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- May 11, 2013
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The Tanzanian government, concerned by the decline in cargo volumes at the Dar es Salaam port, is planning a stakeholders meeting to come up with ways to increase business.
Tanzania Ports Authority Director General Deusdedit Kakoko said cargo traffic at the port declined by 800,000 tonnes between the 2014/15 and 2015/16 financial years.
The Parliamentary Committee for Industry, Trade and Environment is planning a stakeholders meeting that will include Prime Minister Kassim Majaliwa, officials from the Tanzania Revenue Authority, port authorities, ship owners, transporters and major clients in the region.
The president of the Tanzania Freight Forwarders Association, Stephen Ngatunga, is optimistic that “the meeting will bear fruit.”
At the centre of the debate is whether the 18 per cent value added tax charged on auxiliary services attached to in-transit goods since July 1, 2016 has led to the loss of clients from Zambia, Uganda, Malawi, Rwanda, Burundi and the Democratic Republic of Congo.
Finance Minister Philip Mpango said the VAT is not an issue, but technocrats in government institutions that deal with cargo have differed with him.
Mr Mpango said VAT is levied only on auxiliary services on the process between cargo arrival at the port and its evacuation, and not on the goods themselves.
An agent of a Dubai-based shipper, which used to bring in 10,000 vehicles per month, said the number of cars offloaded at Dar port by their ships is now 3,000 per month. He said they have diverted their cargo to Mombasa port, which they find more affordable.
“Our single major cost at Dar port was the usual stevedoring charge of about $500,000 per month for the 10,000 trucks offloaded. Today, each of these trucks is charged 18 per cent VAT on top of the stevedoring charge. This cost is not recoverable,” he said.
VAT payment
In principle, VAT should be shouldered by the final consumer, who may be in Zambia, Burundi, Rwanda, Malawi, Uganda or the DRC. Recovery of VAT takes place after the payment has been made in the said countries and not before.
Shippers say that what matters is the fact that the VAT charged constitutes a major overhead, enough to make any ship owner think twice before choosing the Dar port.
Dr Mpango argues that since the VAT only came into force in July, it cannot be blamed for the decline in cargo volumes.
Tanzania government steps in as cargo volumes fall at Dar port
Tanzania Ports Authority Director General Deusdedit Kakoko said cargo traffic at the port declined by 800,000 tonnes between the 2014/15 and 2015/16 financial years.
The Parliamentary Committee for Industry, Trade and Environment is planning a stakeholders meeting that will include Prime Minister Kassim Majaliwa, officials from the Tanzania Revenue Authority, port authorities, ship owners, transporters and major clients in the region.
The president of the Tanzania Freight Forwarders Association, Stephen Ngatunga, is optimistic that “the meeting will bear fruit.”
At the centre of the debate is whether the 18 per cent value added tax charged on auxiliary services attached to in-transit goods since July 1, 2016 has led to the loss of clients from Zambia, Uganda, Malawi, Rwanda, Burundi and the Democratic Republic of Congo.
Finance Minister Philip Mpango said the VAT is not an issue, but technocrats in government institutions that deal with cargo have differed with him.
Mr Mpango said VAT is levied only on auxiliary services on the process between cargo arrival at the port and its evacuation, and not on the goods themselves.
An agent of a Dubai-based shipper, which used to bring in 10,000 vehicles per month, said the number of cars offloaded at Dar port by their ships is now 3,000 per month. He said they have diverted their cargo to Mombasa port, which they find more affordable.
“Our single major cost at Dar port was the usual stevedoring charge of about $500,000 per month for the 10,000 trucks offloaded. Today, each of these trucks is charged 18 per cent VAT on top of the stevedoring charge. This cost is not recoverable,” he said.
VAT payment
In principle, VAT should be shouldered by the final consumer, who may be in Zambia, Burundi, Rwanda, Malawi, Uganda or the DRC. Recovery of VAT takes place after the payment has been made in the said countries and not before.
Shippers say that what matters is the fact that the VAT charged constitutes a major overhead, enough to make any ship owner think twice before choosing the Dar port.
Dr Mpango argues that since the VAT only came into force in July, it cannot be blamed for the decline in cargo volumes.
Tanzania government steps in as cargo volumes fall at Dar port