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     REF              :   KATO/CIRCULAR/FEB-22/7

     DATE           :   18th February, 2022

     TO                 :    All KATO Members


     Dear Members,


    We have been receiving a few enquiries from members regarding the legal provisions under which Tour Operators were exempted from VAT.


    The Association first lobbied for a VAT exemption for Tour Operators 2001 and an exemption was granted.   This VAT exemption was however revoked in 2013 whereby the Finance Act 2013 deleted the clause granting such exemption.  With effect from June 2013, all aspects of Tour Operations was once again subjected to VAT.Following lobby efforts, the VAT exemption for Tour Operations was restored in 2016 vide the Finance Act 2016 (copy attached).

    Current Position:

    With effect from 9th June, 2016 when the Finance Act 2016 came into effect, the “services of tour operator excluding inhouse supplies” were exempted from VAT.

    What are in-house supplies?

    Tour Operators are in the business of packaging tours and safaris which include components that are VAT inclusive from source.   The VAT exemption accorded to Tour Operators took cognisance of the fact that they could sometimes directly provide goods/services directly that would have otherwise attracted VAT if they had been procured from a third party. e.g. accommodation, food, drink and car hire.

    The key issue to note is that where a Tour Operator directly supplies any Vatable goods/services, VAT is not exempted and must be charged and accounted for to KRA.

    Kind regards,

    Fred Kaigua, ACIArb, CPM


    in 2022-Feb
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