TRA urged to remit 35bn/- tax refunds to beverage industries

By KATARE MBASHIRU

THE Confederation of Tanzania Industries (CTI) now wants the Tanzania Revenue Authority (TRA) to remit 35bn/- in industrial sugar unpaid refunds to five big industries, saying any continuous delay is likely to suffocate the operations of the respective industries.

Speaking at a news conference in Dar es Salaam yesterday, CTI Chairman Samuel Nyantahe said the long outstanding refunds of the additional 15 per cent import duty on industrial sugar was threatening the food, beverage and pharmaceutical industries with imminent closure.
“As of now, unsettled claims from manufacturers submitted to CTI amounts to 35bn/- in industrial sugar refund, and food, beverage and pharmaceutical industries are the main users of industrial sugar for production processes,” he said.
In addition to the delayed refunds by TRA, he said the manufacturers were also grappling with yet another challenge of reallocation of the industrial sugar emanating from the ongoing government exercise of verifying the use of the imported industrial sugar for production processes. Since industrial sugar is not produced by any of the EAC partners states, manufacturers in the region are allowed to import it from other countries.
Its importation is governed by the EAC duty remission scheme. The agreed import duty for industrial sugar to all EAC countries is 10 per cent, but Tanzania decided to charge an additional refundable import duty of 15 per cent making it a total of 25 per cent. The government decided to add an import duty of 15 per cent so as to curb misuse of industrial sugar by unscrupulous traders who sell imported sugar in the local market for domestic use.
According to Mr Nyantahe, for a long time CTI has been advocating for the removal of the additional 15 per cent on imported industrial sugar as it does not increase government revenue but rather it increases the cost of doing business to genuine manufacturers. In the 2017/2018 financial year, the government introduced an Escrow Account for industrial users to deposit the 15 per cent with an intention to fast-track the refund process.
However, Mr Nyantahe insisted there has not been any improvement yet. “The additional 15 per cent refundable import duty does not increase government revenue, rather it is an administrative burden to both industries and the government itself,’’ said the CTI chairman adding:
“It is huge financial burden to manufacturers whose cash flow has been tied up completely, as they do not earn interest on delayed refunds and instead continue paying interest on overdrafts they have to take to cover the additional cost.’’ Mr Nyantahe added that unpaid refunds to only five big industries amounted to 35bn/- as of December 2017, and so far, more than 3.5bn/- has been cumulatively paid as banks interest.