Uganda Tour Operators Seek Tax Relief

The outbreak of COVID-19 still remains a global health issue and its economic effect has been felt worldwide Uganda inclusive. Following the outbreak of this pandemic disease, Uganda tour operators being among the key players in the country’s tourism industry have had tough time operating as most visitors have cancelled their safari reservations while others demand for refund. This has prompted Uganda tour operators seek tax relief from government. On the other hand, about 100% of the hotels have also been forced to scale down on their operations so as survive the crisis and like the hotel sector, most of the tour operators have laid off most of their workers.

In a move to boost Uganda’s sustainable economic development, the tourism private sector takes hold of the business opportunities by deploying the entrepreneurial acumen and resources, with observation of professionalism. For many years, the sector has always played a significant role in identifying, mobilizing and targeting financial and human resources to boost the country’s tourism sector growth and development.

Regardless of the fact that the tourism sector has been heavily impacted by the COVID-19, a lot is being done to help strategize and attract over 1.5 million visitors in 2020 despite the safari cancellations. Uganda Tourism Association (UTA) as well as tour guides, hoteliers, tour operators, travel agents and craft sellers under their umbrella body have presented their submissions to the government of Uganda so as to help increase foreign exchange earnings from the 1.6 US dollars that was generated in 2019 which is approximately Uganda shillings 6.7 trillion.

Uganda Tourism Association has also requested government to provide real tangible interventions such as adjourn the taxes till the business recover. According to Richard Kawere the Chief Executive Officer UTA, government should provide liquidity to help tour operators manage the situation at hand first. He further suggested that when the current financial stress ends, the framework can be generated to ensure respective tour operators meet their tax obligations.

UTA has further appealed government of Uganda to offer soft loans and put them in Uganda Development Bank to help them begin their businesses. According to CEO UTA, recovery is going to be a great challenge with no running capital. The association also suggested that government suspends the foreclosures then financial institutions need to restructure loan payment and Bank of Uganda shouldn’t penalize commercial banks for the loans not recovered during this period.

In addition, tour operators have also asked government to be prepared to invest heavily on marketing the tourism sector if it is rebound after the COVID-19. According to Richard Kawere the Chief Executive Officer Uganda Tourism Association, the tourism sector has been greatly impacted and as soon as the pandemic stops, government should invest greatly in order to help the industry recover. Prior the outbreak of COVID-19, the country’s industry expected to generate about 2 million US dollars in 2019/2020 financial year. In the 2018/2019 financial year, Uganda’s tourism sector generated about 1.6 million US Dollars.

As a move to minimize the spread of the COVID-19, government through Uganda Tourism Board issued travel restrictions on travelers from most of the affected countries and also cancelled most of the international conferences which were to be conducted early this year. However, travelers have been encouraged to postpone their safaris and not to cancel as away to save the tourism sector.

Impact of COVID-19 on international tourism

In accordance to United Nations World Tourism Organization (UNWTO) analysis, the globe is encountering an unprecedented global health emergency. The containment of COVID-19 is presently priority and the tourism industry is dedicated to observing all the set measures put to curtail the outbreak. The organ is currently collaborating with the World Health Organization as well as its member states and the tourism sector to ensure a coordinated and effective response.

COVID-19 pandemic has caused unanticipated effect on lives, societies, economies and livelihoods as well as growing risks of a global recession and not to forget the loss of jobs. According to UNWTO estimates international visitor arrival decline from 50% to 30% in 2020. This translates into a loss of about 300 billion US Dollars to 450 US Dollars in international tourism receipts (Exports), approximately 1 third of 1.5 trillion US Dollars which is earned worldwide during the worst occasions.

Stimulus package for hoteliers

Currently, it is estimated that about 100% of the hotels have scaled down on operations as way for them to be to survive during the 14 days of lock down and 90% have closed then only 10% are still operating and they serve as quarantine centres. According to CEO UTA, hotels have cut down the wage bill to a minimum to help them keep operating. Whereas the Uganda Hotel Owners Association has written to the Ministry of Finance, Planning and Economic Development through the Ministry of Tourism, Wildlife and Antiquities to arrange a stimulus package for the hotels.

Hotel owners under their umbrella have also requested for reduction of loans, removal of value added tax, PAYE, NSSF for about 6 months to 1 year such that employees who are paid 50% don’t get a reduction further once they get back to work.

Need for tax relief

Some of the tour operators who have managed to keep their staff with a reduced pay have requested government to prepare for aggressive marketing and also invest heavily so as to help the tourism enterprises which have been meeting their tax obligations. The managing director Pinnacle Africa Safaris Mr. Francis Kimbowa suggested that government should provide credit with minimal interests, support companies traveling to travel trade exhibitions for a sustained period of about 6 months to 1 year because tourism has the potential to recover.