TOUR operators have called on the government to invent an online platform for tax payment to cut red tape and ease compliance. Tanzania Association of Tour Operators (TATO) says that its members would like to pay all taxes in a single online platform to save time lost in multiple tax payment.
Representing over 300 tour operators, TATO is a leading lobby agency for a tourism industry, a vital foreign currency earner for Tanzania. Highlighting key challenges facing the industry before the visiting deputy minister for Finance, Dr Ashatu Kijaji, TATO Chairman, Mr Willbard Chambulo said multiple taxes compliance consumes a lot of time and money and could encourage tax evasion.
Available records indicate that tour operators are subjected to 37 different taxes, comprising business registration, regulatory licenses fees, entry fees, income taxes and duties for each tourist vehicle per annum, among others.
The TATO chairman argued that the contentious issue is not only how to pay myriad taxes and make profits, but also the modality and time spent in complying with intricate taxes. “Tour operators need streamlining of taxes to ease compliance because the cost of compliance is so high and as such it acts as an obstacle for voluntary compliance” Mr Chambulo explained.
A study on Tanzania tourism sector indicates that the administrative burdens of completing license tax and hefty paperwork place a heavy cost on businesses in terms of time and money. For instance, tour operator spends over four months to complete regulatory paperwork, whereas in tax and license paperwork consume his or her a total of 745 hours per year.
The report done by Tanzania Confederation of Tourism (TCT) and BEST- Dialogue, shows that average annual cost of personnel to complete regulatory paperwork per local tour operator is 2.9m/- (1,300 US dollar) per year. Tanzania is estimated to be a home to over 1,000 tour companies, but official data shows that there are as few as 330 formal firms complying with tax regime, which is likely due to the complexities of compliance.
This means that there could be 670 briefcase tour firms operating in Tanzania. Going by the annual license fee of 2,000 US dollar, it means that treasury loses 1.34m US dollar annually. However, TATO hopes that the new system of issuing Tanzania Tourism Business License (TTBL) introduced by Natural Resources and Tourism Minister, Dr Hamis Kigwangala, would effectively bring informal tour operators into the tax net.
Late last year, Dr Kigwangala took a bold step in scrapping off the old 2,000 US dollar flat rate fee for TTBL for all local tour operators without considering the size and business of the company. The Minister introduced a new category where TTBL fee for tour operators with between one and three tourist cars would be 500 US dollar in the efforts to encourage majority small scale tour operators to formalize their businesses and boost the tax base.
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