Tanzania slaps 25 per cent tax on Ugandan sugar

What you need to know:

  • Contravening EAC Protocol. Tanzania has slapped tax on a number of goods that are manufactured within the East African region, a move that experts say contravenes the EAC Common Market Protocol.

Kampala. Tanzania has slapped a 25 per cent Import Duty on Ugandan sugar exports contrary to the East African Community Common Market Protocol, which recommends zero tax on goods manufactured within the region.
The EAC Common Market Protocol came into force in 2010 and the 25 per cent Import Duty could be an indication of a failing system that is not agreeable to all member states.
East Africa currently has six member starts but indications suggest some countries have been acting against trade decisions taken by regional leaders.
In a media briefing at the weekend, Mr Vincent Seruma, the Uganda Revenue Authority (URA) assistant commissioner for public and corporate affairs, said sugar that had been exported by Kakira Sugar Works in May had been denied entry and forced to return.
Kakira Sugar Works, according to URA, had exported 12,000 bags (600 tonnes) of locally manufactured sugar but was denied entry.
“Under the EAC Common Market Protocol, this [sugar] is supposed to enjoy preferential treatment at 0 per cent Import Duty within in EAC partner states because it is wholly produced in Uganda. However … Tanzania decided to impose duty of 25 per cent, a violation of the EAC rules of origin and the Common Market Protocol,” he said.
As a result, Mr Seruma said, the shipment was held since May, which resulted into frustration and unnecessary expenses.
“The shipping company - MV Wankyo - as a result incurred a lot of storage costs and general loss of business,” he said.
Kenya has also suffered similar treatment with Tanzania denying entry to some of its goods such as sugar and sweets.
In its sweeping changes to the EAC Common External Tariff, which was implemented last month, Tanzania proposed Import Duty of 25 per cent for finished goods, 10 per cent for intermediate goods and zero per cent for raw materials and capital goods.
According to the changes exporters dealing in sugar, sweets, edible oil, safety matches, steel and iron products, chocolates, tomato sauce, meat, sausages, biscuits and mineral water face tariffs ranging between 10 per cent and 35 per cent to access the Tanzania market.
Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman and out-going East African Business Council chairman, at the weekend told Daily Monitor, it was unfortunate for Tanzania to disregard agreed EAC Common Market Protocol.
“The sugar was allocated to Tanzania Sugar Industries. We negotiated for the permit through Kagera Sugar Manufacturers [before it was] shipped. But then Tanzania Revenue Authority insisted on charging us. We [had no alternative but to] bring it back,” he said.
Media reports had indicated that the sugar had been sneaked into the country from Kenya, which Mr Seruma disputed.
He said the sugar belonged to Kakira and had been returned after failed entry into Tanzania.
Tanzania is one of Uganda’s largest trading partners. The country’s exports to Uganda have increased by 87 per cent in the in the last 10 years.
According to data from the Central Bank, Uganda imported goods worth $187m (Shs708.5b) in 2017 from Tanzania up from $22m (Shs83b) in 2007.