By ADAM IHUCHA-- Commercial farmers would raise their
glasses to toast for remarkable earnings this year, as the state offers
them a huge tax breaks in a bid to spur agriculture development.
In the 2015/16 budget, the Finance Minister, Ms Saada
Mkuya announced to include agricultural inputs and farm implements in the
VAT exemption list.
The VAT Act 2014 aims to expand the tax base by capturing
most economic activities, would have been imposing standard 18 per cent VAT on
the agricultural inputs and pushing production costs high.
“The new VAT Act, which comes into
force on July 1, abolishes tax on essential goods such as agricultural inputs
and implements as well as all capital goods” Ms Mkuya said.
Initially, the new VAT law had excluded over 300 essential
modern agricultural technologies and supplies critical for farming
mechanization such as plant protection substances in VAT tax
zero-rated items.
The Act also would have hit hard irrigation and water
harvesting technologies, pest management products such as plant protection substances especially
chemicals and biological control agents.
Others were special planting materials like plastic bags and seed
trays, storage, post-harvest and cooling facilities and equipment such as refrigerators, materials
for construction and expansion of farm infrastructures including
greenhouses and packaging
materials of all kinds.
“We are very grateful indeed to our government for being
generous to us. We are very happy and our hopes are that this tax relief will
translate into our earnings this year” says Renalda Mlay, a farmer in
Kilimanjaro.
The finance minister also reinstated agriculture in the
skills Development levy (SDL) exemption list; seeking to amendment of VETA
and Finance Acts to accommodate the changes.
For a decade, commercial farmers have been exempted from
paying a five percent SDL, in a bid to encourage investment in agriculture
industry.
But in 2013, the government amended the vocational
educational training (VET) Act 2006, where it re-introduced the SDL for
farmers with more than four employees.
According to revised law, farmers were required to pay the
five percent of the total gross emoluments paid to their workers in each month.
Gross emolument comprises all the benefits extended to the
employee such as wages, leave pay, health care payments, bonus, gratuity,
allowances, and any subsistence paid by employers.
This implies, in other words, almost everything paid to
the employee in farming industry would have been charged SDL.
As if that was not enough, the government has also
reduced land rent rate from Tshs 10,000 ($4.6) per acre per annum to Tshs 5,000
($2.3) for urban farming; and Tshs 1,000 ($0.457) to Tshs 400 ($0.183) for
rural farms.
Policy and advocacy Manager at Tanzania Horticultural
Association (TAHA), Mr Anthony Chamanga commended the government for listening
their voice from the farm and grants their wishes.
"All these positive developments have come at the
right time as we are struggling with other partners to streamline the agricultural
taxes, levies and fees to improve business climate in the industry” Mr Chamanga
explained.
With an enabling environment and
massive involvement of mostly women and youth in horticultural farming at the
moment, only the sky is the limit, TAHA Chief executive officer, Ms Jacqueline
Mkindi.
“Our target is to hit an annual
export value of $1 billion in 2018 and double in two years’ time to reach a
staggering $1.85 billion by 2020,” Ms Mkindi says.
Horticulture brought home an extra
$102 million in 2014, cementing its position as Tanzania’s one of major sources
of foreign exchange alongside tourism, manufacturing, and mining.
Data from Tanzania Revenue Authority (TRA) shows $477
million worth of horticultural products were exported last year, up from $375
million in 2013, equivalent to 38 per cent of total agricultural exports valued
at $1.18 billion.
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