NEW PROSPECTS IN THE TANZANIA 2021/2022 BUDGET

Published by Kemilembe Barongo

“ We continue to build our nation, we continue to build our nation, come rain or shine, we will continue to build our nation, be night or day, we will continue to build our nation. No project or development intervention shall stall. “Kazi inaendelea”

On the 10th of June this year, the Minister of Finance Hon. Dr. Mwigulu Lameck Nchemba Madelu (MP) presented the national budget to the Tanzanian parliament and the entire nation. The 2021/22 budget is the first in the implementation of the Third Five Year National Development Plan (2021/22- 2025/26) with the theme of “Realising Competitiveness and Industrialization for Human Development”.

 

Priority Areas

The finance minister gave a number of proposals intended to promote economic recovery after the impacts of COVID -19 and promote economic growth particularly in agriculture and industrial production. The proposals cover the followings tax laws:

 

A.   THE VALUE ADDED TAX ACT, CAP 148 57;

            i.        Fresh prospects for Stakeholders in the Farming Industry

The Minister has proposed an exemption of Value Added Tax on cold rooms to reduce production costs and promote modern horticultural farming and an exemption on Value Added Tax on insurance of livestock farming to promote local farming.

          ii.        Sports Industry benefit from exemptions

It was proposed that Value Added Tax be exempted on Artificial Grass for football pitches in City Councils. to promote sports in the country;

         iii.        More VAT exemptions for NGO’s

Exempt Value Added Tax on imported or Local Purchases of Goods and Services by Non-Governmental Organizations (NGO’s) solely for realisation of justice for the vulnerable.

          iv.        Suppliers of Mobile Devices Benefit as well

Exempt Value Added Tax on smart phones, Tablets and Modems to promote usage of data services in the country

           v.        Exemptions for the Mining Industry Stakeholders

Abolishment of Value Added Tax on imported precious metals and raw minerals to allow more importation of precious metals and raw minerals for refining and smelting Locally.

          vi.        Other exemptions

§  Exempt Value Added Tax on imported and Local Purchases of Goods and Services for East African Crude Oil Pipeline (EACOP) to reduce operational cost of the pipeline project from Uganda through Tanzania to the port

§  Exempt Value Added Tax on Contactless Smart Cards and Card Consumables for National Identification Authority to reduce costs.

§  Abolish Value Added Tax exemption on cans intended for preserving milk to reduce production costs and promote modern dairy milk industry

§  Abolish Value Added Tax exemption on Solar Lights to bring equality for users of all kinds of energy

        vii.         Limits proposed on tax deferment

The proposed propose that the government Limits Value Added Tax deferment on Capital Goods to prevent abuse of the same

 

B.   THE INCOME TAX ACT, CAP 332

i.            Relief for employees

The Minister proposed reduction of the minimum PAYE rate from 9 percent to 8 percent to provide relief to employees.

ii.          Government bonds tax free

Exempt Income Tax on interest income derived from Government bonds.

iii.         Proposal to Introduce a Non -final withholding tax of 2 percent on payments made to suppliers of agro -products, livestock and fisheries when supplied to processing industries, millers and other Government Agencies.

iv.          Reinstate power of the Minister to grant income tax exemption without a requirement for approval by the Cabinet

v.           Enable depreciation costs calculation at a rate of 5% For cost of assets under the East African Crude Oil Pipeline (EACOP).

vi.          New Taxes for individuals engaged in small mining operations

For individuals engaged in small mining operations whose annual turnover does not exceed Tanzania shillings 100 million per annum the minister proposed that the government:

·        Introduce special income tax at a rate of 3% of the sale value of the minerals;

·        Establish time of payment of income tax for individuals engaged in small scale mining operations to be the time when selling minerals

·        Proposed PAYE tax at the rate of 0.6% for mining sector employees

 

 

C.   THE EAST AFRICAN COMMUNITY CUSTOMS MANAGEMENT ACT 2004

 

The Minister proposed Changes in the Common External Tariff (CET) rates 

 

Item

Current Rate

Proposed Rate

Stay of application of the EAC CET rate and apply a duty, for buses for transportation of more than 25 persons imported for rapid transport project

25%

10% (for one year)

Stay of application of the EAC CET rate and apply a duty for cotton yarns

10%

25% (for one year)

Stay of application of the EAC CET rate and apply a duty for new pneumatic tyres of rubber, of a kind used on motorcycles

10%

25% (for one year)

Stay of application of the EAC CET rate and apply a duty for peanut butter

25%

35% (for one year)

Stay of application of the EAC CET rate and apply a duty for wires of other alloy steel

10%

0% (for one year)

Stay of application of the EAC CET rate and apply a duty for mild cans

25%

0% (for one year)

Organic surface-active agents (Anionic) used by manufacturers of detergents and liquid soaps 

10%

0% (for one year)

raw material used in leather processing 

25%

10% (for one year)

00 raw materials used to manufacture different types of fertilizers for fertilizer manufacturers

25% or 10%

0% (for one year)

00 packaging materials for processed tobacco

25%

0% (for one year)

packaging materials for processed tea 25% 0% (for one year) 7606.92.00 aluminium alloy circles

25%

10% (for one year)

CKD for Three-Wheel Motorcycle excluding Chassis and its components

25%

10% (for one year)

on inputs used to manufacture Glass Reinforced Plastic pipes. (Polyester Film 50mm & 200mm; Tissue Mat 30gr; Chopped Strand Mat/Knitted glass Mat; Mesh cloth liner; Sand holding cloth (Polyester Mesh); Direct Roving (2400 TEX); Direct Roving (600 TEX); Chop Roving; Surface Liner; Rubber O-ring; Rubber Gasket; and Resin Cystitis.

25% or 10%

0% (for one year)

Flat-rolled products of other alloy steel, of a width of 600 mm

10%

0% (for one year)

 

 

The Minister has proposed the following measures to continue being effected during 2021/22:

 

  • Duty remission at a duty rate of 0% instead of 25% or 10% on inputs for the manufacture of essential medical products and supplies for fighting COVID-19 including masks, sanitizers, coveralls, face shields and ventilators for one year;
  • Continue to grant stay of application of EAC CET rates of 10% and apply duty rate of 0% for one year on Cash registers and Other Electronic Fiscal Device (EFD) Machines and Point of Sale (POS)
  • Continue to grant duty remission at a duty rate of 0% instead of 25% for one year on other packing containers, including record sleeves as inputs used by domestic manufacturers of UHT milk
  • Continue to grant duty remission at a duty rate of 0% instead of 10% for one year on Corks and stoppers
  • Continue to grant stay of application of the EAC CET rate of 25% and apply a duty rate of 35% for one year on Ceramic tiles
  • Continue to grant stay application of the EAC CET rate of 25% and apply a duty rate of 35% for one year on Tea, whether or not flavored;
  • Continue to grant stay of application of the EAC CET rate of 25% and apply a duty rate of 35% for one year on HS Code 6305.10.00 (Sacks and bags, of Jute or other textile bast fibres of heading 53.03);
  • Continue to grant stay application of EAC CET rate of 0% and apply a duty rate of 10% for one year on Cocoa powder, not containing added sugar or other sweetening matter;
  • Continue to grant duty remission at a duty rate of 0% instead of 25% for one year on packaging materials for processed coffee;
  • Continue to grant duty remission at a duty rate of 0% instead of 25% for one year on inputs used by domestic processors of cotton lint;
  • Continue grant duty remission at 0% instead of 25% on raw materials used to manufacture baby diaper:

 

A.A.   THE TAX ADMINISTRATION ACT, CAP 438

The Minister proposed the following changes;

·        Courts of law be allowed to collect and account for revenue emanating from fines and penalties due to ruling of tax offences by the Courts

·        Commissioner General of TRA to now have power to implement remission of interest and penalties, and enhance efficiency and effectiveness in the determination of such applications; and

·        Changes to the (Transfer Pricing Regulation) by deleting 100 percent penalty of sales adjusted for failure to comply with the requirements of the law.

 

B.   THE LOCAL GOVERNMENT FINANCE ACT, CAP 290

The Minister of Finance proposed the following changes;

Clear description on production levy

A clear description on the circumstances in which a corporate entity liable for paying service levy may not be liable to pay production levy on the value chain of the product.

 

More outdoor advertisements

The Minister also proposed reduced Outdoor advertisement fees charged per square foot for businesses;

 

  •  

    Illuminated advertisement

    From shillings 18,000 to shillings 13,000;

    Non-Illuminated advertisement

    from shillings 15,000 to shillings 10,000;

    Wall Sign advertisement

    From shillings 15,000 to shillings 10,000;

    Electronic Sign advertisement

    From shillings 20,000 to shillings 15,000

    Vehicular advertisement

    From shillings 15,000 to shillings 10,000 for those advertising products of other manufacturers/traders;

    Short term advertisement/promotion per day

    From shillings 55,000 to shillings 50,000

    Every poster promotion for first 100 posters for every other bunch of 100 of posters or part thereof

    From shillings 100,000 to shillings 50,000.

 THE PROPERTY TAX ACT, CAP 289

Property tax to be paid via LUKU

The finance minister proposed a few changes to the property tax collecting system; 

The property rate shall now be embeded in the electricity bill or prepaid meter and charged at a proposed rate of 1,000/= shillings per month on ordinary buildings with one meter; and a rate of 5,000/= shillings per month for every storey building or apartments with one meter.

THE LAND ACT, CAP 113

Reduced premiums

The proposed changes include a proposal to Reduce premium rate from 2.5 percent to 0.5 percent for new land occupancy; and from 1 percent to 0.5 percent on Regularizing Land.

THE STAMP DUTY ACT, CAP 189

Increased stamp duty rates

The minister proposed increased rates for stamp duty to update the current Stamp Duty rates with the current economy from shillings 500 to shillings 2,000; 

For Memorandum and Articles of Association from shillings 5,000 to shillings 10,000; On Partnership Instruments whose capital ranges from 100,000 to shillings 1,000,000 from shillings 2,000 to shillings 5,000; 

Stamp duty rate on Partnerships whose capital ranges from shillings 1,000,000 from shillings 5,000 to shillings 10,000; 

Stamp duty rate for instruments of dissolution of Partnerships from shillings 1,000 to shillings 10,000.

THE VOCATIONAL, EDUCATIONAL AND TRAINING ACT, CAP 82

The minister has proposed to provide Relief to employers on Skills and Development through the following changes: Increase of threshold for employers with number of employees from 4 to 10 to pay SDL; SDL exemption to the religious health institutions from SDL; and Introduce a specific requirement to small -scale mining operation to pay SDL at a rate of 0.4%, to be paid at the time of selling mineral and payment of royalty at buying station or at mineral and Gem house designated by Commissioner of Mining. The proposed changes aim at creating a friendly business investment environment in the country, reduce operation cost to employers and create convenience to small scale miners to make payment of levy

THE GAMING ACT, CAP 41 : Room for More Gaming Activities and Sports Betting

The Minister has proposed to amend the Gaming Act by reducing of Gaming tax on winnings from 20% to 15% on sports betting. The proposal also includes an increase in gaming tax rate on the Gross Gaming Revenue from 25% to 30%. The proposed additional 5 percent will be earmarked to sports development fund in the country. 

Further, the Minister has proposed to introduce Gaming tax on Gross Gaming Revenue on Virtual Games at the rate of 10% and Gaming products licensed under pilot study at the rate of 10%. The aim is to increase Government revenue and promote fairness within the gaming industry.

PUBLIC AUDIT ACT, 148 : New audits for parastatals under Companies Act

The Minister has proposed that the Controller and Auditor General (CAG) be granted legal powers to audit all Parastatals that are established under the Companies Act where the Government is a shareholder so as to protect the government’s interests. The Minister has also proposed that enough time to be granted to the Minister responsible for Finance to respond to CAG report in the next Parliamentary Session after the CAG has submitted the report, instead of the current practice where all reports are tabled on the same Parliamentary Session. This measure is aimed at enabling the Minister responsible to provide response and clarifications on the report after a though study of the same.

THE NON-CITIZENS (EMPLOYMENT REGULATION) ACT, NO.1 OF 2015

Employers of non-citizens Beware!

There is a proposal to impose a penalty of 500,000/= shillings per month for every employer with non – citizen employees for failure to submit monthly returns to the Labour Commissioner information of his/her employees including details of their salaries. The objective of this measure is to enhance voluntary compliance towards that obligation; and to impose a sanction of 12 months’ imprisonment or a fine of 10,000,000 million shillings or both for failure to submit monthly return to the Labour Commissioner information of his/her employees including details of their salaries. The objective of this measure is to enhance voluntary compliance

Other laws

a) Government Loans Grants and Guarantees Act, CAP 124 71.

The minister proposed that the Government be able to Guarantee any public company or institution a loan up to an amount not exceeding the Value of Government Shares to the respective company upon Cabinet approval

b) The Motor Vehicle (Tax Registration and Transfer) Act, CAP 12

An amendment to reduce Personalized Plate Number Registration fee from TZS 10,000,000 to 5,000,000 for every three years. This measure aims at enabling individuals to opt their preferred personalized registration at low cost as the current rate received a very low response.

c) The Road Traffic Act, CAP 168 : Relief for motorcyclists and Bajaj drivers

The minister proposed a reduction of the road fines imposed under the Road Traffic Act for offences to motorcycles and three-wheelers motorcycles from shillings 30,000/= to shillings 10,000/= for each offence committed. The objective of this measure is to align the fines with the ability to pay. 

d) Amendments of Various Fees and Levies imposed by Ministries, Agencies, Regulatory Authorities, Regions and Independent Departments

The Minister has proposed to amend the various rates of fees and levies charged by Ministries, Agencies, Regulatory Authorities, Regions and Independent Departments as follows:

a) Ministry of Agriculture

To introduce registration fee TZS 60,000 for irrigation communities and To introduce irrigation service fee of 5% for seasonal harvest to irrigation communities. 

b) Ministry of Home Affairs 

The Minister has proposed to amend the Society Act, CAP 337 by introducing and revising rates as follows:

 

Type

Current Fee

Proposed Fee

Application fee for New Certificate of registration of a Society replacing Damaged certificate

N/A

Tshs. 100,000

Application fee of Correction of misrepresentation caused by applicant of a society

N/A

Tshs. 50,000

Application fee of Change of physical address of postal address of a society

N/A

Tshs. 50,000

Application fee for registration of a society

Tshs 10,000

Tshs. 50,000

Annual fee for Religious Society

Tshs. 20,000

Tshs. 100,000

Annual fee for Non-Religious Society

Tshs. 40,000

Tshs. 50,000

Annual fee for Foreign Religious Society

USD 30

USD 60

Foreign Non-Religious Society

USD 30

USD 60

Increase the application fee for change of name of a society

Tshs.  50,000

Tshs. 100,000

Increase the application fee for change of Constitution of a society

Tshs. 50,000

Tshs. 100,000

Increase the application fee for certified true copy of the original from the records by society

Tshs. 20,000

Tshs. 50,000

Increase the application fee for new certificate of a society- Loss,

Tshs. 50,000

Tshs. 100,000

Increase the application fee for new certificate - Loss Second time

Tshs. 50,000

Tshs. 200,000

Increase the Search fee -by society

Tshs. 50,000

Tshs. 100,000;

Increase the Search fee -by member of public

Tshs. 50,000

Tshs. 200,000

 

The objective of these changes is to consider inflation and value for money.

  1. Tanzania Bureau of Standards (TBS):

The Minister has proposed new fees on standards and review old fees that were charged by TFDA before the role to regulate foods being transformed to TBS.

  1. The Marine Parks and Reserves Unit

It was also proposed to review fees and levies imposed on Marine parks and reserves

  1. Other Minor Amendments in Tax Laws and Other laws
  • Ministry of Natural Resources and Tourism

Relief for Tourist Agents

The Minister proposes to reduce TALA License (Tanzania Tourism Business License) for travel agents from USD 2,000 to USD 500 to promote the tourism industry.

  • Ministry of Livestock and Fisheries

The Minister has proposed to introduce Inspection fee at the rate of TZS 40,000 per certificate regardless of nature of the meat instead of the existing rate of TZS 100 per kilogram of beef and TZS 50 per kilogram of mutton or chevon.

  • Worker’s Compensation Fund

Relief to the Private Sector Employers

The Minister has proposed to make amendments of the Workers Compensation Fund Act, Cap 263 by reducing the rate of contribution to the Fund applicable to the Private Sector Institutions from 1% to 0.6% of the total gross monthly salary of employees. The objective being to provide relief to the Private Sector Employers by reducing the burden of their contributions to the Fund and improve the business environment in the country for existing and upcoming investors.

  • Tanzania Atomic Energy Commission

The Minister has proposed to amend Atomic Energy (Fees and Charges) Regulation in order to abolish Radioactivity Analysis fee which is charged at 0.2% of FoB for food crops exported to countries with no requirement for Radioactivity Analysis Certificate.

  • Immigration Department

The Minister proposes the following: Abolish Student VISA/PASS FEE for higher learning institution students in Tanzania – Mozambique students exchange programme (TAMOSE). The objective is to promote and facilitate exchange programs; and

  • Fire and Rescue Force

The Minister has proposed to amend the Fire and Rescue Act, CAP 427 as follows: i) Abolish Fire Compliance Certificate fee for Urban and Rural Petrol Stations and their Certificates will be issued freely after inspection; ii) Abolish Horticultural farms from paying fire levy; iii) Abolish Fire Inspection fee on farms/plantations including farmhouse(s) which were paying between TZS 100,000 to TZS 1,000,000; iv) Increase the area used for Trade Fair Events not subject to Fire and Rescue levy from less than or equal to 2000m as per previous regulations to less than or equal to 10,000m; and v) Increase the number of boarders in Educational Boarding Schools from less than or equal to 100 boarders to less than or equal to 200 boarders.

  • National Environmental Management Council (NEMC)

Reduced fees

The Minister proposes to amend the Environmental Management (Fees and Charges) Regulation, 2019 by reducing the following fees: i) Fee for destroying expired medicines from TZS 1,000,000 to TZS 100,000; and ii) Annual environmental Fee from TZS 200,000 to TZS 100,000.

  • Meat Board of Tanzania

The Minister proposes to change Clearance Fee at the rate of TZS 70,000 per Consignment instead of 1% of FOB.

  • OSHA

More Reduced fees

The Minister proposes to reduce electrical inspection and electrical insulation test and general inspection fee from TZS 590,000 to TZS 150,000 which was charged before and after commencement of business. This is to promote business environment in the country

  • Licenses for Insurance Companies

The Minister proposes to alter the current arrangement of applying for annual licenses to be granted permanent licenses for companies with good records of conduct and three years’ license for companies which have repeating irregularities while being monitored by the Regulators. The aim is to remove bureaucracy in licensing procedures and improve the business environment.

  • Conducive Environment for doing Business

Single Electronic Window for investors

The Minister has proposed to the Government to introduce one electronic single window which will provide access to investors to process all the permits and licenses for the businesses electronically. This will relieve Investors from lengthy licensing procedures, cost of doing business and improve the business environment.

  • The Roads and Fuel Tolls Act, CAP 220

Increased Road and Fuel Tolls?

The Minister has proposed to make the following changes: i) Increase Road and Fuel Tolls by TZS 100 per each litre of petrol and diesel; ii) Amend of section 4 A (a) of the Act in order to provide for the amount of TZS 100 collected from both diesel and petrol to be used for road maintenance in rural areas through TARURA. The objective is to generate revenue to the Government.

  • Petroleum Act, CAP 392

Higher levy on fuel

 The Minister has proposed to amend the fuel levy from TZS 150 to TZS 250. The objective to this measure is to reduce adulterations of fuels due to the increase of Road and Fuel tolls on Petrol and Diesel.

  • The Electronic and Postal Communication Act, CAP 309

More charges for mobile money transactions?

The Minister has proposed to make the following changes: i) To impose a levy of from TZS10 to TZS10,000 in withdrawing and sending of mobile money transaction; and ii) To impose a levy of from TZS 10 to TZS 200 per day per SIM card on recharge balance. The objective is to increase government revenue

Our Take

All in all, these proposed changes intend to improve the National wealth by ensuring voluntary compliance in revenue collection, encouraging investment and tourism, and promoting financial recovery from the global impacts of the novel COVID-19 as part of the struggle for an ever growing economy.