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Every Good Employer is a Member of the Associat ion of Tanzania Employers

SUMMARY OF THE BLUEPRINT ON REGULATORY REFORMS TO IMPROVE THE BUSINESS ENVIRONMENT


SUMMARY OF THE BLUEPRINT ON REGULATORY REFORMS TO IMPROVE THE BUSINESS

ENVIRONMENT

Every Good Employer is a Member of the Associat ion of Tanzania EmployersEvery Good Employer is a Member of the Associat ion of Tanzania EmployersEvery Good Employer is a Member of the Associat ion of Tanzania EmployersEvery Good Employer is a Member of the Associat ion of Tanzania EmployersEvery Good Employer is a Member of the Associat ion of Tanzania Employers

Every Good Employer is a Member of the Associat ion of Tanzania Employers2


About ATEThe Association of Tanzania Employers (ATE) is the most representative Employers Organization in Tanzania. It was formed in 1960 to represent and protect the interest of Employers on Labour and Employment issues.

The Association represents employers in all sectors of the national economy excluding the civil service. ATE has about 1,500 registered direct members and about 7,500 indirect members drawn from private business firms, companies and some parastatal organizations.

Membership of ATE is open to all Tanzanian employers:- Individuals, partnerships, companies, public corporations, local and other public authorities or associations of employers and is currently classified into 8 divisions.

ATE VisionThe most preferred organization addressing the evolving business needs of employers in Tanzania

ATE Mission To represent and advocate for the business interests of employers

ATE MottoEvery good Employer is a member of the Association of Tanzania Employers

Services offered:-1. Industrial relations2. Representation before CMA and Labour Court3. Training and Seminars4. Consultancies on HR issues5. Policy, Research and Advocacy6. Information and Networking7. Processing of Work/Residence Permits8. Female Future Programme

Every Good Employer is a Member of the Associat ion of Tanzania Employers Every Good Employer is a Member of the Associat ion of Tanzania Employers 3


Introduction

The Blueprint elaborates challenging areas in policies, laws, regulations, levies, taxes that require reforms aimed at reducing the cost of doing business in the country. It also covers regulatory issues that require reforms, fiscal implications of the reforms and recommendations necessary for improving the business environment in Tanzania. Specifically the Blueprint discusses issues faced during business registration (such as Permits, licenses and inspection) and issues faced during business operations (such as taxes, levies and registering products and inspections). The analysis covers six economic sectors (agriculture, natural resources and tourism, construction, health, energy and minerals and transportation) that are prioritized in Tanzania’s Five Year Development Plan. This summary covers cross-cutting issues and sector-specific regulatory issues raised in the Blueprint for regulatory reforms and has been derived from the original version of the Blueprint.

GENERAL AND CROSSCUTTING REGULATORY ISSUES

Starting Business – General Business Licensing

§There are high costs associated with registering a business this is attributed to Multiplicity of regulatory agencies such as TRA, BRELA, Ministry of Industry, Trade and Investment, and other specific sector regulators. Multiplicity of regulatory agencies yields overlaps at operational level of agencies with roles spanning across many sectors. For example; the overlaps between TBS and TFDA mandates who both conduct laboratory tests to assess quality of products.

§Overlaps between Migration and Labour and Employment Regulations

§Duplicative Roles in Inspection of Work Permits the Non - Citizens (Employment Regulation) Act empowers immigration officers, police officers and labour officers to inspect work permits’ status of the foreign workers but it does not stipulate any boundaries regarding the circumstances upon which either of the officers should go to inspect.

§Significant increase in the fees associated with residence and work permits as a result of splitting the two

§Conflicting geographical restrictions between work permits and residence permits where the permits may not be valid throughout the country.



§The use and legitimacy of the Business Pass/Visa (temporary work permits) is not recognized by the labour office.

§Delays in Processing Work and Residence Permits

Social Security and Labour Issues

§Multiple Social Security Schemes brings in increased operational expenses as inspectors from the respective Schemes make visits to working places at differed times.

§Duplication of Registration Requirements: SSRA and BRELA and Tanzania Employment Services Agency (TAESA) and BRELA

§There is lack of interface between the data systems of the two agencies that are not synchronized/do not interface- this causes duplications to businessmen.

§There is differences in rates to be deducted and remitted to Pension Schemes –however this challenge is expected to be minimized due to the recent merging of pension schemes

§Exclusion of Informal Sector in Schemes whereby 20 million people who are employed largely in the informal remain excluded from the social security schemes.

Labour and Employment Issues

§There are general issues such as the requirement for the employer to pay employees who have been nominated to represent others in the Workers Unions.

§The compulsory contributory Schemes have insurance covers for work related accidents for employees but there is no a system that align these Pension Schemes laws with the mandate of Workers Compensation Fund (WCF).

§Private Employment Agencies face two licenses one is the BRELA business license and the other is the license from the Labour Division

Occupational Safety and Health Agency (OSHA)

§Due to the nature of its activities, the functions of OSHA inevitably overlap with those of other Regulatory Agencies especially since health and welfare issues transcend a number of sectors, including those dealing with construction, commerce, agriculture, hazardous materials



and chemicals. Overlaps with authorities such as TBS, NEMC, The Tropical Pesticides Research (TPRI), Fire and Rescue, Atomic Energy Authority and TFDA are inevitable

Regulatory Issues Overlaps:

§OSHA and other Agencies conduct multiple separate inspections In the dairy sub-sector, FDA, TDB, TBS, inspect whether buildings / premises / processing are maintained in an environment that is safe for processing food.

§High OSHA Fees and Charges For example OSHA issues Certificate of Electrical Safety Inspection, which is associated with charges for services such as Polarity test per point 50,000/=; Continuity test per point 50,000/=; Earth Resistance test per point 150,000/=; Insulation Test per point 200,000/= and Electromagnetic field test 300,000/=.

§Long Processes for Obtaining OSHA Permits and Certificates: that it takes between 62 - 225 days to complete all these steps/procedures.

Fire and Rescue Force (FRF)

§There are considerable overlaps between OSHA and FRF.

§There is inadequate FRF Delivery Capacity and high Charges and Fees. The FRF Regulations (2012/2014) raised the annual contributions, inspection fees and training costs paid to FRF significantly, allegedly without consulting the involved business community.

National Environment Management Council (NEMC)

§Sector specific environment requirements overlap with NEMC requirements. Even though EMA relates with other sector laws in operation NEMC does not recognize approvals issued by sector regulatory agencies. For instance, the Environmental Protection Plan (EPP) approved by the Commissioner for Mining is not recognized by NEMC.

§There is excessive delay in processing EIA certificates from NEMC despite there being a timeframe for conducting the EIA and



Environment Audit Unjustifiably high fees charged for EIA, which are expressed as percentage of project investment costs. The fines are also high.

Land and Human Settlement

§The multiplicity of laws governing land and activities related thereto has been a concern for many businesses. This costs in terms of time and money.

§Non-citizens are not allowed to own land as it is the case in other jurisdiction this issue denies Tanzania of potential economic and social gains

§The process for acquiring land for business and investment is cumbersome and resource consuming.

§There is high Fees for land located in urban areas that expand this raises the cost of doing business.

§Double annual charge of land in mining areas- investors in the mining sectors complain about duplicative investment costs due laws that require them to pay annual land rent in adherence to Land regulations/ Ministry of Lands and Human Settlement and at the same time pay annual rent to the Ministry of Energy and Minerals. Investors also face increased compliance costs of complying with the two laws.

§Tax laws and policies get frequently changed for different and sometimes controversial motives. For instance while some raw materials for animal feed such as cow blood, sardines and maize are exempted while some other raw materials such as cotton and sunflower are VATABLE, this in a way conflicts the goal of domestic industries promotion.

§Rigidity of indicative prices for imports: for instance importers flat rolled products (H.S Code 7208) continued facing a USD 800 per ton while the prices in the world market are lower ranging between 320 and 420 per ton.

§There are frequent tax policies amendments initiated for different and at times conflicting motives the changes have introduced substantial weaknesses in tax laws and tax administration.



§There is limited Tax relief for promotion of domestic industries especially on VAT treatment for raw materials.

§There is lack of flexible, realistic and operational approach in determining Indicative Prices for Imports

§The private sector is concerned of lack of adequate one stop centres where all regulatory agencies can be accessed all at once. The available one-stop centres (TIC and EPZA) are not evenly available across the country

§There is a stringent requirement that inhibit Coverage in terms of export requirements of which investors are required to export 80 percent of production and 20 percent be supplied in the local market; but again in terms of the amount of capital expected to be invested of which both SEZ and TIC have a required business capital of USD 500,000 for foreign investors and USD 100,000 for local investors.

§The Single window System only targets Dar es Salaam port and the TIC’s one stop shop centres are only based in Dar es Salaam.

SECTOR SPECIFIC REGULATORY ISSUES

Tourism Sector

§Administration of Tanzania Tourism Licensing Board has the following challenges:-

o TTLB license in the era of liberalization is irrelevant and only used a source of revenue

o The TTLB is charged in foreign currency instead of local currency

o The amount charged for acquiring the license is unjustifiable

o There is long procedures in acquiring the TTLB license

o There is too many duplicative procedures between TTLB License application and BRELA License

o It takes longer time to access the TTLB license to get the license- it could go up to 6 months

o TTLB license per each activity and charging license per each hotel adds to costs of doing business

o There is no a general principle guiding the certification requirements



by the tourism division in MNRT Funds collected via tourism development levy is not used properly on prioritized areas

o Varied LGA payment requirements yields unstandardized payment and regulatory requirements. It could yield multiple charges and fees to the private sector

Tourism sub-sector Regulatory Challenges

Tour operators

§Entry requirements for Tour operators are very expensive (5 requirements they need to be scaled down to match with competitors in the region)

§Lack of streamlined procedures and consolidation of vehicle registration requirements

§Corporate Stickers are irrelevant and moreover the required stickers are too many

§Higher fees aviation frequency Radio Licenses (TCRA- USD 75 per frequency of aviation and USD 500 per frequency of Aircraft)

§Payment of Base station License is per station instead of being per frequency this yields duplication of payments

§Lack of Multiple entry pass (for parks fees) –this increases cost expense to visitors

§Unpredictability of park fees by pack authorities

Hotel

§Too many regulatory payments and uncoordinated inspections

§Too many number of procedures, permits and fees to be adhered to by entrepreneurs planning to start operating tourist hotels

§Too high hotel levy (10 percent of the turnover)

Wildlife and Hunting

§Presence of two ministries responsible for managing affairs related to hunting and wildlife sub-sector; the ministries are Ministry of Natural Resources and Tourism and the Ministry of Agriculture, Livestock and Fishery –responsible for marines Park Act)



§Uncertainty in reviewing block leases;

§There is double requirements of TTLB licensing and hunting business

§There is no clarity on mandates between MALF and the wildlife division on handling export of trophies

§Trophy handling fee are unjustifiably high

§Hunting fees are the highest in the region – affects our tourism competitiveness

§There is confusion on legal mandates of the ministry responsible for regulating runaways and TANAPA in national parks

Agriculture and Agro-processing

§ There are total of 56 laws that are applicable to the agriculture sector in Tanzania

§ Some of these laws have weak cross references and hence hampers compliance by agro-business operators

§ There is lack of transparency among regulatory agencies on how their excise their regulatory functions

§ Agriculture sector is also subject to 10 laws governing cross cutting agencies such as TBS, TFDA, etc.

§ Local Government Authorities also intervenes and collect revenues

§ Key regulatory issues facing the Agriculture and Agro-processing:-

o There is no predictability of policy decisions on agriculture trade, e.g ban on exporting food and import permits

o Lack of clarity on policies related to export taxes on some products (e.g, cashew-nuts, hides and skins)

o Also non-market prices set by the National Food Reserve Authority

o NFRA distort prices by playing a buffer stock role and by paying farm gate prices

o Tanzania doesn’t have sustainable solutions to produce surplus this motivates market distortions in events of food scarcity

o There is no close market process for all strategic crops to have a database on their flows



Horticulture Sub-Sector

§ Over regulation on importation of softer insecticides and pesticides

§ There is a long and expensive process for newer, safer products such as Biological Control Agencies.

§ The VAT 2014 does not accommodate a range of modern horticultural inputs and equipment in the list of exemptions such as dam liners of irrigation technology and spare parts for green houses.

§ There is overlapping and conflicting mandates among regulatory Agencies; such as registration of manufacturers and distributors of animal feeds requires sanctions from both the department of livestock production and marketing and Tanzania Dairy Board.

§ There is also an overlap in the controlling import and export of animal feeds are regulated by both Directorate of Veterinary Services and the department of Plant Protection.

§ Milk and milk products is regulated by TDB and DVS.

§ Acaricides are registered by both DVS and Tropical pesticides Research Institute.

Dairy Sub-Sector

§ Overlaps among regulations add to the cost of doing business; e.g Tanzania Dairy Board issues import permit where the permit holders are subjected to DVS and TFDA.

§ The VAT exempted status inhibits claiming of VAT refunds

§ There is no clarity between processed and unprocessed milk, this yields hence imported fresh milk (UHT) that is not currently VATable.

Skin and Hides Sub Sector

§ There is expensive production cost due to expensive licensing procedures

§ Dumping of cheap imported leather goods in the domestic market

§ Exports permits are handled by more than one departments and there is a long chain of permits and licenses (11 licenses and permits)

Meat Industry

§There is multiple regulatory agencies and export taxes.



§The sector is regulated by 10 separate regulations

§The produces are also regulated and taxed by LGAs

§There is a total of 15 procedures for processing permits and licenses required for red meat trading

§There is no clear distinction of functions between TMB and TFDA

§Documents required for exportation seem to be used as a source of Revenues

Crop/Commodity Boards

§Multiplicity of regulatory agencies for the tea industry that include OSHA, TFDA and FIRE- there is no coordination among them-this attracts multiple fees.

§Farms established in urban areas face high urban land rents

§There is prohibition of importation of raw cashew- processing machines remain idle during off-seasons

§Cashew nuts can only be purchased through cooperatives and not from individual farmers- this expands costs of doing business.

§During off seasons processors are not allowed to source raw cashew nuts from imports

§Lack of stringent regulations that prevents free riding by some ginneries that do not invest in out-growers and contract farming

§Overlapping in inspections (from agencies such as TFDA and TBS) for Domestic sugar production.

§Acquiring land for he investment in sugar production is a regulatory constraint.

§ Multiplicity of charges and fees for the coffee sector (charges and fees amounts to 16) increases the going prices by at least 25 percent.

§There is overlapping of regulatory mandates for the coffee sector

§There is multiplicity of fees that are associated with a sector specific research institute.

Fisheries Sub-Sector

§Overlapping regulations (TFDA, SUMATRA, FIRE and OSHA).

§Presence of imposed fish royalty that doesn’t exist in Kenya and Uganda.



Agricultural Inputs – Seed Sub-Sector

§Lengthy and costly process of accessing basic (foundation) seeds from the Agricultural Seed Agency (ASA)

§There is a conflict of interests between ASA as a regulatory agency and as a seeds trader

§There is regulations that inhibits the private sector ability to develop licensing to multiply basic seeds with the Agricultural Research Institutes (ARIs)

§Tanzania has not obtain the international accreditation from the Internal Seed testing Association (ISTA) and OECD – this prevents access to potential seeds markets

§Overlapping mandates of seeds related agencies such as; Seed Unit, Plant health services, Tanzania official seed certification Institute (TOSCI) and TPRI

Fertilizer Sub-Sector

§Overlapping and conflicting regulatory mandates for fertilizer dealers between TFRA, WMA, Tanzania Atomic Energy Commission and SUMATRA.

§2011 fertilizer regulations prohibits/ bars companies from introducing specialist and customized fertilizers- Inhibits overall growth of Agricultural Sector

§There is high variability and uncertainty by-laws are to be complied with in different LGAs jurisdiction.

§There is high produces cess and its administration of produces cess.

§There is limited capacity in law drafting that eventually yield lack of uniformity and predictability

§LGAs are more focused I Revenue collection than regulation of business activities

Transport and Logistics Sector

§Licensing and Registering Clearing and Forwarding Agents by TRA and SUMATRA requires submission of at least 10 supporting documents which is cumbersome.

§Long delay experienced in Issuance of Debit Notes, Certificate of



Conformity (C.O.C) and Inspection. This makes Dar es Salaam port less competitive compared to those in the neighbouring countries like Mombasa and Beira.

Construction Sector

§ Non-standardized LGAs by laws governing Roads- This could potentially attract multiple fees and charges

§ Regulations Governing Transportation of Forest Products on Transit are contradictory to each other with regards to transportation of goods past 18:00 Hrs with the Tanzania Forest Service (TFS) prohibiting transportation of the forest products past 18:00 pm while TRA regulations suggests transportation could go beyond the hour.

§ Fees for transporting Chemicals are too high due to charging consignment per each tone of chemicals instead of charging USD100 per consignment.

§ Overlapping mandates among LGAs, Ministry of Agriculture and TFDA on the provision permits to transport food products (E.g. milk transportation permit)

§ Unpredictable Variation of weighing results across various weighing stations for example weight for tubers could be a results natural phenomenon such as moisture that is not recognized by WMA- This give rise to penalties and charge owners for truck owners that also lower their competitiveness attributed to delay of cargoes

§ Lack of harmony between Safety Requirements for Public Transport Vehicles especially between Left Hand Drive Vehicles and RHD vehicles; where TRA allows importation while TBS and SUMATRA inhibits those cars to be used for business.

§ Differences in Requirements at Regional Level especially on lengths and weights but also movements of buses at nights This inhibits bus owners and operators in Tanzania who seek to forge partnerships with businesses operating in other countries country

§ Multiplicity of Fees at different LGAs for using particular bus stands/stops/parking lots

§ Charges/Fines for Transporting Dangerous items and Undocumented Immigrants; the legal charges/fines paid are too high and bus operators opine that they are not legally empowered to inspect



passengers’ luggage.

§ Multiple Inspection Procedures by Weighing points, Police force, TANROADS officers, SUMATRA officers, LGAs, etc.

§ Import Duty for Buses Offering Public Transport are high and affects competitiveness of the businesses

§Multiplicity of Regulators at Ports, duplicity of charges and rates of charges

§Wharfage Charges for Cargo by TPA is computed by ad valorem system which makes the total fee payable to Dar es Salaam Port relatively larger compared to the rate used by its competitor, Mombasa Port.

§Multiple Regulatory bodies and Registration of Contractors, a limited firm must be registered with the Business Regulatory Licensing Agency (BRELA), they must be registered with the Architects and Quantity Surveyors Registration Board (AQRB) and engineers must be registered with the Engineering Registration Board (ERB)). Other institution include, the Contractors Registration Board (CRB) and Tanzania Civil Engineering Contractors Association (TACECA).

§There is delay in the approval process for example for Architects the board sits 4 times a year and it takes a minimum of 120 days for an architect or surveyor to be registered. It also takes 120 days for an engineer to be registered

§There is difference in validity period of certificates and licenses for practitioners in the sector

§Multiplicity and Conflicting Mandates due to the absence of a single institution which will have the duty of coordinating other relevant institutions in the process of registering and operating a business and inspecting compliance. The multiple mandates include those with CRB, NEMC and AQRB. These mandates attract multiple licenses, permits and certificates that amount to at least 9 of them. Moreover after instruction inspection by those regulatory bodies will follow which will further attract more costs.

§High taxes, fees and other charges charged by the Tanzania Revenue Authority (TRA)

The construction industry faces multiple taxes and tax administration



that amount to 11, that include, corporate tax, VAT, withholding Tax, spare parts related custom duty, 15 percent penalty due to lack of pre-shipment verification Conformity (PVOC) Standards, off-set taxes across different taxes and Local LGA taxes and regulatory fees.

§The contentious consulting and withholding taxes of 5 percent Withholding tax is applicable to employment income, investment returns (rent, interest, dividend, natural resource payment and royalty), service fee, insurance premium, money transfer commission and on goods supplied to the government or to public institutions which are wholly financed by the government. The cost of Professional services used in the final output that is buildings or other physical structures is built in its final price and since withholding taxes (WHT) is for income related professional services, It should only apply to payments made to the outsourced sub-contractors/consultants (e.g., consulting engineer, architect or quantity surveyor) by the contractor, and not to the payments made by clients to contractors.

The Mining Sector and Mineral Processing

§Most regulatory issues are around limited administration and management of regulatory activities.

§Environmental Impact Assessment Process takes long sometimes investors wait for more than a year before getting clearance on environmental aspects.

§Presence of double standards in the duration it takes before getting the EIA where some investors get the same in relatively shorter period (less than a month).

§There is huge variations in Payment Requirements in Extracting Sand in the LGAs (the payments or charge include, license, royalty to the MEM and other fees)

§Mining in Reserved Lands and Urban Area: in case the land in question is reserved for other purposes, the investors will get the license but will still have to apply for authority from the respective authority.



Utilities -Water and Energy

§Procedures and Conditions for Issuance of Licenses; the procedures involved in applying for water and electricity supply license are cumbersome petroleum and petroleum products.

§ Multiplicity of Institutions in Monitoring and Inspection this attracts potential duplicated charges and fees monitoring and inspection exercise performed by EWURA and other sector specific regulatory bodies

§Lack of Knowledge by Entrepreneurs on issues related to procedures, regulations, and charges or fees applicable to licenses, permits or certificates.

Water sub sector

§The water sub sector is regulated by two laws the Water Resources Management Act, No. 11 of 2009 and Water Supply and Sanitation Act, No. 12 of 2009. The sector is burdened by eleven licenses and permits

§Multiple Regulations and Certificates/Permits

§Approval Process in Issuing Permits/Certificates: takes lot of times especially in preparing the requisite documents.

Energy subsector

§Multiple Regulations and Certificates/Permits: - There are eight licenses that are issued under the Electricity Act, 2008. Section 8 (1) (a-h). These licenses include; generation, transmission, distribution, supply, systems operation, cross-border trade in electricity, physical and financial trade in electricity and electrical installation.

§There is no a more simplified way of streamlining compliance with all the regulators managing the energy sector.

Health Sector

The challenges faced by business operating in health sector include:-

§The health sectors has 12 regulatory bodies on top of cross cutting regulatory bodies such as TBS, TFDA and BRELA.



§Longer period taken for application process through the Private Hospital Advisory Board (PHAB).

§The Board has limited powers for enforcement and monitoring functions of the private sector resulting into very duplicative and weakly coordinated roles performed by other regulators such as the pharmacy council, etc.

§Businesses in the Traditional and Alternative Medicine sector faces multiplicity of relates to registration, which involve multiplicity of agencies.

§There is a weak coordination and overlapping mandates yields duplication of roles with the Private Hospital Board and the Tanzania Pharmacy agency

§There is overlapping of legal mandates between TFDA and TBS.

§ The mandate of the Private Health Laboratories Board (PHLB) overlaps with those of TFDA and Private Hospital Advisory Board,

§Processing Licenses and Permits: the legal framework does not allow temporary permits /licenses and the process for getting permits is not decentralized in the regions.

§Administration of VAT: VAT refunds claiming procedures is cumbersome and frustrating

§Overlapping and Conflicting Mandates: these include TFDA, PHLB, TBS, WMA TPA and Internal Container Depots (ICD). The presence of multiple agencies could in some cases attract multiple fees and charges.

§Fee Structures as Revenue Collection Instruments: sector specific fees and those cross cutting agencies are considered detrimental to cost of doing business in the economy.

Creative Industry

§There is no proper coordination of agencies that regulate the creative industry.

§Duplicative roles between COSOTA and National Arts Council (BASATA) which focuses on music contents



§Difference in motives of the four agencies (TRA, COSOTA, BASATA and The Tanzania Film Board (TFB) through a Formalization of Film and Music Committee) that enforce the Films and Music (Tax Stamps) whereby TRA focuses on ensuring that all works sold have TRA stamps); COSOTA is interested in protecting the intellectual property rights and BASATA is interested in monitoring the music content.

CAPACITY ISSUES AFFECTING REGULATORY FRAMEWORK AND FISCAL IMPLICATIONS OF THE PROPOSED REFORMS

The capacity issues include the following:-

§Shortage of manpower: Skills, Expertise, and Pro-private Sector Attitude that a lot of regulatory authorities have raised the issue of under-resourcing in terms of skills and tools/equipment/facilities that are necessary to ensure compliance

§Design Institutional Setup Capacity for Effective and Efficient Regulations that For some agencies, the institutional setup limits their capacity to carry out regulatory functions and results in a vacuum, which attract the emergence of numerous other agencies to fill the gap

§Implement ICT Capacity Development for Convenience Compliance and Payments that the Business Enabling Environment (BEE) reforms should strive to synchronize and allow interface among data/database systems of the related agencies (e.g. TRA, BRELA, RITA, NIDA, Land Administration, etc.) so as to reduce duplications in documentation.

§Capacity Gaps in Private Sector Organizations especially in areas of their ability to advocate for the interests of their members.

Fiscal implications of the Proposed Reforms

The Blueprint points out that the proposed regulatory reforms will lead to loss revenues to Local Government Authorities (LGAs), MDAs and Cross Cutting Agencies of which the Blueprint provide proposals for revenue loss mitigation at LGAs and MDA level.



RECOMMENDED BUSINESS REGULATORY REFORMS AREAS

Area Set 1: Invoke and Evoke the Statutory Powers of Ministers to Control Regulatory Agencies/Boards

Below are the quick win reforms related to doing business, which could be addressed in the short term by Ministers who have powers under the law establishing their respective regulatory agencies:-

i. The Standards Act: Section 31 of this Act empowers the Minister to issue directives on a general or specific nature to the Tanzania Bureau of Standards Board. The Minister can make use of this section in giving directives to the Board to give effect to the recommendations of this Blueprint that have a bearing on the TBS.

ii. Section 36 of the Standards Act empowers the Minister (after consultation with the Minister responsible for LGAs) to make bylaws for implementation of the Standards Act at the LGA level.

iii. Section 17 of Weight and Measure Act: - The Minister can make use of this section to bring positive effect in the objective of its enactment as well as promoting the business environment. Moreover, the Minister can re-organize the composition of the Committee to include members to be drawn from Authorities/Boards with seemingly conflicting mandates to ensure such conflicts are eliminated.

iv. Section 2 of Occupational Health and Safety Act- the Minister is empowered by this section to give exemption for Stakeholders who feel that the application of OSHA Act to their business is unwarranted have made a strong case and apply for it

v. Section 105 of Occupational Health and Safety Act gives the Minister the power to designate OSHA’s functions under the Act to be performed by any local government authority given the challenges faced by OSHA due to lack of adequate personnel that can serve the whole country

vi. Section 20 (2) of The Diary Industry Act: empowers the minister to review the recommendations of the Board in relation to terms and conditions for registration. On the other hand, the minister is also empowered under sect 34 of the same law to exempt any class of persons from all or any provisions of the Act. The two sub sections



could be used to reduce conflict and reduce complaints from related private sector stakeholders

vii. Section 7 (4) EWURA Act: empowers the Minister to give the Authority directives of a specific or general nature other than those in relation to its regulatory functions.

viii. Section 42 of Tanzania Food and Drug Authority Act–empowers the Minister responsible for Health after consultation with the Minister responsible for livestock development and on the advice of the Director of TFDA to make Regulations relating to premises for slaughter of animals or birds and sale of meat for human consumption as well as inspection. This section can be utilised to reform the apparent conflicts that have been noted between TFDA and the Meat Board.

ix. Section 6 (4) of SUMATRA Act:- empowers the Minister responsible for transport to give to the Authority direction of a specific or general character. This provision could be used by the Minister to address apparent conflicts that have been identified in this sub-sector.

Area Set 2: Reforms which entail Legal Review Phase Category:

It is noted in the Blueprint for regulatory reforms points out that some reforms require amendment of laws as follows:-

Tax Laws and Tax Administration

i. Frequent amendments in tax legislation: The Blueprint recommends that regulations have to enable TRA to rationalize the VAT treatment for raw materials in a bid to promote domestic industries and enhance industrial inter-linkage and value addition.

ii. Application of Indicative Prices for Imports. The rigidity of the indicative prices in Tanzania affects the local economy and adds to the cost of doing business. The recommendation put forth is that TRA in a bid to make the local industries competitive has to find the most realistic and operational approach for determining indicative prices.

iii. Immigration and Labour Sectors Temporary Work Permits: that are issued by Immigration Department for temporary work are not recognized by the labour division, something that has



brought in chaos between foreign workers and labour officers. The recommendation made on this issue is amendment (by way of Miscellaneous Amendments) of the Immigration and employment and labour acts in order to remove the conflict.

iv. Duration of Issuing Work Permits and Clarity for Renewal Applications: That the Non-Citizens (Employment Regulations) Act place no ceiling on the duration it should take for work permits to be issued from the day an application is made. On the other hand, the status of applicants seeking their permits renewal is unclear on whether they should stay in the country or leave. On these particular issues, the Blueprint recommends that the Non-Citizens (Employment Regulations) Act has to be amended (by way of Miscellaneous Amendments) in order to provide specific and reliable duration it should take for work permit renewal and a clarification on the legal status of applicants with pending applications.

v. Inspection of Work Permits: the Blueprint recommends amendment (by way of Miscellaneous Amendments) of the Non-Citizens (Employment Regulations) in order to provide for only one inspecting agency (preferably the labour officers) and provide for either utilization of immigration officers or police officers but not both.

vi. Fees for Processing Residence and Work Permits have been observed to be too high ranging between USD 2300 and USD 3000 per head for two years are considered too expensive for employers with many foreign workers in terms of securing the permits. On the other hand the differences between the two role occurs in terms of limits in residence permits of which the later could have limitations in being used in some regions while the work permits allow the holder to work anywhere in the country the Blueprint recommends for harmonised laws that are low and allow for their applicability across the country.

Social Security and Labor Issues

vii. Lack of National Coordination of Social Security Schemes of which each pension report to a different ministry compliance costs increases due to differences in rule of operations and procedures. The Blueprint recommends amendments of Social Security Laws to provide for coordination of all Social Security Schemes under one parent Ministry with the exception of NHIF, which should remain under the Ministry of Health.



viii. Remittance of Funds to Pension Schemes: in the absentia of a centralized payment system employers are required to remit different statutory contributions to multiple schemes in accordance with the law. The situation has increased cost of doing business to the private sector. The Blueprint recommends law amendment of the law in order to centralize and automate employers’ registration and remittance of contribution collections and harmonize deduction rates among all Social Security Schemes (that will be retained).

ix. Exclusion of Informal Sector in Schemes: with high business informality in the country SSRA has a challenge of increasing inclusion of the informal sector. The Blueprint recommends that, Sect 31 of SSRA Act, 2008, Cap. 135, R.E. 2015 has to be amended in order to allow the Informal Sector enter into schemes and a centralized payment systems for informal sector has to be established

National Environment Management Council (NEMC)

x. unnecessarily long duration of EIA and unjustifiably high fees ,coupled with high fees for non-compliance : the Blueprint recommends the following:-

• NEMC should assign some of its regulatory mandates, and its requirement to sector regulatory agencies, such as the mining sector which also impose environmental requirements, in order to reduce overlaps and duplicity

• Introducing a cap on the fees charged in order to reduce excessive burden for relatively large projects; and

xi. Provide a specific time frame in the law within which the EIA process should be completed.

Land and Human Settlement Issues

xii. Non-citizen Ownership of Land: that stakeholders view that the land tenure regime as discriminatory as non-citizens are not allowed to own land except through the TIC. It is recommended that the government has to engage the private sector to re-iterate the spirit, and the policy and legislative framework behind the land law reforms that led to the present land tenure system.



Tourism Sector

xiii. The main Recommendation is that there is need of reviewing Hunting Regulations in order to remove double licensing element in hunting. Also payment of TTLB for Separate Facilities and for Professional in Hunters (PHs) in order to reduce cost of doing business

Agriculture Sector

xiv. Tax Exemption for Horticultural Inputs and Equipment: This has been reported as a constraint to competitiveness of Tanzania horticultural sub sector in global markets. The Blueprint recommends amendment (by way of Miscellaneous Amendments) of the VAT Act to accommodate a range of modern horticultural inputs and equipment in its list of exemptions. The list should include dam liners for irrigation technology, spare parts for greenhouses, biological control agents, agro-nets, plant protection substances and storage and post-harvest and cooling equipment.

xv. Other challenges include, Overlaps in Registration of Animal Feeds, such as duplicity in the registration of manufacturer and supplier/distributor of animal feeds and in the control of the import and export of animal feeds. There is also exports and imports of milk products and in the registration of acaricides

o In addressing these issues the Blueprint Recommends the following - MT

• Amendment of the law to ensure that the Department of Livestock Production and Marketing (DPM) handles registration of manufacturers and suppliers/distributors of animal feeds and DVS to regulate control of the import & export of animal feeds. Where necessary this could be done in collaboration with the Department of Plant Protection.

• Amendment of the law to ensure that DVS/TDB charge per consignment on import/export of milk and milk products and that DVS should refrain from charging consignments for the export market.

xvi. Duplication of Roles in Issuing Import Permits: for example The Tanzania Dairy Board one-month Import Permits issuance with



the objective of controlling the importation of dairy products into Tanzania. The Blueprint recommends amendment (by way of Miscellaneous Amendments) the law to provide that TDA should be responsible for coordination of the registration of premises/ business name(s)/ processors or manufacturers.

xvii. Lack of clarity on ‘processed’ and ‘unprocessed milk’ in dealing with VAT exemption or zero-rated VAT for Protection of Domestic Processors of UHT: the Recommendation made is amendment (by way of Miscellaneous Amendments) of the VAT Act to revert to zero rating the sub-sector inputs and charge VAT on processed milk.

xviii. Conflicts in line of Reporting: for the Tanzania Fertilizer Regulatory Agency (TFRA) that reports to the Agricultural Inputs Section of the Ministry responsible for Agriculture while the agency still has to report to other regulatory agencies leads to confusion in the TFRA regarding charges for licenses, certificates and permits for fertilizers. The confusion relates to the roles of key players - TFRA, TBS, WMA, TAEC and SUMMATRA. The Blueprint recommends that there is a need to review the legal framework establishing the roles of key players in order to remove the conflicting and overlapping mandates between TFRA and other regulatory agencies.

Transportation and Logistics Sector

i. Inconsistency in LGA By-Laws: The Blueprint recommends that

• The Minister in charge of LGAs should issue Regulations directing LGAs bylaws to specify the exact amount of fee associated with Permits and provide for a fee range within which all LGAs’ fees will fall. • Review the law to establish a one-window Facility to deal with issuance of single permits to be used across the LGAs. Truck owners should be able to apply for a single permit which states that all LGAs are covered by the route. The relevant LGAs can then share the fee as per their respective by-laws.

ii. Time limits on Hours of Operation for Transportation of Forest Products: the Blueprint recommends that TRA and TFS Regulations need to be harmonized to remove such controversies: and that either TRA should relax its regulatory condition for such types of cargo (forestry products) or TFS should relax the



requirement not to transport forest products beyond 18:00 hrs. iii. Regulating Left Hand Drive (LHD) Motor Vehicles:–the Blueprint recommends amendment (by way of Miscellaneous Amendments) of the relevant laws to harmonize the safety and quality standards by TBS, TRA and SUMATRA such that the requirements for importation and operation of commercial public transport vehicles are consistent across the three Regulators.

iv. Trans-boundary Transportation: Tanzania’s Regulations relating to trans-border transportation in terms of technical and safety rules for buses and restrictions of travel during the night are in conflict with those of other countries. –to address this challenge the Blueprint recommends • Review laws to harmonize the country’s domestic transport Regulations with those of other countries in the region.

v. Variation of LGAs fees requirements to bus owners among different LGAs: the Blueprint recommends that the Minister responsible for LGAs should enact Regulations to put in place a coordinated fee payment system such that bus owner can pay the entire amount of fee at the starting point of the journey to receive a stand/stop usage permit that stipulates all the stops that the bus is eligible to use along the route. It is then advised that the fees can then be divided across the relevant LGAs.

vi. Prohibition of Carrying Dangerous Items/Persons in Buses: in a bid to address this issue the Blueprint recommends amendment of the regulations such that the penalty/legal charges are incurred by the passenger found to have violated the Regulations not bus operators

Construction Sector

i. Multiple and Uncoordinated Regulatory Agencies such as CRB, ERB, and AQRB which adds to costs of doing business to the private sector. In a view of addressing this issue the Blueprint recommends introduction of one regulatory body – the Construction Industry Development Board which will host CRB, ERB, and AQRB as departments in order to enhance coordination and improve efficiency.

Other recommendations include, revising the amount of fees charged in order to boost competitiveness, enhance usage of to minimize manual work and cut down costs and reviewing and



implementation of the Construction Industry Policy, particularly on the significance of establishment of the Construction Industry Development Fund

ii. Long Duration of Registration of Quantity Surveyors and Architects: the Blueprint recommends:-

• Amendment (by way of Miscellaneous Amendments) of the Architects and Quantity Surveyors (Registration) Act, 2010 to address the concerns for Architects and Quantity Surveyors

• Amendment (by way of Miscellaneous Amendments) of the Engineers Registration Act, No. 15 of 1997 (Cap 63) to address the concern of Engineers.

iii. Tax administration: is cumbersome for businesses in the construction industry who are required to pay VAT at the point of issuing the invoice/certificate that is before realizing the payment; on the same note administration of VAT in terms of VAT credit clearance in the Mainland allows for six months while that of Zanzibar takes one month only. In order to address this issue the Blue print recommends that with regards to corporate tax, loss should be allowed to be carried forward to more than 3 years like the way it is in the case in the agriculture sector;

• Other recommendations include; harmonization of VAT administration and credit clearance between Mainland and Zanzibar, reduction of amount required for tax appeal that is 1/3rd of total tax in dispute which is considered very high. There is a need of amending (by way of Miscellaneous Amendments) the Income Tax Act, 2014 and VAT Act, 1997 to address the concerns.

Mining Sector

i. Variation of Fees at the LGA Level, for example businesspersons in the sand extraction sub-sector are required to pay for a license, royalty to the MEM and other fees charged by LGAs but the issue is that different LGA’s have varied payment rates as per their specific by-laws. Again fees paid by exporters of cement clinker inhibits exportation of materials abroad. With a view of addressing the challenges, the Blueprint recommends that the Minister for LGAs should enact Regulations to standardize LGA payments and fees across different LGAs



Health Sector

Cumbersome Procedures for Securing Licenses to Operate Health Facilities due to stringent factors such as the requirement to have hire professionals before granted the permit to operate. The Blueprint recommends the review the legal framework to allow temporary permits/licenses and decentralize decision making to minimize time and related costs for applications to operate health facilities.

Creative Industry

Pro-longed process of amending relevant laws in the Industry that have conflicting and overlapping mandates. The Blueprint recommends that in order to Fast track the process of amending the relevant laws to remove conflicting and overlapping mandates, the needs to be collaboration between MITI and the Attorney General.




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