Uganda's President Orders Review of Hotel Taxes Amid Calls for Simplification

Strategic Insights -

President Museveni's remarks were made while meeting a delegation from the Uganda Tourism Association (UTA) at State House Entebbe, where stakeholders complained about the excessive tax burden on hotels, stifling growth in a top foreign exchange-earning sector. The President expressed surprise at the numerous taxes levied on hotels, stating that tourism is an export industry and should not be taxed like domestic businesses. Hotel operators in Uganda face at least 25 taxes and must acquire seven different licenses to operate, according to a document compiled by the Uganda Hotel Owners Association (UHOA). These costs are crippling the industry, with stakeholders saying they are unable to compete with neighboring countries like Tanzania, Kenya, and Rwanda.

Key Takeaways:

  • President Museveni has ordered a review of the numerous taxes levied on hotels, citing them as unfair and counterproductive to Uganda's tourism industry.
  • Hotels in Uganda face at least 25 taxes and must acquire seven different licenses to operate, according to a document compiled by the UHOA.
  • The President expressed surprise at the extensive tax burden, stating that tourism is an export industry and should not be taxed like domestic businesses.
  • Hotel operators are burdened with a lengthy list of taxes and fees, including corporate tax, withholding tax, VAT, hotel tax, and property tax, among others.
  • The President has promised to address the issue and follow up with relevant ministries and institutions to reduce the tax burden on the tourism and hospitality sector.
  • The UTA president, Yogi Biriggwa, requested direct government funding of Shs800 million annually for three years to strengthen the association's secretariat and implement priority reforms.
  • UHOA chairperson Susan Muhwezi called for harmonization of tax and exemption policies, arguing that the current system is fragmented and unfair.
  • President Museveni questioned why the Uganda Development Bank (UDB) was not offering suitable financial packages to the tourism sector, likening its role to that of financing factories.

Statistics:

  • Hotels in Uganda face at least 25 taxes and fees, including corporate tax, withholding tax, VAT, hotel tax, and property tax.
  • Hotel operators must acquire seven different licenses to operate, including trading, restaurant, bar, swimming pool, liquor, entertainment, and a Uganda Tourism Board (UTB) license.
  • The tax burden on hotels includes corporate tax of 30 percent, withholding tax of 6 percent, and an 18 percent Value Added Tax (VAT).
  • The hotel tax is $2 per night, and the local service tax varies by district, ranging between Shs10,000 and Shs100,000.
  • Hotel operators face additional financial obligations, including a property tax of Shs200,000, an occupational safety and health fee of Shs2 million per star rating, and various copyright levies for music and film.
  • Hotel operators also face ground rent charges ranging between $5,000 and $10,000, per-person, park entry fees ranging from $5 to $30, and a 5 percent service charge on all restaurant bills.

Sources:

  • "Uganda's President Orders Review of Hotel Taxes Amid Calls for Simplification" by [New Vision or other original publication not provided]
  • "President Museveni orders review of hotel taxes" by [New Vision, not provided]
  • Document compiled by the Uganda Hotel Owners Association (UHOA)