Ntemi Kazwile
JF-Expert Member
- May 14, 2010
- 2,182
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Saturday, 24 December 2011 22:26 |
Saumu Jumanne CROSSROADS saumu.j@gmail.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it How many people know that the Finance Act 2011 requires every business to apply for a new annual license comes 1st January 2012? I can bet, very few business people are aware. Many will be caught off guard. Then there will be big shouts of the return of nuisance taxes scrapped some years ago. If all goes well, the local government authorities will start knocking on every business premises to have a look at the business licence, and if you will not have it, then you will be operating illegally. Before the Finance Act 2011 came into being, entities were paying for a business licence only once in a lifetime. The new act empowers the local government authorities to enact bylaws to charge and collect business licence fee annually. The government by now should have massively informed the business community about this new requirement. It should have used paid advertisements in newspapers, TV and radios to inform the public. After all, it expects to collect billions from the exercise. In fact, the least the ministries in charge of Finance, Trade, and Local governments could have done is to post information in their websites about the issue or to just call a press conference. Unfortunately, media reports indicate that the whole government machinery has been silent about the issue leaving business association leaders confused about what will happen. It was the Finance ministers budget last June that proposed new licensing fee for all businesses (except hard drinks) as follows - town areas Sh 50,000, District Councils Sh30,000 and Village Councils Sh10,000. Unfortunately, The Finance Act 2011, does not state the amounts to be charged as indicated by the budget. What happens now is that businesses will be at the merciy of local authorities that will decide what to charge. This is likely to bring chaos in the whole exercise, as traders may refuse to pay any charges above the figures proposed in 2011/12 National Budget. Unconfirmed reports have it in Dar es Salaam that some municipalities are ready to make it big time taking advantage of the loophole. For example, dont be surprised if you have a small secretarial bureau somewhere in Kinondoni, the local authorities may charge about Sh100, 000. For big businesses, they can expect to cough more. This exercise must be implemented carefully so as not to open the door for corruption. Small traders who may not afford to pay the required fee will just be bribing their way out of the mess. If to get a business licence one will have to get a tax clearance certificate from Tanzania Revenue Authority (TRA), then many businesses will be in trouble. TRA often requires one to pay tax in advance before you can get the vital certificate. I would like to add my voice to those calling for the ministry of Finance and Economic Affairs, ministry of Industry, Trade and Marketing, and ministry of Regional Administration and Local Government Authorities to issue a statement on how the exercise will be conducted and assure the business community that it will not adversely affect the business environment. Anything that destroys business environment should be done away with as you dont kill the goose that lays the golden egg. On 13 September, 2011, The Citizen newspaper reported that Tanzania has dropped six places in 2011 Global Competitiveness rankings, taking 119th spot among the 142 countries surveyed in Global Competitiveness Report (GCR) by the World Economic Forum. How well or badly the new licence regime is implemented will determine whether we will be at the top or bottom of business environment reports by the close of 2012. Saumu Jumanne is an Assistant Lecturer, Dar es Salaam University College of Education (DUCE) |