Tanzania: VAT on transit goods blamed for cargo Dar port woes

Reduce cargo volume passing through Dar es Salaam port is not due to red tape or the fear of making decision by the port management but due to value Added Tax on transit goods.

The Acting Port Manager, Hebel Mhanga, told the Daily News in an interview yesterday that although it was yet to be enforced, the VAT on transit was scaring away importers as they fear it would increase port charges hence inflating their costs of doing business.

“The problem of declining cargo volume is not due to red tape or the fear to make decision by the management. It is due to VAT on transit,” he said.

A Kenyan newspaper reported over the weekend that Tanzania business community were ditching Dar es Salaam port for its rivals due to excessive bureaucracy and delays by the port management in making decisions for “fear of annoying the presidency.”

The paper quoted the Principal Communication Officer of the Kenya Ports Authority (KPA), Hajj Masemo, as saying the Mombasa port management had noted increased transit volumes to Tanzania.

Mr Mhanga, admitted there was a significant business volume decline at the Dar es Salaam port but that was due to VAT on transit. He said it was yet to be applied, the VAT was scaring away cargo importers.

He said the situation was serious as the problem of copper exports and transit vehicle volume from Zambia may decline due to VAT threat.

He said there were likelihood that copper cargo from Zambia may decline as most of agreements with importers were coming to an end in the near future.

“The problem is most of the big importers may not renew their contracts because of the VAT threat. So there is a possibility that copper cargo will decline,” he said.

So far, transit vehicle for Zambia had declined by 50 per cent and it is likely there would be further decline, he said.

Mr Mhanga said they had submitted their proposal to Tanzania Revenue Authority on the VAT on transit to be scrapped off the books so as to rescue the situation.

“We are pleading with the government to reconsider the VAT issue,” he said, the situation required a quick decision. “It is not enforced yet, but the fact that it is there in the books makes it a threat to importers,” he said.

Earlier, the Chairman of the Tanzania Business Community, Johnson Minja, said it was true that many importers were opting for rival port as tax regime at the Dar es Salaam port were becoming “unpredictable.” “It is true.

There is a crisis. The tax system at the port is very unpredictable,” he said in an interview adding that there were many cargo held up at the port due to tax payments.

They come up with strange (tax) figures. They can not be paid,” he said. He said they have organised a meeting with TRA Commissioner General to address the situation as it is affecting both the traders and the port.
Source: Daily News, reported from Dar es Salaam, Tanzania
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