Tanzanian shipping agents impose $50 levy per Teu By WILFRED EDWIN THE EAST AFRICAN Posted Sunday, October 26 2008 at 12:08 Tanzanian shipping agents have started collecting a container service charge of $50 per twenty-foot equivalent unit (Teu) for imports and exports passing through Tanzanian ports. The charge comes at a time when Tanzania Revenue Authority has also started levying value added tax on stevedoring services rendered by the Tanzania International Container Terminal Services (TICTS) to all shipping lines calling at the port. The Tanzania Shipping Agents Association told importers and exporters last week that due to a sudden increase in operational costs related mainly to implementation of VAT on stevedoring services, local shipping agents have no choice but to levy the container service charge. The association said that the charge will be recovered from the account of the shipping lines as it is within the scope of collection of liner charges, which are applied in the global shipping trade. The charging of VAT, and now the container service charge threatens to reduce the competitiveness of the port of Dar es Salaam, experts have warned. Furthermore, the container handler has from October 1 this year reduced the free time enjoyed by shippers of transit goods through the port from 30 days to 21. Domestic free time has also been reduced, from 14 days to seven. A maritime source told The East-African last week that VAT and the new container charges would increase operational costs at the port, which will automatically be passed over to port users. This means that shipping companies will increase freight charges, a move that could hurt the economy. TICTS started charging its customers VAT on stevedoring services on September 12, although in Schedule 1 of the existing Value Added Tax Act Revised Edition in 2006, the service is subjected to VAT. Further, TICTS is claiming VAT from its clients who have enjoyed stevedoring services in the past as permitted by law, the companys general manager said recently. Stevedoring is the service offered by TICTS to shipping lines to load and discharge containers. TICTS started to charge VAT after the TRA forced the firm to pay $5.5 million in overdue payments that backdates to last July. But the government has said it will look into the VAT issue to see if the charges are likely to harm the economy. We are looking into the matter afresh, Deputy Minister for Finance and Economic Affairs Jeremiah Sumari said. Already, stakeholders have filed complaints, and the government is keen to review the law to see if it affects performance at the port, Mr Sumari said. TPA is worried by the possible effects on its performance. Sources say its director, Ephraim Mgawe, has asked the Ministry of Infrastructure Development to intervene in the matter. TICTS says reverting to the approved 21 days free time is necessary, given the current space constraints in the terminal and the increase of cargo expected in the latter part of the year, when it will need to ensure a faster movement of containers through the terminal. Container handling capacity has risen tremendously at TICTS. Annual growth before the firm was hired to operate the terminal was as low as 4 per cent, but it shot up to 15 per cent after concessioning. Numerous Container Inland Depots have been built in Dar es Salaam and projections show that these can absorb some 4,000 containers from the TICTs terminal, effectively reducing congestion at the Dar es Salaam Port by about 30 per cent. It is expected that container volumes will increase from 341,000 Teu to 525,000 Teu in two years. Alterations made to accommodate the growing market demand include the acquisition of berth 8, modernisation of number 5 gate area, relocation of infrastructure and utilisation of Ubungo Inland Depot. Recently, TICTS allocated some $13 million for civil works, which includes demolishing of sheds, refurbishment of the Ubungo Inland Depot, new fenders and crane rails. The company has in recent times purchased various containers handling equipment worth $60 million.