Local shipping agents used to charge the fees for the issuance of the documents to consignees, and the Tanzania Shipping Agents Association (TASAA) now says the government stands to lose some 1.5bn/- in value added tax (VAT) a year following the abolishment of the delivery order fees.
A delivery order is a document the Tanzania Revenue Authority (TRA) and inland container depots (ICDs) use in cargo release and clearance operations. It also helps port officials in identifying cargo for onward delivery to the people or institutions concerned.
Reacting to a news story published in this newspaper earlier this week, TASAA executive secretary Abel Uronu said: “Until the abolishment in May, shipping agents were charging fees to the tune of US$38 plus 18 per cent in value added tax (VAT) – which comes to a total of US$45 – for each delivery order.”
He appealed to the government, through the Works, Transport and Communications ministry, to reinstate the charges “because, apart from the fact that the government is now losing various taxes previously obtained from delivery orders, shipping agents will not be able to afford ship agency administrative costs and will find themselves losing both directly and indirectly in terms of employment”.
Uronu explained that the taxes the government used to collect in DO fees include 1.3 per cent levy on gross operating revenue paid straight to the regulator, meaning the Tanzania Shipping Agencies Corporation (TASAC), city levy (0.3 per cent), maritime education levy (0.3 per cent) and the 18 per cent VAT equivalent to US$7 for each local delivery order issued.
“The scrapping of the DO fees will result in drastic fall in corporate tax in that the government collected corporate tax amounting to 2.0bn/- from 15 TASAA members last year,” he said, adding that the government’s intervention would make most shipping agents fail to operate.
Uronu argued that, while some other countries are charging DO fees per container, shipping agents in Tanzania charged consignees US$38 plus VAT (18 per cent) “regardless of the number of containers or cars in the bill of lading”.
He said consignees in Tanzania pay lower DO fees than elsewhere in East Africa and sub-Saharan Africa, citing Kenya (US$70), Mozambique (US$105), Ivory Coast (US$75), Sudan (US$75), Mauritius (US$78), Gabon (US$45), South Africa (US$43) and Djibouti (US$39.33).
He highlighted some of the reasons to why delivery order fees should be restored saying the document is used as a control mechanism, helps to reduce fraud since it identifies the customs agents, transfer the legal liability from the shipping line to the rightful owner of goods and safeguarding the interest of financial institutions.
“Without DOs the risk of loss of containers will be high resulting into increased claims thus making the port more expensive”, he noted calling upon the regulator to rethink its decision as the removal of delivery order charges will lead into shipping agents incorporating the fees in freight rates the act of which our Government will be in disadvantage of not collecting the VAT.
He further explained that, The TASAC board is misinformed of the fact that Tanzania could be going on obsolete way of releasing an Original bill of lading, in the current global Shipping practice, No single country on earth is working without delivery order due to the following reasons
According to Uronu, TASAA has already asked the Works, Transport and Communications ministry and the TASAC board of directors to reconsider the abolishment of DO fees which took effect the very day it was signed – May 27.
In a signed order, TASAC stated that it arrived at the recent decision after considering stakeholders’ deliberations during a consultative meeting held in Dar es Salaam on January 23, 2018.
However, TASAA says that it was not given access to the minutes of the said meeting.
But TASAC argues that the DOs were issued by agents for their own convenience and should not be a source of income, adding that shipping agents have statutory sources of income as provided for under the Shipping Agencies Regulations, 2018.
The TASAC board insists that the release of import cargo should be done on the basis of original bills of lading and not otherwise.
Late last month the government, through TASAC, issued an order effectively scrapping delivery order fees with immediate effect.
In 2010, former regulator Surface and Marine Transport Regulatory Authority (Sumatra) listed DO fees as permitted local shipping charges. It approved the charging of bill of lading fees, DO fees and amendment fees in respect of local shipping charges.