To import or export goods, traders are subject to paying a varying number of duties, taxes, fees and charges, depending on several factors including the nature of the goods being traded, the volume of the goods, customs laws in force at the time of the transaction, and the public services required to complete the necessary trade procedures. Together, duties, taxes, fees and charges all contribute to the total import and export costs of a given product. To understand why and which duties, taxes, fees and charges a trader will need to pay, it is important to understand the distinction between each of them.
1. Duties and taxes
A duty is a type of tax imposed by the government on the imports of a foreign good or service. Duties are collected by the Customs department to protect local industries. The amount of customs duties to be paid varies by product and country of origin, and is based on the characteristics of the imported goods, such as the value, HS code, weight, etc. It is also based on trade agreements.
Taxes are a source of government revenue that is imposed on goods and individuals. More specifically, import and export taxes are placed on purchased goods imported into or exported out of a country, and are collected by Customs when the goods enter or leave the country. Import taxes include the import duty, excise duty, value-added tax (VAT).
The importation and exportation of goods is subject to the imposition of duties, taxes and other kinds of taxes. The duties and taxes applied and their rates vary based on the customs value of the goods. Below is a summary of applicable duties and taxes:
● There are three groups of import duty rates which depend on the nature of goods/services to be imported. The Import duty rates are 0% for capital goods, 10% for intermediate goods and 25% for consumer goods as provided by the East Africa Community Common External Tariff (CET 2017). However, Sensitive items Attract a duty higher than the global rate mentioned above depending on the current country’s demand for that particular good/service. The sensitive items are listed in the schedule 2 of the EAC Common External Tariff (CET 2017)
● Excise Duty is a duty charged at varying rates on specific goods and services manufactured locally or imported. It is charged in both specific and ad-valorem rates. Ad-valorem rates and specific rates depend on goods/services as provided by The Excise (Management and Tariff) Act revised edition 2019. Note that these rates are amended on an annual basis through the Finance Act depending on the needs.
● Value Added Tax (VAT): The standard rate of VAT is 18%. However, there are some Items exempted from VAT as provided by the Value Added Tax Act, R.E 2019 which attract a rate of 0%.
● Customs Processing Fees (CPC) & Railway Development Levy (RDL): A Customs processing fee of 0.6% of F.O.B and Railway Development Levy of 1.5% of C.I.F are levied as provided by the Tanzania Revenue Authority Act 1995 and Finance Act, 2015 respectively
Tax exemptions are extended to some agriculture inputs, livestock inputs, beekeeping implements etc. where imports are exempted from Value Added Tax as stipulated by part one of Value Added Tax Act R.E 2019
Fees and charges
Fees and charges refer to costs imposed by governmental authorities for services rendered on or in connection with importation or exportation. Fees and charges are typically associated with such services as customs clearance, delivery of certificates, inspections, etc. In accordance with WTO rules, fees and charges for services rendered must be limited to the approximate cost of the service rendered.
Information on all the specific duties, taxes, fees and charges that one will need to pay for the import or export of specific goods is provided on Tanzania Trade Portal. Users will find this information for each procedure in the section on costs. When applicable, the imposed duties and taxes and/or fees and charges that must be paid are provided in this section, which has a built-in tool displaying the details of each cost and allowing the user to calculate an estimate of the total cost for each step as well as the full trade procedure. Users input specific values e.g. total value of goods or number of consignments, can be used to calculate with high accuracy as an estimate of the costs of full trade procedures.