Fresh push on investment, major projects

Finance and planning deputy minister Hamad Hassan Chande tables a bill seeking the amendment of carious laws in Parliament in Dodoma yesterday PHOTO | SAID KHAMIS

Summary

  • In line with President Samia Suluhu Hassan’s desire turn Tanzania into a darling of investors and a country where strategic projects are swiftly implemented, the government moved

Dar es Salaam. The government is king a raft of measures in renewed efforts to attract investment and speed up the implementation of strategic projects.

In line with President Samia Suluhu Hassan’s desire turn Tanzania into a darling of investors and a country where strategic projects are swiftly implemented, the government moved - under a certificate of urgency – a bill in Parliament yesterday that streamlines the granting of investment incentives.

Finance and Planning minister, Dr Mwigulu Nchemba tabled The Written Laws (Financial Provisions) (Amendment) Act 2022 whereby six specific laws are amended in a manner that streamlines the granting of incentives and offer Value Added Tax (Vat) exemptions on certain investment projects among others.

Since ascending to the Presidency in March 2021, President Samia Suluhu Hassan has adopted a pro-business approach that has seen a monumental rise in the number and value of investment projects being registered in Tanzania.

The President has on several occasions openly castigated a past tendency of strangling businesses through exorbitant taxes and frustrating investors through bureaucratic processes.

When she addressed a gathering upon her arrival from the US through the Kilimanjaro International Airport (KIA) in April, this year, President Samia Suluhu Hassan said investments worth Sh11.7 trillion would soon start flowing into the country, noting however that she would not tolerate unnecessary hurdles or bureaucracy that would frustrate the investors.

The President repeated similar sentiments when she witnessed the signing of the construction project of the fourth lot of the Standard Gauge Railway (SGR) in Dar es Salaam in July this year when she directed her lieutenants to amend the bureaucratic provisions in the laws that were taking Tanzania backwards economically.

By setting a pro-business tone - in a country that had been sliding backwards in terms of its readiness to working with investors during the past few years – President Hassan’s approach has had positive outcomes, with the Industry, Investment and Trade minister, Dr Ashatu Kijaji revealing earlier this year that Tanzania registered 294 investment projects worth $8.1 billion between March 2021 and February 2022.

Such a volume of registered investment projects has never been recorded before in Tanzania’s history, Dr Kijaji said in March this year.


Walking the talk

And yesterday, Dr Nchemba tabled a bill in Parliament to amend the Excise (Management and Tariff) Act, Cap. 147, the Income Tax Act, Cap. 332, the Mining Act, Cap. 123, the Public Finance Act, Cap. 348, the Road and Fuel Tolls Act, Cap. 220 and the Value Added Tax Act, Cap. 148 through The Written Laws (Financial Provisions) (Amendment) Act 2022.

Under the bill, the government has amended the Excise (Management and Tariff) Act, Cap 147 to empower the Minister to remit excise duty on goods to be used for implementation of strategic or special strategic investment approved by the National Investment Steering Committee.

The amended Section 128 has a subsection (2B) which now reads: “Notwithstanding the provisions of subsection (1), the Minister shall, upon approval by the Cabinet and by order published in the Gazette, remit excise duty on goods imported or purchased for implementation of strategic investment or special strategic investment approved by the National Investment Steering Committee under the Tanzania Investment Act”.

According to Dr Nchemba, the amendment aims at harmonising the provisions of the Act and of the Tanzania Investment Act in order to enable grant of incentives to investors.

The government is also raising the excise duty rates for imported wines of fresh grapes in an effort to promote local grape farming and create a sustainable market for locally grown grapes.

The amendment to the Income Tax Act, Cap 332 will involve Section 10 so as to include strategic investment approved by the National Investment Steering Committee within the scope of areas for which the Minister may grant income tax exemption, Dr Nchemba told the Parliament yesterday.

“The aim is to harmonise the provisions of the Act and of the Tanzania Investment Act in order to enable grant of incentives to investors,” Dr Nchemba says in the tabled bill.

Similarly, the government is amending the Mining Act, Cap 123. Section 87 (1) by adding a new paragraph (e) so as to provide for the rate of royalty to be paid by a miner of phosphates are used in the manufacture of fertilisers.

Under the amendments, the government will reduce the royalty rate from three to one percent.

Dr Nchemba told the House that the government was also amending Section 8 of the Road and Fuel Tolls Act, Cap. 220. Section 8 so as to empower the Minister to exempt strategic or special strategic investment approved by the National Investment Steering Committee from payment of fuel tolls.

“The proposed amendment aims at harmonising the provisions of the Act and of the Tanzania Investment Act in order to enable grant of incentives to investors,” he says in the bills that is up for debate during the coming few days.

As for the Value Added Tax Act, Cap 148, D Nchemba proposes to amend Section 6 in order include strategic investment approved by the National Investment Steering Committee within the scope of areas for which the Minister may grant value added tax exemption.

The aim is to harmonise the provisions of the Act and of the Tanzania Investment Act in order to enable grant of incentives to investors.

A new section 55A is proposed to be introduced in order to zero-rate value added tax on locally manufactured fertiliser.

“The aim of the amendment is to provide relief to local farmers and users of fertiliser by reducing the production cost for local producers of fertiliser,” Dr Nchemba says, noting that also being proposed was to amend the Schedule so as to exempt Vat on locally manufactured sisal bags and wire of other alloy steels imported for manufacture of gas cylinders.