Wednesday, November 13, 2013
Law makers calls for the review of investment Act in the country
SOME legislators have appealed to the government to look at the possibility to make a quick review on Investment Act of 1997 noting that, the Act has been denying government with huge e sum of billion of shillings as tax revenues in its coffers. They claim that, as the Act is entitled to tax exemptions to prospective foreign investment projects in the country for which an investor is given five years of grace period to operate without paying tax, is not fairly done bearing the fact that they make profit during the period.However, they are on the view of the fact that, the continued tax relief which is being offered to prospective foreign investors in the country gives them opportunity to enjoy the national wealth an aspect which abuses the nation for carelessness to freely allow the misuse of its wealth. They have further noted that, as long as the Act exists some investors have also found it a loophole to evade paying tax by changing trading names of their business entities once the period expires. Speaking to The Guardian in an exclusive interview on different time, the law makers who finished attending the 13th Parliamentary debate session which discuss the proposed national development plans for 2014/15 fiscal year have noted that, the government should make a review of the Act in order to make a level playing ground with the locals. They are however astonished by the way the government continues to embrace investors and offers them huge tax relief an aspect that is against the imposed conditions and regulations by the International Momentary Fund (IMF) which requires young developing nations to effectively engage in tax collection at all economic levels for their national development programs. Otherwise, they have further suggested that the Act should be amended so as to enable ward off the grace period which they say contributes a great loss to the government in terms of revenue collection. The law makers (most of whom from the ruling CCM party) who spoke on strict condition of anonymity are painful to see that, the locals are obliged to pay taxes to the government as the law demand irrespective of their small business enterprises and yet the government do not have mercy on them. They have queried that, it is high time that the government should ratify such existing laws to see that, it benefits from investors more and cross cut the exploitation kind of a business style whereby investors benefit and take huge chunk of the national wealth back to their countries. The call by the law makers has come amid the government’s insistence which it issued during the just ended session last week when the Deputy Minister for Finance Saada Mkuya defended foreign investors on tax exemption by letting them continue enjoying five year grace period. The Deputy Minister was responding a supplementary question from MP Hamad Rashid Mohamed (Wawi-CUF) who wanted to know why tax exemptions to investors were still high in the country. In response to defend the government’s stance, Mkuya said by giving exam poles of recent studies which she said have established that the investment climate in Tanzania is still not quite promising, especially in the area of the market and labour, hence the need for tax exemptions will continue so as to attract investors. The Minister noted that, shortage of skilled labour is among reasons cited for giving tax exemptions to foreign investors in the country as a way of compensating for the scarcity. She said that, “between 1997 and 2007 a total of 5,002 investment companies completed establishing their projects. Hence they are not exempted from tax anymore,” she explained. The deputy minister said currently projects about to be established which are exempted from tax were registered from 2008 to 2013, and that the incentive is on excise duty by 75 percent and Valued Added Tax (VAT) by ten percent.