Come July 2015 under the new VAT Act 2014, the definition of international transport services excluded ancillary transport services. Which meant that ancillary transport services attracted VAT at the standard rate of 18%. Cries were echoed from the business community from business owners, business associations dealing with clearance of cargo at the port to freight forwarders. However the pinch was mostly felt by non-residents, who are not VAT registered in URT and consequently could not claim input VAT. Therefore this was an added cost to their business.
TPSF as an effective apex body of the private sector together with its members TATOA & TAFFA proceeded to advocate for its removal. Sentiments were echoed at all levels and statistics illustrating the negative impact it had on our economy were tabled at PPDs, Ministerial committees, Tax reform committees and the Think-Tank in support of its removal.
As result of advocacy efforts from the private sector, the government has called for the reintroduction of VAT at the rate of 0% on ancillary transport services in relation to goods in transit through URT, in 2017/18 Finance Bill. Ultimately leading to reduction in costs for the recipients of goods in land locked countries when using our ports and also making our ports more competitive.