Government grants VAT relief for housing sector

RABAT: THE government has announced plans to remove Value Added Tax (VAT) on the construction of affordable houses worth not more than 50m/- in a move aimed at boosting access to decent housing.

The announcement was made by the Deputy Minister for Lands, Housing and Human Settlements Development, Mr Kaspar Mmuya, during a special interview on the sidelines of the 45th Annual Meeting of the Shelter Afrique Development Bank (ShafDB) in Rabat, Morocco.

Mr Mmuya said the measure is aimed at attracting local and foreign investors, as well as increasing private sector participation in the construction of quality and affordable housing to meet the country’s growing demand by 2050.

“Any investment in housing projects costing not more than 50m/- will be exempt from VAT. This is a very significant incentive,” he said.

He also urged stakeholders in the housing sector to embrace the construction of multi-storey buildings to address the challenge of dwindling land resources.

According to Mr Mmuya, high-rise developments would accommodate more people within smaller areas, making it easier and more cost-effective to provide essential social services such as roads, water and electricity.

“Land is not increasing. Therefore, the type of development we must embrace is vertical construction through multi-storey buildings. This will help the government deliver social services to many people at once within a smaller area,” he stressed. The Deputy Minister acknowledged that the government cannot achieve its ambitious housing and urban development targets without strong collaboration with the private sector.

He said Tanzania recognises the private sector as a key partner in mobilising domestic and international capital required to finance housing projects.

“Without working closely with the private sector to help the country access funding from within and outside Tanzania, we will not be able to achieve this objective. As Tanzanians, we have embraced this approach following this conference,” he said.

Mr Mmuya outlined two immediate priorities following the conference: Briefing President Samia Suluhu Hassan on the outcomes and agreements reached, and working closely with the Ministry of Finance to engage potential investors interested in housing development projects.

He said the new measures are expected to stimulate growth in the land and housing sector while strengthening partnerships between the government and private investors.