As of early 2014, all tourism packages and activities in Zambia now incur an expense of an additional 16% allocated to VAT, where previously VAT on tourism in the country was 0%. This will not apply to any bookings that were made back in 2013. This follows on from Kenya’s introduction of a 16% VAT tax on tourism in 2013.
The new tax will apply to bookings for safaris and game viewing (including unique Zambia offerings such as walking with lions), canoeing, helicopter tours, boat cruising and so on.
Not surprisingly the new tax laws have been met with considerable opposition by both tour operators and tourists, with many voicing concerns that it is hampering both local and inbound markets and making it harder for tour operators to make a profit. Grant Cummings, Owner of Chiawa Camp in the Lower Zambezi has said that he has received only negative feedback after the tax was implemented on January 1. “Zambia’s loss will be someone else’s gain,” he said.
There have already been a number of campaigns and petitions presented to government with the hope of reversing the new tax, but thus far these have borne no fruit. Some in the tourism industry have voiced hope that once the government sees the alleged negative effects of the tax on tourism, they will reverse the law, as they did with a previous law that hiked tourist visa fees up to $150.
However, other pundits have reasoned that the tax on tourism, one of Zambia’s most burgeoning industries, will have important and more wide-reaching effects on the country’s development, and that tour operators are thinking about their own pockets and failing to see the bigger picture.
Either way, even with the new 16% VAT charges, Zambia remains, on average, cheaper for tourists than either Kenya or Botswana, whilst simultaneously being less populated by tourists and more exclusive for the most part.
So bearing in mind the comparison of Zambian prices to other regional competitors and all that Zambia has to offer, is this new tax really likely to have a strongly negative effect on Zambian tourism?