Thursday, January 11, 2018

5 soft drink producers press govt on Sh30bn tax refunds

Finance and Planning minister Philip Mpango and

Finance and Planning minister Philip Mpango and his deputy Ashatu Kijaji keenly listen to discussants during the discussion on the 2017/18 Budget Framework Plan and National Development Plan in Parliament. PHOTO | file 

By Alex Malanga @ChiefMalanga

Dar es Salaam. The government withholds more than Sh30 billion in refundable additional import duty on industrial sugar owed to five soft drink producers, a confederation says.

The Confederation of Tanzania Industries (CTI) has named the five soft drink producers as SBC Tanzania Ltd, Bonite Bottlers Ltd, Nyanza Bottling Company, Coca-Cola Kwanza and Bakhresa Group.

Initially, importers of industrial sugar were being charged 10 per cent duty, but the government raised it to 25 per cent in the 2015/16 financial year.

Import duty for sugar climbed to $460 (about Sh1 million) per tonne of the cost, insurance and freight (CIF) value of the imported product.

CTI criticised the imposition of 15 per cent additional import duty, saying it would kill innovation and cut jobs.

The government maintains that the move is aimed at protecting local sugar producers against imports.

CTI also unhappy with the government failure to honour an agreement on refunding the 15 percent duty as soon as it is proved that the sugar was indeed imported for industrial production.

“It is unfortunate that it is two and a half years now since the government has been holding our money,” CTI policy and advocacy acting director Akida Mnyenyelwa told BusinessWeek.

He laments that is contrary to the government’s industrialisation drive.

“The government should speed up the process of refunding... it should at least take two days for big firms and one day for small ones,” opined Mr Mnyenyelwa.

He suggests for removal of the 15 refundable duty. Only import duty of 10 per cent should remain if it is to do away with inconveniences in question and turn the country to an industrialised nation.

“Refundable import duty should be removed as it adds no value in the government’s basket of revenue,” opined Mr Mnyenyelwa.

Bakhresa Group corporate affairs director Hussein Sufian was once quoted by this paper as saying the 15 per cent refundable import duty was constraining the company’s cash flow.

“This increases the cost of doing business. In manufacturing, we use borrowed funds and therefore, delays in refunds are disservice to us as we will have to pay more interest rate after failure to pay loan on time,” said Mr Sufian.

Tanzania Private Sector Foundation executive director Godfrey Simbeye said the 15 per cent refundable duty attracted a liquidity problem.

“The policy hurts industrial sugar users. In that regard, we can’t be competitive enough to compete in international market.”

He alleged that the government was delaying to refund them because some manufacturers were using industrial sugar as the final product and not as a raw material.

He suggested that importers declare their suppliers so that it could be easy for the government to trace the matter.

“Why should the industry suffer because of a few players? Why doesn’t the government punish those who mess up?”

The Tanzania Revenue Authority (TRA) director for taxpayers services and education, Mr Richard Kayombo, reacted that the government was still undertaking the verification to prevent people from importing sugar for domestic consumption under the pretext of industrial sugar.

“The manufacturers’ funds are safe in the escrow account pending the completion of the auditing.”

TRA commissioner general Charles Kichere was last September quoted by BusinessWeek as calling upon CTI to ensure that its members utilise industrial sugar for the intended purpose.

“Experts believe that timely payment of refunds to companies is a legal obligation of the state. Thus, there is no excuse for delaying.”