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'Cut tax to enable business manage Covid-19 burden'

Thursday July 22 2021
Tax pic
By Zephania Ubwani

Arusha. Businesses here are calling for reduced tax estimation rates to enable them recover from the impact of Covid-19.

“It will help business people to operate. Currently, some businesses have closed down due to failure to generate profit,” stakeholders said.

They said Arusha was one of the regions where Covid-19 had severely impacted businesses, yet tax rates have kept on increasing.

The Tanzania Revenue Authority (TRA) is requested to reduce at least 50 per cent of tax estimations to the firms so as to enable them to recover.

This was recommended during a recent annual general meeting of the Arusha chapter of Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA).

For instance, it was cited, businesses with sales of between Sh11 million and Sh14 million are supposed to be taxed Sh450,000.

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“This tax rate is very high. It has to be reduced to at least between Sh300,000 and Sh350,000,” it was recommended.

Equally, the 3.5 percent rate of tax estimation for sales that ranged from Sh14 million to Sh100 million is also considered as “very high”.

If a business has sales of Sh28 million, the exceeded Sh14 million tax rate (3.5 percent of Sh14 million), overburdened the business owner.

The firm owner is forced to pay “a bigger amount of tax” for the excess of Sh14 million than the tax of Sh14 million of the fourth category (Sh11 million to Sh14 million).

It was recommended that the 3.5 percent rate of tax estimation (Sh14 million to Sh100 million) be reduced to at least 2.5 percent.

The proposed reductions, it was observed, would help reduce the burden to the business people who had to grapple with falling sales after the outbreak of Covid-19.

TCCIA Arusha also reiterated its concern on late payments of value added tax (VAT) refunds, saying it stalled business performances.

The chamber said despite the companies’ efforts to submit their audited reports and all other requirements, VAT refunds were still delayed.

“This situation hinders the business performances since the businesses depend on those funds to run their businesses,” it observed.

The chamber insisted paying VAT refunds on time would not only boost business operations but increase the badly needed government revenue.

TRA was also tasked to consider reducing “a lot of taxes” for new small scale firms barely before growing and starting to make profit.

These include tax for processing a license, income tax, excise duty, business license and those associated with regulatory bodies.

“This makes it hard for the businesses to grow and discourages entrance to the market. It rather encourages unregistered businesses,” the meeting pointed out.

It was recommended that there should be a grace period of two years on the payment of the processing license (Sh500,000).

Protection of start-up businesses is set not only to increase investments into the country but also increase government revenue.

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