Steel manufacturers demand friendly tax regime

Tanzania has 21 steel industries producing approximately 200,000 tonnes of iron annually. The industry uses scrap metal and is forced to import the metal from neighbouring countries to meet demand.

Reports show that between 2007 and 2012, the demand of billets by the steel manufacturing industries was between 600,000 and 700,000 tonnes, equal to the smelting of 750,000 and 910,000 tonnes of scrap metal each year.

Group Chairman and Managing Director of Kamal Steels Limited, Gagan Gupta said the budget needs to walk the talk and show real implementation towards the government’s intent of industrialization.

Gupta hopes that the budget will relook at procurement norms by focusing on quality cost based and bring in a single independent authority to ease confusion.

“There is dire need for a strong and well-structured innovation agenda or policy for the idea of a semi-industrialised economy to be a reality,” he argued.

Motisun Group’s Executive Chairman, Subhash Patel whose subsidiary company, MM Integrated Steel Mills of Dar es Salaam manufactures steel bars, said the budget should focus on streamlining regulations to reduce tax uncertainties and improve the ease of doing business.

“The finance minister must make provisions to broaden the tax net and one way to achieve this is to increase Permanent Account Number (PAN) registration, which will result in substantial reduction in black money transactions,” argued Patel.

He also urged finance minister to simplify and bring clarity in tax laws, which will undoubtedly improve tax compliance, thereby increasing revenue.

A. M Steel & Iron Mills Ltd expects the budget to do everything to restart capital formation and investment cycle.

Its founder, Sheikh Majeed said the Treasury chief, Dr Philip Mpango also needs to restore the confidence of the private sector by furthering the reform process that is already under way to improve ease of doing business.

“The private sector has subdued animal spirits which need to be revived. We need to get more energy in the economy, the catalyst for which is good expenditure and accelerated reforms process,” Majeed pointed out.

He also emphasised the next budget should boost the steel industry by expediting the enactment of the Real Estate Bill, as it can go a long way in protecting consumer interest by curbing fraudulent practices.

He underscored that their expectation from the budget this year is a fervent hope that the government will harmonise the process in the Tanzanian Income tax Act.

“Our second request is that, if any benefits are extended to any industry in terms of tax exemption or concessions, such benefits should be extended to the steel industry as well,” he argued.

According to him, this is an industry that requires huge investments in developing infrastructure with a long gestation period.