Gov’t Called Out as Excessive Taxes Weigh Down Hotel Industry
Hotel owners and operators in Uganda have called out government for crippling this industry with excessive and irrational taxes.
According to players, the Hotel industry, which remains the largest employer and tax payer in the Tourism Sector in the country, is crumbling under a myriad of taxes that add to the existing his costs, which make smooth operation near impossible.
Mrs Susan Muhwezi, the president of the Uganda Hotel Owners Association (UHOA) says her members are currently paying a total of 26 different taxes and fees, administered by both the central government and local governments.
While speaking last weekend at the monthly “Tourism Konnect” meeting in Kampala, Mrs Muhwezi listed some of the taxes levied on hotels as follows.
| Corporate Tax | 30% | |
| Withholding Tax | 6% | |
| Value Added Tax | 18% | |
| Hotel Tax | 2% per room per night | |
| Local Service Tax | Varies per hotel | |
| Service Charges | 5% | |
| Fees to Trade Unions | Shs 2000 per staff | |
| Occupational Safety and Health | Shs 2Million per staff | |
| Copyright Tax for Music | Shs 1Million | |
| Property Tax | Shs 200,000 (varies) | |
| Copyright Tax for Movies | Shs 1Million | |
| Ground Rent | Between $5000-$10000 | |
| National Park fees per person | $5 – $30 | |
In addition to these, Muhwezi says members have to pay a number of licences that include;
- Trading Licence
- Restaurant Licence
- Bar Licence
- Swimming Pool Licence
- Operations Licence
- Liquor Licence
- Entertainment licence
Other charges include
- Uganda Tourism Board Licence
- Tourism Development Levy
- NSSF remittances
- PAYE
All these taxes and charges, she says, have to be paid on top of the ever rising rent fees, electricity bills and generator fuel costs, water bills, wear and tear, salaries among others.
“This is what is happening to the Hotel Industry,” she said. “This is why we are not growing.”
According to Uganda National Bureau of Statistics, Uganda has about 6000 accommodation facilities, 95% of which are privately owned.
The occupancy rates of these currently stand at 58% in Kampala and Wakiso, 41% outside Kampala and 27% in National Parks.
The hotel industry directly employs about 250,000 Ugandans, majority of whom are women (58%).
Mrs Muhwezi says Hotel owners like herself would be complaining less if government devoted some of the taxes collected from them to helping the industry.
“We collect our own garbage, and the roads leading to our facilities as well as street lights are done by ourselves,” she says.
As remedy, Mr Muhwezi called on government to among others consolidate the 26 taxes into 5 or 6, which are more manageable.
She also urged government to establish a Tourism Bank, to help sector players cope with the high interests on loan.
“We hear that Uganda Development Bank is offering money to farmers but not people in tourism which is the No. 1 foreign exchange earner. We want our own bank that will give us money on friendlier terms.”
Speaking during the meeting organized by Uganda Tourism Board, URA’s Jude Ochieng who represented the Commissioner Customs, Mr Dickson Kateshumbwa, said the tax body was not responsible for the multiple taxes on hotels.
“Of the 26, we manage on about 3 or 4. It’s is just that most people attribute all taxes to URA, even those charged by local councils.”
Ochieng also revealed that Government is implementing a number of tax incentives which include zero import tax on hotel equipment such as washing machines, kitchenware like cookers and fridges, air conditioning systems, Television sets, carpets, furniture, linen and gym equipment.
On his part, Mr Oule Epyanu from Ministry of Trade and Industries urged hotel owners to challenge the multiplicity in parliament during the coming budgeting process.
According to Uganda Tourism Board CEO Mr Bradford Ochieng, despite the numerous hurdles, Uganda’s tourism sector in general continues to thrive, with arrivals expected this year to jump to 1.8million.
The sector, he said, has been helped among others by Uganda’s simple immigration policy.
“It terms of the visa process ease, Uganda is ranked currently in 8th position in world,” Ocheing revealed.
“We however, have to improve in other areas such competitiveness and hygiene where we are not performing well.”
The Tourism Konnect meeting which brings together different stakeholders in the Tourism Sector is organized months by UTB as a platform for tourism knowledge exchange.
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