16 May 2018

Uganda: Taxes Choking Hotel Sector - Association

Photo: Micheal Kakumirizi/Daily Monitor
Lake Victoria Serena Resort, Kigo.

Multiple taxes have slowed growth in the hotel industry, threatening the survival of a number of facilities, especially in upcountry locations, the chairperson of Uganda Hotel Owners' Association has said.

Speaking in Kampala yesterday, Ms Susan Muhwezi, the chairperson of Uganda Hotel Owners' Association, said multiple taxation remains a serious challenge to the industry, especially those in upcountry locations.

Ms Muhwezi, who is also a director of Agip Motel Mbarara, said: "Much as we have lobbied and brought this concern to the attention of President Museveni, nothing has been done", and government continues to introduce new taxes and levies on the industry every year.

Right now, she said, hotel owners pay about 12 types of taxes and levies including Local Service Tax, Hotel Tax (license), Conference License, and Occupational Safety Act, many of which are duplicated.

Ms Jean Byamugisha, the Uganda Hotel Owners' Association executive director, said hotels are also subjected to an annual payment of Shs4m, which under Copy Right Act, grants them permission to play music and videos produced from local artistes.

Other taxes include Pay As You Earn, VAT, Income Tax, Rental Tax and Hostation Tax for those in national parks as well as the pending doubling of tourism fees.

"These taxes are bogging down the industry and many of them are duplicating each other," Ms Byamugisha said.

The hotel industry reported a 4.2 per cent growth on the account of new entries such as Golden Tulip, Marriot Naguru, Pearl of Africa and Mesti, which according to Uganda Hotel Owners' Association, added more than 1,000 beds to the industry.

However, the growth, Uganda Hotel Owners' Association said, has been threatened by the multiple tax regimes that have been slapped on the industry.

Ms Muhwezi said the taxes have been a constraint on the operation of hotels, many of which are servicing loans.

She urged government to revise a number of taxes that she says duplicate each other.

The hotel industry, Ms Muhwezi said, has been key in the promotion of Uganda's tourism, therefore it was unfair to squeeze it with multiple taxes.

Ms Byamugisha said there have been a number efforts to develop a strategy through which they can effectively promote tourism in Uganda.

The strategy, she said, will focus on how they can promote Uganda as a destination for meetings as well as incentivising clients to bring conferences and exhibitions to Uganda.

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