make it easier for the hotels to meet their obligations and access to financing by opening a tourism bank that will offer more friendly terms to investors in the hotel industry.

“A portion of the tourism licence should go to UHOA to help her in self-regulation of her members to meet government targets. Also, we need solar and green incentives to help hotels access solar water heaters and panels for the off-grid hotels,” she said.

Bradford Ochieng, UTB deputy CEO, said the need for quality and affordable accommodation is eminent in order for the sector to realise tourism value - spend and stay.

“Therefore, the item of multiple taxations for the sector is something that needs to be addressed for the hospitality sector to be seen as profitable and hence a pull factor for more investment,” he advised.

justuslyatuu08@gmail.com

Comments

0 #1 rubangakene 2019-10-14 21:53
Just listen to these people, who do they think they are trying to cheat their way around what is good for the country. "Confusing taxes....", my God, if they didn't do their homework properly before falling headlong into this lucrative business then they are tony to blame.

You see it is not just counting the incoming dollars and squirreling it away; you must reinvest and pay back to the government that has given you the licence to operate. "KAZENI MKANDA NDUUGU" (Tighten your belts, we are all in the same boat!)
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