Dar es Salaam. The Tanzania Private Sector Foundation (TPSF) has expressed concern about the new value-added tax (VAT) deferral policy, claiming that it may raise import costs and impede new investments, particularly in manufacturing.
VAT deferral allows businesses to postpone paying VAT on imported machinery and equipment (capital goods). This helps with upfront costs associated with setting up or expanding operations.
According to the policy brief issued by the TPSF, previously, as prescribed in the tax laws, importers were enjoying relief for all plants and machinery that had not been procured for resale if their respective VAT exceeded Sh10 million.
The policy was also applied when the capital good is procured to conduct an economic activity that generates a turnover of at least 90 percent of taxable (vatable) supplies.
However, the changes made in the Finance Act 2023 ended the VAT deferment regime for imported capital goods.
According to the TPSF, the act ceases the application of Section 11 of the Value Added Tax Act, Cap. 148, on imported capital goods by June 30th, 2026.
“This will mean the VAT deferral regime will no longer apply to imported capital goods. Therefore, investors looking to benefit from the existing VAT deferment regime must make their imports before the specified deadline (June 30, 2026),” the TPSF policy brief read in part.
Another key change from the new Finance Act entails amending the principal Act to extend VAT deferral benefits to locally manufactured capital goods while subjecting investors to the same eligibility criteria.
The envisioned rationality is to boost the domestic industrial base by creating a facilitative regime or environment for investors who wish to manufacture capital goods.
Speaking to The Citizen, TPSF’s head of research and policy advocacy, Mr Kennedy Rwehumbiza, said there is a policy shift dilemma in the private sector about whether the incentive being extended to investors when procuring locally manufactured goods will have the intended outcome.
“Prospects show that even with the extension of the incentive (VAT deferment) to locally manufactured capital goods (plants and machinery), the imported ones will remain competitive, thus defeating the purpose of the proposed policy,” he said.
According to Mr Rwehumbiza, it’s the private sector’s view that the government should first reconsider the timeline of 2026 for a new VAT deferral regime, as well as reform the new policy by revising the amount that is eligible for deferment.
“Rather than discontinuing the regime entirely on imported capital goods, stakeholders could reach a consensus to marginally raise the VAT component per unit of imported capital goods, commencing at Sh20 million or another figure exceeding Sh10 million based on importation data,” he said.
The stakeholders had also proposed extending the VAT deferment to agents of foreign manufacturers of capital goods. This extension would allow for the associated benefits to be extended and would promote the attraction of businesses, particularly dealers.
Mr Rwehumbiza explained that some companies have principals located outside of the country, and as a result, direct purchases from local agents currently deny access to the VAT deferment regime.
He emphasised that implementing this measure would not only promote employment but also enhance domestic revenue mobilisation.
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Africa: Rwanda Gets a Grip Of Marburg, But Mpox ‘Not Yet Under Control’
Monrovia — The Rwanda Minister of State responsible for Health, Dr. Yvan Butera, cautioned that while the country is beginning to see positive signals in its fight against the Marburg virus, the outbreak is “not yet over”. He, however, expressed hope that “we are headed in that direction”. The minister said the epidemiology trend, since the disease was first discovered in the country more than a month ago, is moving towards fewer cases.
Dr. Butera, who was giving updates during an online briefing yesterday, said in the past two weeks, only two deaths were recorded while 14 people recovered from the disease. He said Rwanda was expanding its testing capacity with 16,000 people already inoculated against the disease.
The priority right now, Butera said, is “rapid testing and detection”.
Marburg is a highly virulent disease transmitted through human-to-human contact or contact with an infected animal. The fatality rate of cases, which has varied over the period, is more than 50%, according to the World Health Organization. WHO said the highest number of new confirmed cases in Rwanda were reported in the first two weeks of the outbreak. There’s been a “sharp decline” in the last few weeks, with the country now tackling over 60 cases.
At Thursday’s briefing, a senior official of the Africa Centers for Disease Control, Dr. Ngashi Ngongo, said mpox – the other infectious disease outbreak that countries in the region are fighting – was been reported in 19 countries, with Mauritius being the latest country to confirm a case. He said although no new cases have been recorded in recent weeks in several countries where outbreaks occurred previously – including Cameroon, South Africa, Guinea, and Gabon – Uganda confirmed its first Mpox death. This, he said, is one of two fatalities reported outside Central Africa.
Dr. Ngashi revealed that there was an increase in cases in Liberia and Uganda. He said mpox cases were still on an upward trend.
“The situation is not yet under control.”
Source: allafrica.com
Britam half-year net profit hits Sh2bn on higher investment income
Insurer and financial services provider Britam posted a 22.5 percent jump in net earnings for the half-year ended June 2024, to Sh2 billion, buoyed by increased investment income.
The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.
“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.
“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”
The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.
Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.
The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.
Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.
The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.
Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.
“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.
Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.
Jubilee Holdings net profit in the six months increased by 22.7 percent to Sh2.5 billion on increased income from insurance, helping the insurer maintain Sh2 per share interim dividend.
CIC Insurance Group posted a 0.64 percent rise in net profit to Sh709.99 million in the same period as net earnings of Liberty Kenya nearly tripled to Sh632 million from Sh213 million, while Sanlam Kenya emerged from a loss to post a Sh282.2 million net profit.
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