Tanzania: New 20 Percent Tax On Ship Services At Dar Port

	Email This Page Print This Page Comment on this article

The East African (Nairobi)

20 September 2008
Posted to the web 22 September 2008

Wilfred Edwin
Nairobi

The competitiveness of the port of Dar es Salaam could soon face a test as a result of introduction of 20 per cent value added tax on stevedoring services offered by Tanzania International Container Terminal Services (TICTS) to shipping lines.

The container terminal operator will also from next month reduce the free time enjoyed by shippers of transit goods from 30 to 21 days. Domestic free time has also been reduced from 14 to seven days.

Stevedoring is the service offered by TICTS to shipping lines to load and discharge containers.

A source in shipping circles told The EastAfrican last week that VAT would trigger an increase in operational costs at the port, which would automatically be passed on to port users through increased freight charges.

TICTS started charging its customers VAT on stevedoring services on September 12, although on Schedule 1 of the existing Value Added Tax Act Revised Edition in 2006, the service is subject to VAT.

The company started to charge VAT after the Tanzania Revenue Authority forced it to pay $5.5 million in overdue payments dating back to last July.

The government has, however, said that it will look into the VAT issue to see if it is harmful to the economy.

"We are looking into the matter afresh," Deputy Minister for Finance and Economic Affairs, Jeremiah Sumari, said last week.

Already, stakeholders have filed complaints and the government is keen to review the law if it affects the performance at the port, Mr Sumari added.

Sources said Tanzania Port Authority director Ephraim Mgawe has asked the Ministry of Infrastructure Development to intervene on the matter.

TICTS said last week that reverting back to the approved 21 days of free time was necessary because of the current space constraints in the terminal and the increase in cargo expected in the latter part of the year.

Container handling capacity has risen tremendously at the port.

Annual growth before the firm was hired to operate the terminal was as low as 4 per cent, but this increased to 15 per cent after it came on board.

Numerous Container Inland Depots are being built in the Dar es Salaam neighbourhood, and projections show that they will absorb 4,000 containers from the TICTs terminal, effectively reducing congestion at the port by about 30 per cent.

It is expected that the container volumes will increase from 341,000 Teus to 525,000 Teus in the next two years.

The company has in recent times purchased various container handling equipment worth $60 million.

Recently, TICTS said it will spend $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 container handling equipment worth $60 million.

Alterations made to accommodate the growing market demand include the acquisition of berth 8, modernisation of gate area number 5, relocation of infrastructure and utilisation of Ubungo Inland Depot.

Read comments. Write your own.

AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.

Share this on: Facebook Digg Del.icio.us StumbleUpon Muti

Copyright © 2008 The East African. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here.

Make allAfrica.com your home page | RSS Feed Sign up for FREE daily 'top headlines' by email >>

Top | Site Guide | Who We Are | Advertising | Search | My Account

Questions or Comments? Contact us. Read our Privacy Statement.