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Tanzania Budget 2016-2017 – Proposed changes

Its that time of the year again when Ministers of Finance in the East African Countries pose for a photo with the famous Budget briefcases before addressing their respective national assemblies to unveil the proposed national budget.

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The Tanzanian Minister of Finance and Planning, Hon. Dr. Philip Mpango, gave a speech to introduce to the National Assembly, the estimates of Government Revenue and Expenditure for the fiscal year 2016/17.

Below are some of the proposed changes:

  • Individual Tax/PAYE rate on the monthly income bracket of 170,000 to 360,000 reduced to 9% (from 11%) giving a maximum relief of TZS 3,800 to individuals and employees.
  • SDL to be reduced to 4.5% from the current 5%.
  • Import duty on Second-hand clothes and shoes (Mitumba) to be doubled to $0.4 per kg from the current $0.2 per kg
  • Petrol stations to have EFD machines connected to their pumps by 1 October 2016.
  • Among other products to face an increase in Import duty include Cement, Fishing nets, Oil and Petrol filters, Aluminum milk cans, Paper products and Sugar.
  • TRA to have powers to determine Rental Income (which is subject to Withholding Tax) based on the minimum market rental value of property
  • VAT to be imposed on Tousrism industry services such as guiding, game-drives, park fees, ground transport, bird-watching etc.
  • VAT to be imposed on goods produced in Mainland Tanzania and sold to Zanzibar and vice-versa. Therefore Mainland Tanzania will collect VAT on supplies from Zanzibar and Zanzibar to collect VAT on supplies from Mainland Tanzania.
  • VAT to be applicable on the fees charged in the financial service industry (banking) except for interest on loans.
  • Those entities granted exemptions (religious institutions, NGO’s, public servants, businesses) to be required to pay tax in advance on goods ordered. This will be refunded. The measure is to control exemptions better.
  • Excise duty increased by various degrees on beverages, cigarettes and other items such as lubricants and natural gas.
  • Imported furniture to now attract Excise duty of 20% from the current 15%.
  • Charges/Fees payable on money-transfers via Telecommunication providers to attract Excise duty of 10%
  • Motor vehicle registration to rise to TZS 250,000 from the current TZS 150,000
  • TRA to be able to make valuations of properties and collect Property tax instead of the local government authorities.
  • Exemptions to the armed forces (via the duty free shops) abolished . Instead allowances provided to the armed forces to be able to procure their supplies
  • MP’s to pay tax on the previously tax-free golden handshake (final gratuity payment).
  • Revenue from Tax collections expected to cross TZS 15 trillion.
Our interpretation of tax legislation may differ from that of others and should not be regarded as a basis for ascertaining tax liability or as an alternative for professional advice. As always, seek professional advice.
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