The Tanzanian Government has defended the introduction of 18% Valued Added Tax on tourism services.

Responding to opposition from tourism players last week, Tanzanian Finance and Planning Minister, Philip Mpango, said government was initiating the charges after carrying out thorough research.

“We came up with this proposal after we were convinced that VAT charges were not a major aspect when tourists make a decision on the destination,” he said. The Minister argued that the VAT charges would have no impact on tourism as Tanzania targeted high-end tourists who spend more in the country. The Tanzania National Tourism Policy of 1999 advocates the country to focus on attracting low numbers but who are high-end holidaymakers.

The imposition of the VAT will affect park entry fees, tour guiding, game drives, animal and birdwatching in the East African country.

Mpango gave international tourist statistics, saying in 2014 Tanzania received 1 140 156, while Kenya, which used to charge 16% VAT on tourism services, got 1 261 000 tourists.

However, Serene Tours DMC Africa for Tanzania and Zanzibar, said the introduction of VAT on tourism services would do more harm to the industry.

The DMC projected that tourist arrivals to Tanzania would drop by between 15% and 18% in 2016 while in 2017 arrivals would plunge by between 20% and 25%.

Serene Tours says Kenya has boosted tourism through giving incentives to charter airlines, visa waivers for children under 16 years, waivers on landing fees and the scrapping of 16% VAT on tourism services.