Traders seek 75pc cut in stamp duty

22Jan 2022
Francis Kajubi
Dar es Salaam
The Guardian
Traders seek 75pc cut in stamp duty

​​​​​​​MANUFACTURERS of excisable goods are pleading for a massive reduction of the tariff relating to the new electronic tax stamp (ETS) as it affects operational costs and lowers competitiveness.

Leodegar Tenga, Executive Director for the Confederation of Tanzania Industries (CTI)

They want the Tanzania Revenue Authority (TRA) to make a 75 percent reduction on the new ETS rate pegged at $18.37 (42,434/-) levied) on every 100 stamped items that came into effect on Monday.

Leodegar Tenga, executive director for the Confederation of Tanzania Industries (CTI) said at a press conference yesterday that the new rate is only an 8.15 percent reduction from $20 (46,187/-) levied earlier.

Manufacturers feel that this difference is minor and the stamp duty is a tax burden in operational costs, holding back local competitiveness in the East African market and at the wider stage.

There is only a four percent reduction offered in the new rates across all beverages and alcoholic drinks from the previous ETS rates, he stated.

"Our plea to the government is justified by TRA’s own reports which show an increase in economies of scale due to the rise in the number of manufacturers registered with ETS from 57 when the system was adopted in late 2019 to 272 more recently,” he stated, pointing out that findings indicate that alternative ETS providers provide that service at 50 percent of the new rate;

“What hurts is that the levied money goes directly to a foreign company that does the job while the government earns nothing,” he declared, urging that “in the near future the government should consider awarding such tenders to local companies through open bids.”

Coca-Cola Kwanza Ltd managing director Unguu Sulay noted that last year when the ETS levy stood at U$20 they paid 200/- to have one crate of 24 soda bottles stamped. With the deduction, they are since Monday paying 194/- a crate.

“We support the use of ETS on grounds that it ensures transparency in business operations and combats under-declaration and proliferation of illicit goods in the market. But the levy must be healthy for running our businesses,” he said.

Paul Makanza CTI board chairman said that manufacturers appreciate the fact that in the new changes the ETS shall be paid in Tanzanian currency but they are not encouraged by the fact that there has been an insignificant reduction in the rates.

“Based on the positive engagements we had with TRA and other government entities supported by an independent study on the execution of the rates, we are still left with an anticipation of significant ETS costs,” said Makanza.

Manufacturers should be involved in the review process as key stakeholders, he elaborated, demanding that the review alleviate the impact on industries that are already tasked with value-added tax and excise duty, plus fees associated with the industrial subsector.

Jose Moran, Tanzania Breweries Ltd chief executive officer said planning tax reforms should consider the fact that manufacturers are striving to recover from the COVID-19 pandemic impact in their businesses.