How tax reforms can transform Arusha businesses

Arusha. Tax reforms can be a game changer for the struggling businesses in Arusha, some grappling with high taxation.

Affected businesses are likely to grow should the reforms, often proposed by the regional business chambers, be readily implemented.

"If our proposals are considered and accepted, the tax reforms will enable the business environment to be more conducive to growth," it said.

Some taxes are simply a hindrance to the ease of doing business, as observed at an annual meeting of the regional chamber of commerce held last week.

The regional chapter of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) has outlined an array of tax-related business hurdles that have to be cleared.

These include late issuance of Value Added Tax (VAT) refunds, service levy and licence fees, multiple permits and inspections.

"Business-related taxes have affected the ease of doing business," the chamber said in its tax proposals to the government.

The TCCIA Tax Proposals, discussed at the meeting, were initially forwarded during the tabling of the 2023/24 budget estimates in June.

They shed light on the obstacles that hinder the growth of businesses in the Arusha region, one of the country's key economic zones.

The regional TCCIA pleaded for "a friendlier business climate" as well as a reduction in the cost of doing business "in Arusha and the rest of the country."

The reforms and recommendations proposed, even with their fiscal implications, were necessary for improving the business environment.

"Local and international investment will increase, which in turn will propel a rise in government revenue within the Arusha region," it was further observed.

On the service levy, the regional business chamber said it had conducted "advocacy meetings" with the relevant authorities but with little success.

TCCIA feels the regulation, charging and collection of service levy by the Arusha City Council left a lot to be desired and unfriendly to businesses.

The magnitude of the problem was big given that Arusha was one of the major commercial cities in the country with a large number of formal enterprises.

The unreasonable amount of service levy charged to businesses has been exacerbated by high tax estimations.

There had also been a tax influx for small businesses and the tourism sector, compounded by what the TCCIA described as an "unfriendly relationship" with the taxman.

Members of the chamber suggested that a service levy be charged on business turnover while the multiplicity of licences required to operate a business be reduced.

On the delayed verification process for VAT refund, the meeting observed that the issue remains thorny despite several appeals to the relevant authorities.

Traders and businesses have repeatedly complained about delayed refunds, blaming the verification process as "too long and counterproductive."

A VAT refund is the reimbursement of the value-added tax that one pays on certain purchases and is charged in many countries around the world.

Non-resident tourists and foreign companies, in particular, are eligible for VAT tax refunds for goods and services purchased.