UNDERSTANDING THE DIFFERENCE: STORAGE FACILITY, WAREHOUSE AND BONDED WAREHOUSE IN TANZANIA

A Storage Facility

A storage facility is a space or building utilized by any business for the storage of goods or products for sale. A storage facility can be a warehouse, store, container, etc. that are used to store final products or goods for sale.

Storage facilities are regulated by the Tax Administration Act, Chapter 438, Revised Edition of 2019 of the laws of Tanzania (hereinafter referred to as “the TAA”), and they must be registered or licensed by the Commissioner General of the Tanzania Revenue Authority (hereinafter referred to as the “Commissioner General”) whose role, among many others, is to license and monitor monthly returns which are submitted by the storage facility owner or his agent within fifteen (15) days after the end of each month.

The Commissioner General maintains a register which contains particulars such as a storage facility number, name and address of the owner of the storage facility, Tax Identification Number of the owner, details of the nature of goods which are kept in the storage facility and such other particulars as the Commissioner General may deem fit.

There are distinctive features that distinguish a storage facility from a warehouse and a bonded warehouse, such as:-

• It is utilized in any business for the storage of goods/products for sale;
• General;
• Two or more storage facilities are to be registered/licensed differently;
• There are no specific commodities that are to be stored in the storage facility;
• There is no mandatory insurance or bond requirement for the goods stored in a storage facility;
• A storage facility has only a single key player responsible for stock taking and filing of the monthly returns.

The Finance Act, Number 5 of 2022 of the laws of Tanzania amended section 45A of the TAA, which requires any person who establishes a storage facility with the aim of keeping goods for business purposes to register the same with the Commissioner General. The implementation of this particular requirement took effect from 1^st July 2022.

A Warehouse

A warehouse refers to any building, structure or other enclosed structure used or useable, for the storage and conditioning of agricultural products and/or goods.

One could use the products or goods stored in a warehouse as collateral, thus one has an option to register the same at the Warehouse Receipts Regulatory Board (hereinafter referred to as “the WRRB”) if certain thresholds have been met to be registered. Once a storage facility is registered or licensed by the WRRB it is termed as a warehouse.

Warehouses registered under the WRRB are regulated by the Warehouse Receipt Act, Number 10 of 2005 of the laws of Tanzania (hereinafter referred to as “the WRA”). The WRRB is primarily tasked with regulating and promoting the warehouse receipt system through the issuance of warehouse receipts to ensure that there is fair and sustainable accessibility to formal credit and commodity marketing systems as a way to securitize commodities stored in a warehouse.

There are distinctive features that distinguish a warehouse from a storage facility and a bonded warehouse, such as:-

• The registration of the warehouse is with the WRRB;
• Two or more warehouses may be registered or licensed under a single license;
• There are specific commodities to be stored in the warehouse as stipulated under the WRA, which are agricultural commodities such as coffee, raw cashew nuts, maize and other goods as the Minister may declare by order published in the Gazette;
• Every applicant for registration or license to operate a warehouse shall submit to the WRRB the commodities proposed to be warehoused and a schedule of charges;
• Each applicant for a license to operate a warehouse is required to furnish the WRRB with a certificate of insurance evidencing effective policy of insurance issued by an insurance company authorized to do business in Tanzania and execute a bond sufficient to secure the faithful performance by him of the obligations as a warehouse operator;
• Warehouse has six primary key players for the system to function effectively such as a (1) Depositor; (2) Collateral Manager; (3) Licensed Warehouse; (4) Licensed Warehouse Operator; (5) Buyer; and (6) Financial Institution.

A Bonded Warehouse

A Bonded Warehouse refers to any building or any other place as a warehouse licensed by the Commissioner of Customs for the storage of goods imported into the country pending the payment of duties.

As opposed to the storage facilities which are registered or licensed by the Commissioner General and regulated by the TAA and the warehouse storage facilities registered or licensed by the WRRB and regulated by the WRA, a bonded warehouse is registered or licensed by the Commissioner for Customs and regulated by the EAC Customs Management Act, Number 1 Revised Edition of 2019 of the laws of Tanzania (hereinafter referred to as “the EACMA”).

A bonded warehouse facility is managed by the Commissioner for Customs through a specialized unit dealing with the inspection of bonded warehouses. However, the responsibility for the day-to-day operations of a bonded warehouse facility rests under the respective entity or organization. The role of the Commissioner General is licensing and monitoring for accounting purposes, but supervision role is done by the entity or organization responsible for the imported goods.

There are distinctive features that distinguish a bonded warehouse storage facility from a storage facility and a warehouse storage facility, such as:-

• It is used to store dutiable goods on which import duty has not been paid;
• Alteration to a bonded warehouse is to be done after obtaining the permission of the Commissioner of Customs;
• The registration of the bonded warehouse is with the Commissioner for Customs;
• The goods are stored in the joint custody of the bonded warehouse keeper and Customs;
• There are two types of bonded warehouse (i) General bonded warehouse and (ii) Specialized bonded warehouse. General bonded warehouse accommodates everything as a general store, whereas specialized bonded warehouse is specialized to only certain type of goods;
• The law requires bonded warehouses to be distinguished by numbers;
• A licensee of a bonded warehouse shall submit a return of goods remaining in the bonded warehouse to the Commissioner for the period up to the 30^th  day of June of each year;
• A  bonded warehouse offers several benefits such as deferment of customs duties, such as import duty and Value Added Tax.

In summary, a storage facility is a facility that is used to store goods for sale. A warehouse is a building or facility where raw materials, agricultural products or manufactured goods may be stored prior to their distribution and/or sale. A bonded warehouse is a storage facility that is authorized to store goods for import or export.

By Joel Kimale - Advocate

Note: This is not a legal opinion, and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.