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Value Added Tax Act, CAP 148

Proposed Changes	Reason for the Change	Commentary
To exempt VAT on re-insurance transactions between insurance companies and re-insurance companies.	The measure is intended to increase the competitiveness of local companies.	This is a positive change, additional coverage to include all types of insurance services will be welcome.
To impose a reduced VAT rate of 16% instead of 18% on the purchase of goods where payment is made online (B2C) and the consumer confirms that the payment invoice issued contains the correct amount of the transaction.	The measure aims to encourage the use of online payment systems, reduce the use of hard cash and simplify tax administration by facilitating the availability of information on purchase transactions.	The change is good news for consumers considering the wide use of mobile and debit card payments in retail shop outlets. We await to see implementation especially having a VAT system with two tax rates.
To establish a VAT collection agency system on payments made to a registered seller through approved Government institutions as well as taxpayers registered to collect VAT as will be specified in the VAT Collection Agency Regulations.	The objective of this measure is to increase efficiency in the collection of revenue arising from VAT.	Strategic move which will assist in VAT collections, but we await to see how this will be implemented in practice.

To amend Section 12 of the Income Tax Act to include retained earnings in the definition of repatriated income.

This measure intends to stimulate the flow of capital into economic activities and enhance transparency.

This is likely to impact positively the booming investment considering the change in Finance Act 2022 that removed this requirement.

To increase the withholding tax rate on payments for professional and management services provided to the extractive sector from 5% to 10%.	This measure intends to broaden the tax base and align with global economic changes.	A strategic move to increase government revenue but may result in additional cost to extractive sector service providers due to cash flow issues.
Increase the Alternative Minimum Tax (AMT) rate paid by companies incurring losses for three consecutive years from 0.5% to 1%.	This measure intends to enhance government revenue and curb tax avoidance.	This increases tax burden to taxpayers who incur genuine tax losses during early years of their investment.
To reduce the limit ratio of the carrying forward losses from previous years that can be deducted during the income tax calculation for businesses in mining, petroleum, oil and gas activities operating at a loss from 70% to 60%.	The aim of this measure is to enable the Government to collect revenue earlier from the relevant sectors.	Loss corporation rules now apply to exploration; however, impact is minimal due to lack of income in early phases.

To require a person to interface their system used in the issuance of electronic receipts with the system operated by the TRA.	Intended to enhance voluntary tax compliance and facilitate tax administration.	A strategic move to enhance tax compliance and transparency.
To waive the requirement to pay the amount of tax which is not in dispute or one-third of the assessed tax decision whichever is greater within fifteen days from the date of receipt of tax decision.	This measure is intended to provide the taxpayer with sufficient time to apply for a waiver.	More clarity needed; aligns better with the 30-day objection submission window.

City service levy rate reduced from 0.3% of gross revenue to a fixed rate of 0.25% of gross revenue.	This measure is intended to reduce cost of doing business and investment in the country.	Good move to reduce cost of doing business in Tanzania and unify levies.
To reduce hotel levy from 10% to 2%.	This measure intends to reduce the cost of doing business and investment in the country.	This is significant in hospitality sector and will reduce cost and encourage investment.