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Tax Authorities urged to Exempt Tour Operators from VAT

ADDIS ABABA – Authorities have been urged to exempt tour operators from value-added tax (VAT) to make the Ethiopian tourism sector competitive as the government prepares to amend the VAT proclamation.

The request was made on Tuesday during a forum organized by Addis Chamber under the theme ‘Tour Operation in Ethiopia, Challenges, and Prospects’.

Participants highlighted Ethiopia’s potential to become a major tourist destination due to its combined historic, geographical, and unique cultural attractions. And yet, they say, this potential has remained far less developed, untapped, and not marketed enough.

Yohannes Weldegebriel, director of the arbitration institute of the Chamber, commends the government’s emphasis on the tourism sector through its recent policy measures and regulations as well as several investments to develop and create new tourist attractions. 

He, however, calls for more measures to transform the sector, whose development is hampered by several challenges recently.

The global COVID-19-induced restrictions coupled “with a lack of mobility, safety, and security concerns in the travel and tour sub-sector which is associated with the conflict in the past three years have damaged the tour and travel business in the country, according to the Chamber.

Businesses are bankrupt, jobs have been lost, licenses are returned, and even the basic assets to tour operators such as vehicles are sold out in part to fulfill their basic needs.

Participants of the forum see the ongoing amendment process to the VAT proclamation as a window of opportunity for the government to reinvigorate the business environment for tourism.

The draft VAT proclamation needs to respond to the burning issue of taxation raised by tour operators, says Yohannes, recommending for the government exempt tour operators from VAT to resolve their long-awaited request.

The amended bill reportedly levies a 15% tax regime on all services that tour operators offer.

Ethiopian Tour Operators Association President Andinet Feleke believes exempting tour operators from the value-added tax will make them competitive in the global tourism industry.

“Failing to take such measures in the last decades significantly affected the legally registered tour operators in Ethiopia,” Andinet notes.

Addis Chamber has submitted recommendations to the government that aims to protect and advocate the interest of tour operators in Ethiopia, according to its secretary general Shibeshi Betemariam.

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