Dar es Salaam. Tanzanian manufacturers will push for a speedy implementation of a blueprint for improvement of business climate in Tanzania when they meet minister responsible for investment, Angella Kairuki, on Friday.
The need to hasten Value Added Tax (VAT) refunds and payment of additional 15 percent import duty on industrial sugar are also expected to feature prominently at the meeting organised by the Confederation of Tanzania Industries (CTI).
Importation of the industrial sugar is under the East African Community (EAC) duty remission scheme, where the agreed import duty in all member countries is 10 percent.
However, Tanzania is charging an additional refundable import duty of 15 percent with the intention of curbing abuse by unscrupulous traders who sell it in the local market for domestic use. This makes a Tanzania producers competitively disadvantaged compared to the former.
CTI executive director, Mr Leodegar Tenga, told journalists yesterday that discussion and deliberation of the issues at the meeting which will be attended by both members and non-members of CTI, was meant to further improve business environments by cutting operational costs and enhance the manufacturing sector. Mr Tenga was not in a position to quantify the value of VAT refund and refundable import duty that are yet to be settle.
CTI members had reported outstanding claims of VAT refunds of more than Sh45 billion by May last year, and the same amount for refundable import duty, according to the CTI’s presentation to the Parliamentary Standing Committee on budget.
“We understand the implementation of the new business blueprint takes long because it goes along change of some laws, but our responsibility is to remind the government to do whatever it takes to speed up the process,” said Mr Tenga.
“We commend the government for the ongoing efforts to repay VAT refunds and refundable import duty, but with a motive of supporting industrialisation, we will keep requesting for the hastening of the process.”
Many manufacturers currently face serious cash flow problems they blame on delayed VAT refunds, according to CTI.
Some industries have for the past four year not received outstanding VAT refunds as opposed to three months speculated in the new VAT Act of 2014.
“As it is, their (manufacturers) working capital has been tied up and they have incurred high transaction costs due to interest charges on overdrafts/loans from banks,” CTI’s document reads. CTI was in the past quoted by The Citizen as saying delay in refund of the additional 15 percent import duty, was a punishment to manufacturers since it adds operational hassles and unnecessary administrative procedures and cost.
Until May 2019, manufactures had incurred more than Sh3.5 billion in bank interest for money borrowed from commercial banks as a result of the delayed refunds.
However, Mr Tenga commended the government due to its willingness to meet and discuss with local and foreign investors to address challenges they are grappling with.
“CTI commends the government’s continued efforts to improve the business environment through dialogue and engagement with the industrialists,” noted Mr Tenga.