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Proposed Changes Reason for the change Commentary
Value Added Tax Act, CAP 148    
Proposed amendment to recognise equivalent financing arrangement like other conventional borrowings. To enhance equality in financial products This is a positive proposal
Zero rating of locally manufactured edible oil and fertilizers for one year To provide relief to consumers of edible oil and farmers Zero rating allows 100% claim of input VAT subject to other qualifying conditions. This is a positive change.
Powers to the Minister responsible for Finance to exempt VAT on strategic investors after approval by National Investment Steering Committee (NISC) This measure is intended to attract investments in the country. We believe that this measure will include measures that simplify the VAT exemption process.
Trailers, semi-trailers, and tractors are proposed for addition in the list of capital goods that qualify for deferment. To stimulate industrial development in Tanzania We hope that investors can assess and utilize this opportunity in industrial development
Proposal to amend the VAT Act to accommodate taxation of Digital Services without imposing further income tax obligations. To cover non-residents providing digital services to Tanzania Great initiative upon successful implementation.
Proposal to amend the VAT Act to abolish VAT exemption on Supply of air charter services. To bring a level playing field with other players. We are not sure of how this will protect competition in terms of international competitive bidding.
Income Tax Act, CAP 332    
The 3.5% presumptive income tax applicable for individuals will now apply for those earning more than TZS 11,000,000 but less than TZS 100,000,000 in a year To increase tax revenue. Before this change, the range of revenue subject to 3.5% was between TZS 14M and TZS 100M. We had expected the minimum to increase rather than decrease.
Amendment to recognise alternative financing as approved by the Bank of Tanzania like conventional borrowing   To promote growth of financial products and hence economic activities We look forward to further updates through the Finance Act, 2022.
Individuals will now have obligation to withhold tax on rental payments for residential, and or commercial premises. To enable tenants to withhold and pay tax to the Government. Hitherto, only individuals conducting a business had obligation to withholding tax. There are challenges for individuals to manage this, we hope the Government will provide guidance.
Capital Gains Tax (CGT) exemption on any transactions relating to agreements involving the Government on Free Carried Interest (FCI) shares. This is to ensure timely transfer of mineral rights and FCI This is relevant in the extractive industry where the government has a free carried interest currently 16% under the Mining Act.
Exempt withholding tax on Coupon for Corporate and Municipal Bonds.   To increase investment products in the market This will attract investors including individuals in municipal and corporate bonds.
Introduction of Digital Service Tax at the rate of 2 percent on the turnover of the non-resident service providers.   To expand tax base and uphold equity principles of taxation The Government will need to come up with the modality to implement this great initiative. Depending on the margins, the 2% on revenue can be on a higher side.
To introduce final withholding tax regime at 2% of payments made to Small Scale Miners. To reduce challenges encountered in collecting tax in these Sectors. This is excellent consideration in widening tax base in Tanzania.
Introduce income tax of 3,500,000 shilling on each truck and passenger buses per year. This simplifies taxation in the industry Good for Government revenue collections but a cost to loss making entities.
Introduction of advance income tax at the rate of 20 shilling per litre for retailers of petroleum products. The tax will be collected from retailers by importers of respective product and be remitted to the Government. To simplify compliance Government to come up with a modality to comply on this area. Further guidance is required on refund procedures in case of overpayment due to losses, etc.
Tax Administration Act, CAP 438    
To reinstate power of the Minister responsible for Finance and Planning to remit interest or penalty.     In 2021, the law was amended to give the remission powers to the Commissioner General of TRA. This is now changing back to the Minister of Finance. We hope that this change will allow implementation of new regulations like tax amnesty as hinted by the President, etc.
Workers Compensation Fund Act, CAP 263    
To reduce the workers compensation fund contribution rate from 0.6% to 0.5%. To harmonize with Public Sector employers. Welcome move to reduce business costs
Mining Act, CAP 123    
Reduction of royalty applicable to coal used as energy in factories from 3% to 1%. To reduce production costs This is likely to impact positively the booming investment in coal mining.
Reduction of royalty from 6% to 4% on gold sold to refinery centres. To support the mining sector and local refineries. The 2% reduction on gross sales is a big relief to the mining sector, also smart consideration for our refineries like Mwanza Precious Metals Refinery.
Local Government Finance Act, Cap 290    
The Government proposes to exempt crop cess on seeds and to reduce forest produce cess from 5 to 3 percent. Further the Government proposes to amend the Law by compelling corporate entities to pay service levy and produce cess in two different councils so that both councils' benefit.   To provide relief to farmers and forestry traders. Currently, only a single council benefits with both city service levy and produce cess. The measures will ensure communities benefit from activities taking place in such areas.
Export Levy Act CAP, 196    
Introduction of export levy of 30% or USD 150 per metric tonne (whichever is higher) on copper waste and scrap metals. To protect local players and raw material It is important to note that hitherto, only raw skins, hides, and raw cashew nut were subjected to export levy.
National Payment System Act, CAP 437    
Reduction of mobile money transaction levy on sending and withdrawing monies from a maximum of 7,000 shillings to 4,000 on each transaction   A good move by the government to reduce burden to the taxpayers and further promote electronic transactions.
Insurance Act, CAP 394    
The scope of mandatory insurance has been added to include public markets, commercial buildings, imported goods, marine vessels, ferries, and pontoons.   To enhance the insurance market in Tanzania Noteworthy that NIC and ZIC have been snatched of its primary market hence a need for them to compete like other insurance companies.
Implementation of blueprint for regulatory reforms    
Government to take bold measures to implement the blueprint by amending various laws including (i) introduction of a fee of between TZS 1,000 to 3,000 on TV decoder subscriptions (ii) amendment of various fees in Fisheries and Livestock sector, Atomic and Energy Commission, Fire and Rescue Forces, Gaming Board (iii) reduction of hotel levy from 10 to 5 percent (iv) OSHA to issue a licence within 7 days once the applicant meets the criteria, etc. To improve the business environment Reducing unnecessary taxes and levies also improving the business environment for investors to flourish is always a recommended measure.

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Ark Limited (Zanzibar) Fumba Town P O Box 4840 Zanzibar – Tanzania

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