LUXURY fashion brand Deacons Kenya has reviewed its decision to exit the Tanzanian market completely with a new plan to sell gym equipment in that market.Muchiri Wahome, the CEO, said the decision to serve this market through its gym equipment franchise Life Fitness is informed by the rising demand and the need to take advantage of tax benefits.Its Tanzanian business had been in losses for the past five years and Deacons can claim taxes paid during its operations in the country under Dar es Salaam tax regime.“Although the directors approved the closure of the current business operations, the directors have put in place concrete plans to utilise these tax losses with the introduction of Life Fitness business in (Tanzanian) market,” the company told shareholders at the firm’s AGM held on Thursday.“Under the Tanzanian tax legislation, tax losses can be carried forward into perpetuity,” said Deacons as it prepares to roll out its gym equipment franchise in Uganda, Rwanda, South Sudan, and Burundi.In December, the company’s board approved plans to discontinue sales of its Truworths, Identity, and 4u2 clothing brands by Tanzania Fashion Stores which was to be left dormant.The decision was reached after a five-year loss-making streak in that market, with the company recording a loss of Sh13 million last year alone.But in a fresh notice to shareholders, Deacons said it will take advantage of its historical tax losses in Tanzania to distribute the Life Fitness exercise equipment in that market. Analysts say the fact that tax losses in Tanzania can be carried forward into perpetuity is a major incentive for the company to continue its operations in that market, noting that tax losses in Kenya expires after four years.Tax losses are a legal means of helping a company to reduce its tax burden in a year when profits are high if it had losses in previous years.
