DAR-ES-SALAAM, Tanzanian President John Magufuli has directed the Attorney-General's Office and other responsible ministries to speed up the amendment of the Value Added Tax (Vat) Act of 2015, saying it is slowing down development projects.
Speaking during a visit to Korogwe in northern Tanga Region (Province) on Tuesday, the Head of State said it was irrational to impose VAT on everything, especially soft loans and grants.
In 2015, we made amendments which led to imposition of VAT on everything. These changes have affected us immensely. When we negotiated with the World Bank (WB) on this project (Korogwe bus terminal) the amendment had not yet been effected," he noted.
I have directed the AG, Regional Administration and Local Government and other responsible ministries to fast-track the amendment of the section of the VAT Act during next month's Parliamentary session."
He pointed out that when VAT was imposed on development projects funded under soft loans or grants from development partners, the government suffered immensely because it had to raise money to pay the tax.
After government managed to raise the amount for VAT, President Magufuli explained, some unfaithful contractors renegotiated with the Tanzania Revenue Authority (TRA) to pay only 40 per cent of the tax.
He explained that under the circularity system involving the Finance Ministry, the funder, and tax authorities which seize goods at the port, work on development projects was slowed down and original completion deadlines were not met.
That is why I have directed the Minister of Works, Transport and Communications, and his counterparts in charge of Finance, to make sure that the seized materials for the Dar-es-Salaam-Morogoro Standard Gauge Railway (SGR) should be released soon as we await the amendment, the President added.
Source: NAM NEWS NETWORK