Sh480 billion may be lost over reinstatement of licence fees

Customers select items on display in downtown Kariakoo in Dar es Salaam. The government has reinstated the annual trade licence fees for all businesses including SMEs. PHOTO | FILE   

By Veneranda Sumila,The Citizen

In Summary

According to the report, Tanzania Revenue Authority was preferred by a 44 per cent of the surveyed to collect business licence fees.

Dar es Salaam. Tanzania’s economy stands to lose about Sh480 billion every year if the re-introduced annual business licence fee would be implemented

This is according to a new report which shows that the money will be lost because many businesses – the micro, small and medium enterprises (MSMEs) -- will close shop or experience a drop in profits.

The report -- An Assessment of the Impact of the Intended Reinstatement of Business Licensing Fee for the MSMEs -- estimates that 47.5 per cent of the surveyed 616 active entrepreneurs said their profit would decrease if the intended business licence fees were reinstated.

Three quarters of the surveyed entrepreneurs – in the research conducted by Vikundi vya Biashara Ndogondogo (Vibindo) - were able to estimate the losses and the average of which per entrepreneur would be Sh160,000 per year.

“Therefore, if the national estimated number of MSMEs is 3 million, and if the sample of this study is a national representative then the total country loss will be over Sh480 billion,” says the report that was launched at the weekend.

The report says 10.3 per cent of the surveyed entrepreneurs said they would close down outright if the move were to be enforced. This may mean that 300,000 MSMEs will perish. 34.5 per cent of the surveyed entrepreneurs said they would reduce the number of workers.

“However, if the business licence fees were there to stay then, a majority of the surveyed entrepreneurs wished that these should differ according to the size and location of a business in order to avoid complaints,” says the report commissioned by Vibindo and Best-Ac.

According to the report, Tanzania Revenue Authority was preferred by a 44 per cent of the surveyed to collect business licence fees.

For his part Vibindo executive director Gaston Kikuwi told The Citizen that respondents mentioned corruption among local government officials as pervasive. “Everywhere, they recalled with resentment on the time wasted in procuring the licence, the costs involved, cumbersome bureaucratic procedures and constant harassments by officials, from the village level to the militias in urban centres,” said Mr Kikuwi.