Economy

Foreign firms hit by Tanzanian tax demands

Date: Nov 29, 2016

Some of Tanzania's biggest foreign investors say they could scale back their operations or expansion plans because of tougher demands placed on companies, including higher tax bills, as part of the president's drive to overhaul the economy.

A strict new tax regime tops the list of companies' complaints, President John Magufuli's government imposed tax hikes this year on mobile money transfers, banking, tourism services and cargo transit services. In some cases, businesses say they were warned by regulators not to pass the cost on to consumers.

At least six companies are rethinking their business and investment plans, according to Reuters interviews with senior executives at a dozen of the biggest foreign firms operating in Tanzania, or their local arms, in sectors including mining, telecoms and shipping.

Three said they could scale back operations in the East African nation, two said they planned to expand in other countries on the continent instead, while one said it was in the process of withdrawing from Tanzania altogether.

The companies asked not to be named due to the sensitivity of the matter and because their plans have not been made public.

One firm had not yet made a decision on how to respond to the government reforms, while five companies said their plans were unaffected including two involved in giant projects, a $30 billion LNG plant and a $3 billion fertiliser plant.

Tanzania is more reliant on foreign direct investment than many other regional countries, given the size of its economy. It received just over $1.5 billion last year, into an economy valued at under $45 billion, according to figures from the UN Conference on Trade and Investment and the World Bank.

Neighbouring Kenya has a $61 billion economy received slightly less than Tanzania, while South Africa with a $313 billion economy received $1.7 billion.

Tax revenues for the 2014/2015 financial year totalled 9.8 trillion Shillings ($4.5 billion). In 2016/2017, the target is 15.1 trillion a jump of more than 50%.

Magufuli, nicknamed "the Bulldozer" for his infrastructure projects and pugnacious leadership style, launched his reform drive after he was elected last year, promising to transform an economy hobbled by red-tape and corruption and carry out a major building programme.

--Reuters--

Please visit our Poll section on the website and take part, have your say as our valued reader.

Comments

comments powered by Disqus

Web Content Viewer (JSR 286)

Actions
Loading...
Complementary Content
CLOSE

Your Name:*

Your Email:*

Your Message:*

Enter Captcha:*