The Tanzania Ports Authority (TPA) has been advised to relax its taxation regime in order to woo clients, amid declining cargo volumes at the Dar es Salaam port, a trend that has been linked to unfriendly tax policies.

Members of the Parliamentary Infrastructure Development Committee said a bad tax regime had forced customers to look for alternative ports for imports and exports.

The committee’s chairman, Norman Sigalla, said that the volume of transit cargo at the Dar es Salaam port had declined due to value added tax (VAT), driving importers and exporters from neighbouring states to Kenyan, Mozambican and South African ports.

“VAT is a key factor scaring away port users as it inflates the costs of clearing the cargo,” said Prof Sigalla.

As a result, importers had switched to the ports of Durban in South Africa, Beira in Mozambique and Mombasa in Kenya.

Double taxation

The committee also advised the government to eliminate double taxation for cargo storage, citing the storage rent charged by the TPA and a similar warehouse rent imposed by the Tanzania Revenue Authority (TRA) for the same cargo.

The MPs also recommended that authorities at the port extend the maximum period of stay free of charge at the port for imported oil from 30 days to 90 days in line with rival ports.

Malawi, Zambia, Burundi, Rwanda, Uganda and the Democratic Republic of the Congo rely on the Dar port for their imports and export trade. The port handled 12.54 million tonnes of cargo in the 2012/13 financial year, and 14.7 million tonnes in 2014/15.

Tanzania is eyeing 18 million tonnes by mid next year, but fears it may not achieve this target because it is losing its traditional customers.

Port acting manager Hebel Mhanga said the facility had in recent times lost some customers from DRC and Zambia, who opted for the shorter Beira route. It takes just four days to haul cargo from Beira to Zambia compared with more than a week from the Tanzanian port.

The port handled some 5,125,244 tonnes of cargo destined to neighbouring states last year.