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VAT exemption on cold rooms must spur horticulture industry growth

VAT exemption on cold rooms must spur horticulture industry growth

LAST Thursday the government announced to exempt Value Added Tax (VAT) on cold rooms with effect from July 1st 2021, a measure that is intended to reduce production costs and promote modern horticultural farming in the country.

The announcement was made by Minister for Finance and Planning Dr Mwigulu Nchemba in Parliament when tabling the 2021/22 national budget estimates.

Two days later (on Saturday) the government through the Minister for Minister for Agriculture, Professor Adolf Mkenda announced to revive and start production in 16 horticulture plantations in the Arusha region that measure 1,950 acres.

The government made the announcement after receiving requests from the apex private sector member-based organisation that advocates for the growth and competitiveness of the horticultural sector – TAHA.

The plantations were abandoned by investors for different reasons, one of them being unpaid loans. The decision comes as the sixth phase government is in top gear to resuscitate the agricultural sector, one of the backbones of the country’s economy.

It would be recalled that in March this year President Samia Suluhu Hassan promised to restore trust in investors and create a conducive environment for business.

Horticulture industry is an important subsector that has, until recent years, been contributing immensely to the country’s GDP growth before some investors left the country due to unfriendly production and business environment.

The prices of horticultural products, especially vegetables and flowers have been appreciating day in day out abroad, with Tanzania beefing up efforts to promote horticulture production.

The decision to waive VAT on cold rooms, by any measures, must be supported, especially during this time when the government intends to revive horticulture industry.

Experts in horticulture industry state that for the sector to produce higher yields efforts must be made to address post-harvest handling and agro-logistics issues.

The experts also say access to post-harvest management facilities is almost non-existent for the majority of fruit and vegetable growers in the country.

They state that lack of storage facilities and cooled trucks contribute to large post-harvest losses.

Cold rooms are among the extremely important facilities in the sector but VAT imposed on them prompted some investors to hike the prices of their produce, becoming less competitive in the market.

The removal of VAT on the storage facility, will no doubt encourage investors and other stakeholders to engage in the sub-sector, including bringing back those who had abandoned it.

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