R.B
JF-Expert Member
- May 10, 2012
- 6,296
- 2,575
Acting Dar es Salaam Port Manager, Hebel Mhanga
Charging value added tax (VAT) on transit goods’ auxiliary services will drive away clients and affect Dar es Salaam port’s competitiveness, Tanzania Ports Authority (TPA) has warned.
29Sept2015
Acting Dar es Salaam Port Manager, Hebel Mhanga told The Guardian last week that many stakeholders in the business were against the tax.
He said his office was coordinating their efforts to have audience with Tanzania Revenue Authority Commissioner General, Rished Bade, on the issue.
“Although VAT is refundable, most of us know that it takes years and involves a cumbersome procedure which discourages many people,” argued Mr Mhanga.
According to him, Mombasa port in neighbouring Kenya tried to introduce a similar tax but abolished it almost immediately.
“We have many infrastructure challenges at Dar port and adding this tax on transit goods will drive away many clients,” Mhanga warned.
Dar es Salaam port, which serves six landlocked countries of Burundi, DR Congo, Malawi, Rwanda, Zambia and Uganda, faces fierce competition from the ports of Beira in Mozambique, Durban in South Africa, Mombasa and Walvis Bay in Namibia.
Mhanga said the regulation introducing the tax on transit goods’ services, which include handling, storage and stevedoring, has already been put in place for it to come into effect.
What remains is the date when the tax will start to be charged, he added.
“We are coordinating port stakeholders’ decision to meet with TRA Commissioner General and discuss this issue with him in details,” the Dar port acting Manager pointed out.
Dar es Salaam Corridor Group (DCG), which has become the first casualty following failure to conclude a transit cargo shipping deal with Tanzania Zambia Railways Authority and Malawi Cargo Centre Limited because of fears of VAT on transit goods, said the worst is yet to come.
“TICTS, TPA, DCG and all other service providers are not charging the VAT on auxiliary services as this would be a very bad move for the country. Clients will move their cargo to other ports and it would take a long time to win them back,” said DCG’s Chief Executive Officer Erik Kok.
Mr Kok further pointed out that as clients abandon Dar port, jobs will be lost, income tax will fall and the economy will suffer.
Introduction of the tax will increase cargo charges at the country’s prime port by between four and five US dollars (about 8-10.000/-) per metric tonne.
“This may cause a total stop of any transit cargo through Dar es Salaam as we will be uncompetitive compared to other ports,” Kok warned.
According to a recent Shippers Council of Eastern Africa report, Dar port, which is competing with Mombasa in handling cargo from Burundi, DR Congo and Rwanda, is more expensive when it comes to port charges including wharfage.
Dar es Salaam charges wharfage as a percentage of the value of the cargo at 16 per cent for domestic imports, 12.5 per cent for transit imports and one per cent for domestic and transit exports.
In contrast, Mombasa, charges wharfage at a flat rate of US$70 for a 20-foot container and US$105 for a 40-foot container.
The three countries however prefer to use Dar port because of distance which almost doubles transportation costs.
