6 December 2017

Tanzania: Mbeya City to Cut Service Levy

Mbeya — Mbeya City Local Government Authority (LGA) has agreed to a proposal to cut service levy by 0.2 per cent, bringing new hope to thousands of businesses in the region who have been against the tax for a couple of years.

Under the Local Government Finance Act, LGAs are entitled to charge a 0.3 per cent service levy based on turnover generated.

Mbeya City passed a by-law implementing this national law in 2011. However, it is only 18 per cent of more than 12,000 licensed businesses across the area under the Mbeya City Council that is currently paying the levy.

As a result, the Tanzania Chamber of Commerce, Industry and Agriculture proposed to have the levy cut to 0.1 per cent, a proposal that has received the consent of the City Council.

The acting director for Mbeya City, Mr Afrael Manase sees the move to reduce the levy as quite timely since the TRA is taking over collection of some municipal taxes, including those for billboards and properties. "Thus, the Mbeya City Council is looking for ways to address this shortfall in much-needed revenue. "This public-private dialogue on the Service Levy comes at the right time. It is a win-win for business and government," he added.

The resolution to reduce the service levy is a proposal that came out of a Public Private Dialogue that was co-chaired by Mbeya TCCIA Executive Officer Emile Malinza, acting City Director Afrael Manase, and Deputy Mayor Fanuel Kyanula and supported by the USAID/Tanzania Feed the Future Enabling Growth through Investment and Enterprise Programme.

Deputy Mayor Fanuel Kyanula said: "I support the proposal to cut the service levy by 0.1 per cent as it will increase Mbeya city revenue collection as more MSMEs will be willing to pay the reduced rates."


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