CTI, TPSF Oppose Annual Business Licence Renewals

The new requirement for all businesses to apply business licences annually under the newly introduced business licence regime is ill advised and could further complicate the business environment in the country, according to business stakeholders.

But, the government defends the regime as an inevitable regulatory mechanism that will also help to boost revenues to the central and local governments.

The Ministry of Trade and Industry announced in newspaper advertisements recently that all businesses across the country will need to apply for new annual business licences as the government reverts to a 1972 legislation, putting an end to business licences with indefinite time-frame.

The ministry said the new licence regime was an implementation of the Finance Act of 2011 which has brought back annual payment of business licences. According to Finance Act 2011, local government authorities are supposed to make new bylaws to charge business licence fees.

However, business associations are concerned that the new requirement will be counterproductive to efforts to improve business environment in Tanzania as it signals a return of the nuisance taxes that were abandoned a couple of years ago to make the environment less cumbersome to businesses.

The Confederation of Tanzania Industries (CTI) and the Tanzania Private Sector Foundation (TPSF) have faulted the reintroduction of the new business regime, saying it makes the business climate in Tanzania less predictive and unstable.

They are also concerned that the move will undermine efforts to make the country the best investment destination for both foreign and local investors. "We are not happy about the new requirement. We have communicated with our members and they are all against it," TPSF Executive Director Godfrey Simbeye told the 'Business Standard' in an interview.

He said annual business licencing was part of nuisances that the government got rid of to improve business environment. He said TPSF considered it wrong for the government to use business licencing as a means to increase its revenue because it brought back the nuisances it had earlier abandoned to improve business environment.

"We are of the opinion that business licencing should not be used as a source of revenue. It should remain as a means of identification," he said. 

CTI Chairman Felix Moshi told the 'Business Standard' in an interview that the problem was not on the amount of money required as financial requirement but the implication of the directive in making the licencing regime less predictable and unstable.

"Our policies must be predictable and stable. When you go back to measures you had already removed you are impacting on stability of your policies and also you are negatively impacting on their predictability," he said. 

The CTI chairman said the government was taking deliberate moves that undermine its own efforts to sell the country as the best investment destination in the region.

"The government is sending wrong signals to local and foreign investors. The policies in the business regime are not predictable and stable," said Mr Mosha. In 2007 Tanzania enacted a Business Activities Registration Act, (BARA, 2007) to provide for a one stop shop for business registration.

It sought to streamline and simplify business start-up so as to reduce the time and cost of establishing new businesses, encourage more investment and greater formalisation. In effect the new legislation repealed the Business Act of 1972.
Source: AllAfrica.com reported by Henry Lyimo from Dar es Salaam, Tanzania
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