- The aviation sector in Tanzania will continue to enjoy Value Added Tax, VAT exemption
Celebrations in the Aviation and Tourism Industries as Tanzania extends VAT Exemption enjoyed by air charter services to June 30, 2026.
Recall that on the 20th of January 2023, during parliamentary sessions, a bill supplement was issued, proposing to extend the VAT exemption on the supply of air charter services for four years.
Tanzania Extends VAT Exemption: More Perspective
The Bill Supplement (“the Written Laws (Miscellaneous Amendments) Act, 2023”) further proposes the continuation of the exemption.
The exemption will span 3 years and is now expected to be cancelled finally on the 1st of July 2026.
The decision to extend VAT on air charter services will equally benefit the tourism industry as both the aviation and tourism industries are intertwined.
The two industries relate to travel, as tourism depends on aviation to transport visitors, and aviation depends on tourism to create demand and fill seats.
The players of the twin, multi-billion-dollar industries which earn the Tanzania economy nearly $2.6 billion in foreign currency annually strongly believe that the approval of the bill by the Parliament would bring immeasurable growth to both industries.
TAOA Expresses Appreciation
Speaking on behalf of the aviation industry, the Tanzania Air Operators Association (TAOA) board chairman, Captain Maynard Mkumbwa expressed utmost appreciation to the Tanzanian government for deciding to extend the VAT exemption.
Captain Maynard enthusiastically welcomed the decision and thanked President Samia Suluhu Hassan for taking the initiative.
More On The VAT Exemption On Air Charter Services
Normally, air charter services were handled as exempt supplies as provided under both the VAT Act, 2014, and 1997, respectively but to enlarge the country’s VAT base, the Finance Act, 2022 ended the exemption on December 31st, 2022.
However, the aviation players through TAOA opposed the decision and pointed out certain adverse effects of the amendment.
One of the effects pointed out is the immediate fall in bookings and its resulting negative impact on the tourism industry.
TAOA Chief Executive Comments
According to TAOA chief executive Lathifa Sykes, the removal of VAT exemption on air charter services would hinder the success of President Hassan’s efforts to promote the tourism industry and investment.
Part of the efforts is the recently launched Tanzania The Royal Tour Film which is part of President Hassan’s strong dedication to accomplish one of the pledges of the ruling Chama Cha Mapinduzi’s 2020 General Election manifesto which is to significantly grow the tourism industry.
The TAOA CEO continued that the Chama Cha Mapinduzi’s manifesto had stated that tourism will bring in five million tourists who will leave behind roughly $6.6 billion by 2025.
According to the government’s data, tourism is Tanzania’s largest foreign exchange earner, as it contributes at least $2.6 billion yearly, which is commensurate to 25% of all exchange earnings.
The data also indicates that tourism contributes to over 17% of the national gross domestic product (GPD), producing over 1.5 million jobs.
What is TAOA
Tanzania Air Operators Association (TAOA) is a member-based association that solely strives to promote the legal and responsible development of the aviation industry by ensuring safety, efficiency, regularity, and economical operations.
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