President Magufuli has put an end to the lobbying efforts of the Tanzanian tourism industry, by publicly confirming that VAT is to be charged on tourism services. This is despite the recent removal of VAT charges on tourism by Tanzania’s neighbour and competitor, Kenya. Industry representatives had been trying to at least have the imposition of VAT delayed for bookings already invoiced and paid. Many, less financially robust, operators have been forced to go back to their clients and ask for more money to cover the tax. However, some larger companies have decided to bear the losses with existing clients rather than face long term reputational damage. Enforcement of the new VAT regime has seen the arrival of Tanzania Revenue Authority agents stationed at the entrances to national parks to issue VAT receipts, resulting in lengthy tailbacks of tourist vehicles.

However, President Magufuli has decided that immediate imposition of VAT is the correct course of action, saying that he would rather see 500,000 tourists paying VAT than the current number of over one million paying no VAT. He has also referred to Dar es Salaam port in similar terms, saying that the reduced numbers of ships entering the port is caused by the non-arrival of goods for companies who used to bribe port officials to allow imports through the port without payment of taxes. Business and industry sources are reporting a significant drop in both manufacturing and retail activity, due to the government’s new found zeal to raise and collect taxes and to continued uncertainty as to the ultimate direction of Magufuli’s reforms.