Hotel owners under their umbrella body, the Hotel Owners Association (HOA), have urged the government to harmonize and streamline the various taxes imposed on the hospitality industry. They argue that the current tax regime is not only excessive but also uncoordinated, making it difficult for hotel businesses to operate profitably and sustainably.
The call was made during the recently concluded Hotel Owners Exhibition held at Hotel Africana in Kampala. The event brought together hoteliers, tourism stakeholders, policymakers, and government representatives to discuss the challenges facing the hotel sector and explore avenues for growth and recovery, especially in the post-COVID-19 period.
Susan Muhwezi, the chairperson of HOA, said the hotel industry has immense potential to contribute to Uganda’s economy through employment creation, foreign exchange earnings, and promoting tourism. However, she noted that this potential is being undermined by the heavy tax burden imposed on the sector.
“Our businesses would be booming if it weren’t for the excessive taxes levied on us,” Muhwezi said. “We are not afraid of competition because we believe in the future of our industry. However, the high taxes continue to hold us back. We urge the government to consider reducing and harmonizing these taxes so that our members can continue to grow and contribute meaningfully to the national economy.”
Currently, hotel operators are subjected to a range of taxes, including an 18% Value Added Tax (VAT) on accommodation, food, and beverages, 30% Corporate Income Tax on profits, and a 15% mandatory contribution to the National Social Security Fund (NSSF) for every employee. In addition to these, hotel owners also face local government levies and license fees that vary across districts, further complicating the tax compliance process.
Jean Byamugisha, the Executive Director of HOA, pointed out the lack of coordination between the central and local governments, which often results in duplication of taxes.
“A hotel in Kampala may be required to pay certain fees that another in Jinja is not obligated to. This inconsistency creates confusion, increases operational costs, and affects investor confidence,” she said.
To address these challenges, Yogi Biriggwa, the President of the Uganda Tourism Association (UTA), proposed the adoption of a single-window tax system. This would consolidate all taxes under one digital platform, making it easier for hotel operators to comply with tax obligations while reducing administrative burdens and eliminating overlaps.
“The implementation of a one-stop tax platform would not only improve compliance but also increase revenue collection for the government in the long run,” Biriggwa said.
The hotel owners emphasized that they are not seeking tax exemptions, but rather fairness, clarity, and coordination. They also called for continuous engagement with relevant government agencies such as the Uganda Revenue Authority (URA), the Ministry of Tourism, and local governments to create a more enabling environment for the sector.
The hotel industry is a critical component of Uganda’s tourism sector, and stakeholders believe that with a favourable policy and tax environment, it can recover faster, expand further, and boost the country’s economic growth.