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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:
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.
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.
It was also proposed to review fees and levies imposed on Marine parks and reserves
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.
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.
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.
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.
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
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.
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.
The Minister proposes to change Clearance Fee at the rate of TZS 70,000 per Consignment instead of 1% of FOB.
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
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.
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.
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.
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.
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.