Tanzania Daily News (Dar es Salaam)

Tanzania: EPZ Firms Not Barred From Supplying Local Market

THERE is no law barring manufacturers hosted by Export Processing Zones (EPZs) to supply their products to the local market provided they pay all the required taxes.

The Export Processing Zone Authority (EZPA) Director General, Dr Adelhelm Meru said in a statement recently that there had been increased complaints by non-EPZ firms over unfair competition. "There is no law or regulation that prohibits EPZA registered investors from selling their products in the domestic or local market.

"Contrary to what some business people might be thinking, both the EPZ and Special Economic Zone (SEZ) Acts are very clear on modalities for selling in the domestic market," he explains. Under section 22(1) (b) of the EPZ Act, 2006; an EPZ investor is allowed to sell up to 20 per cent of the manufactured goods in the domestic market provided that all applicable duties, levies and other charges are paid.

Further, section 22(1) (2) of the same Act which empowers EPZA to authorise an investor to sell in the domestic market above 20 per cent provided that once EPZ goods are sold in the domestic market, all applicable duties and taxes are paid in full, he notes.

The exercise of ensuring that applicable duties and taxes are paid in full is monitored by both EPZA and Tanzania Revenue Authority (TRA). He said some businesspeople still confuse the difference between the EPZ and SEZ schemes. As opposed to the EPZ scheme which has the 80 per cent export condition on the manufactured goods, the SEZ scheme, which is also supervised by EPZA, has no condition for exports.

The SEZ Act under section 27 permits manufacturers to sell products in the domestic market, and that section 27 is further supported by section 39 which gives incentives to SEZ investors selling in the domestic market. It is important to note that an EPZA investor who has been registered under the SEZ scheme is permitted by the SEZ law to sell any percentage of his products in the domestic market.

But there are some companies which have registered two sister companies; one under Tanzania Investment Centre (TIC) for domestic and local sales and the other under EPZA for exports. Goods coming in the country in the form of raw materials designated for local sales have their separate facilities and are treated separately under the TIC Act, whereas goods which are meant for export are treated under the provisions of the EPZ Act.

Such operations are normal and are well monitored by both EPZA and TRA and have so far not resulted into any complication. "Business people who are still not clear with EPZA operations should visit the Authority for clarifications.

The practice of offloading EPZ products in the domestic market after paying all applicable duties is common in almost all countries where such schemes are in practice. "It would have been unfair to Tanzanians if EPZ manufactured products were barred from being sold in the domestic market because if there is a unique item which is being produced by EPZ companies here in the country and the law prohibited to sell their products in the domestic markets, he explained.

Dr Meru further notes that it would have not been wise for Tanzanians in need of such an item to begin searching for it in foreign countries while it is made at home. "Business people especially the small and medium enterprises (SMEs) operators should come forward and seize investment opportunities in both the EPZ and SEZ schemes so as to benefit from the incentive packages provided under them and enjoy the best facilitation services offered by the Authority.

"Tanzanians should not stand back and watch or complain on the incentives given under the two schemes but instead, they should come forward and seize the available EPZ and SEZ opportunities through which their businesses will grow very fast, thereby contributing to employment creation, income generation, transfer of new technologies and ultimately to our country's economic growth," he explains.

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