Tanzania Slaps 25% Tariff on Ugandan Exports

Stuck goods

But the new measure has left goods destined for Tanzania grounded at Port Bell in Luzira, Kampala. The Mukwano Group of Companies, which exports tones of detergent, laundry soap, petroleum jelly, edible cooking oil and plastics monthly, has been hit most.

Last week, containers that were destined for Tanzanian ports of Bukoba and Mwanza on Lake Victoria were offloaded from the ship at Port Bell due to the exorbitant new tariff.

"We had loaded finished goods worth hundreds of thousands of US dollars but had to offload them and return them back to our warehouses. This is a great loss to us and Uganda and this move is counterproductive to the spirit of East African integration," said B. W. Rwabwogo, General Manager – Operations, Mukwano Group of Companies, Uganda.

Other Ugandan manufacturers have also revealed to New Vision that the imposition of the 25% tariff is a bottleneck towards business growth in the country.

The New Vision has further learnt that the tax exemption on goods destined for the East African market was offering a reprieve to Tanzanian manufacturers who had expressed fears over the competitiveness of local goods.

Rwabwogo said that the move caught most Ugandan manufacturers and exporters by surprise, since they (manufacturers) were not informed about the resolution made by Tanzania to impose the 25% tariff.

"We want to maintain a level playing field because we are still disadvantaged. This new measure will affect revenues to the Ugandan government as well," Rwabwogo lamented.

Britania Allied Industries General Manager marketing SK. Sridharan described the new move as an impediment to trade in the EAC region.

A senior East African Community Affairs official said that Uganda got an extension of the exemption till the end of June next year. "During this period the status quo is likely to remain, so that manufacturers in Tanzania and other partners are not disadvantaged," he said.

The Sectoral Council on Trade, Industry, Finance and Investment in its June 23rd 2010 meeting agreed that goods exported by Uganda and produced by industries enjoying the remission should attract the EAC CET on all goods that enjoy duty remission exported by the partner states.

Petition

However, in a meeting held at the Ministry of East African Community Affairs last Friday, attended by officials from the Ministry of Finance and Economic Planning, Uganda Manufacturers Association, Private Sector Foundation, Uganda Revenue Authority and the manufacturers, a resolution was made to petition the new tariff imposed by Tanzania.

The manufacturers described the tariff as retrogressive to the spirit of the EAC integration since it inhibits rather than promotes trade between the members of the customs union.

"We agreed that the EAC and URA write to the Tanzanian officials rejecting the new measures. The letter will be written on Dec. 5, 2011," said an official from Uganda Manufacturers Association (UMA) who attended the meeting.

Tanzanian Revenue Authority (TRA) officials on Dec. 4, 2011 told New Vision from Dar-es-Salaam, that the new measure was a policy issue, which could only be resolved at higher levels.

Under the EAC Custom Union Management Act, at least 80% of goods produced under the export promotion scheme must be sold outside the EAC, with the remaining 20% attracting full duties and other charges applicable to goods from non-member states.