Developing countries’ merchandise imports increased by 12 per cent in 2018, says the latest World Statistical Review 2019, which looks into the most recent trends for trade in goods and services. Merchandise imports totalled $7.97 trillion in 2018, according to the report. Developing economies’ imports grew at a faster rate than those of developed economies and the world, with Africa showing double digit growth in 2018.

In the 2019 African Economic Outlook, published by the African Development Bank, East Africa remains the fastest growing region in Africa and one of the fastest in the world. Five of the Africa’s 10 fastest growing economies that are reshaping the continental order are in the eastern region and Tanzania—which is bordered by seven countries: DR Congo, Burundi, Kenya, Uganda, Malawi, Mozambique, and Rwanda—is one of them.

As a dual member of the Southern African Development Community (SADC) and the East African Community (EAC) that is currently mulling the process towards ratifying the African Continental Free Trade Area (AfCFTA), Tanzania offers easy business and trade connectivity to other locations worldwide. Indeed, the country’s biggest port, the Port of Dar es Salaam, provides a critical transit point for cargo from various neighbouring landlocked countries.

In a bid to drive foreign investment, the government is offering tax incentives by way of generous capital deduction provisions for qualifying sectors e.g., manufacturing, agriculture, mining, and petroleum.

Taking the above into account, this new article series starts with a primer on insights into the Tanzanian tax system pertaining to import taxes. Import taxes are imposed on, and paid for, by Tanzanian consumers, not foreign producers. The effect is that foreign goods become relatively more expensive for Tanzanian consumers. Also, if Tanzanian manufacturers of say fruit juices rely on imported inputs in their production processes, they will transmit the increased cost to Tanzanian consumers.

Import taxes are therefore an integral part of our daily lives. That’s even more true when you consider that Tanzania is a net importer of goods as indicated by the country’s overall balance of payments, which was in deficit, according to the Bank of Tanzania Monthly Economic Review of December 2019. In short, the impact of import taxes is felt by every Tanzanian consumer in the prices of goods in the local market, be it the Kariokoo market in sunny Dar es Salaam or the Mwanjelwa market in green-hilly Mbeya.

Source: The Citizen

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.