Before the abolishment of the fees, shipping agents were charging the delivery order fees of USD 38 plus 18 percent Value Added Tax (VAT) upon issuance of shipping documents to the consignee.
Speaking to The Guardian on Monday, the Tanzania Shipping Agents Association (TASAA) Executive Secretary, Abel Uronu appealed to the Ministry of Works, Transport and Communication to reinstate the charges.
He said that apart from government losing various taxes obtained from delivery orders, shipping agents will not be able to pay for ship agency administration costs and thus incur losses of direct and indirect jobs.
Some of the taxes the government was obtaining through DO fees include a 0.3 percent levy that is paid directly to the regulator—Tanzania Shipping Agencies Corporation (TASAC), city levy (0.3 percent), maritime education levy (0.3 percent) and the 18 percent VAT equivalent to US $ 7 for each local delivery order issued.
A single agent may have a minimum of up to 100 DOs issued per year, he stated.
“The government action will result into drastic drop of corporate tax,” he said, pointing out that the government received corporate tax of 2bn/- from 15 members of TASAA in 2018. The removal of DO charges will lead to the majority shipping agents failing to survive, he emphasized.
Delivery order is a working document used in cargo release and cargo clearance operations by the Tanzania Revenue Authority (TRA) and Inland Container Depots (ICDs). DOs help port officials to easily identify cargos and deliver them to the right owner.
Uronu elaborated that while some other countries are charging DO fees per container, TASAA was charging its members US $ 38 regardless of the number of containers in the document.
Tanzanian consignees pay the lowest DO fees compared other countries in the East African region and the wider sub-Saharan zone, with Kenya pegging the fees at $ 70, Mozambique $ 105) Ivory Coast $ 75, Sudan $ 75, Mauritius $ 78, Gabon $ 45, South Africa $ 43 and Djibouti $ 39.33, he pointed out.
Reasons to why delivery order fees should be restored include the fact that the document helps to reduce fraud since it identifies the customs agents, transfers the legal liability from the shipping line to the rightful owner of goods and safeguards the interest of financial institutions, he argued.
“Without DOs the risk of loss of containers will be high resulting into increased claims thus making the port more expensive,” he declared, calling upon the regulator to rethink the decision as the removal of delivery order charges will lead into shipping agents incorporating it in freight rates.
TASAA has already appealed to the ministry requesting for repeal of the order which become effective on May 27th. He said the association has also filed a complaint to TASAC so that it revokes its order, issued by the Board of Directors.
In its published order to shipping agents, signed by TASAC Director General Emmanuel Ndomba and Acting Board Chairman Eng Japhet Maselle, the regulator said that it arrived at the decision after considering stakeholders’ deliberations during a consultative meeting held in January last year.
TASAC noted that DOs were issued by agents for their own convenience and that it should not be a source of revenue. The regulator affirmed that shipping agents have statutory sources of revenue as provided in the Shipping Agencies Regulations of 2018.
The TASAC board observed that DOs were issued by carrier to facilitate completion of carriage contract which was entered earlier between the carrier and the shipper.
Release of import cargo should be done on the basis of the original bill of lading, the board further directed.
Late last month the government through TASAC issued an order on the abolishment of the delivery order fee with immediate effect.
In 2010, the former regulator— the Surface and Marine Transport Regulatory Authority (SUMATRA) listed DO fee as permitted local shipping charges. Sumatra approved bill of lading fees, DO fee and amendment fee permitting local shipping charges.