Executive Summary
The Tanzanian government, under the leadership of President Dr. Samia Suluhu Hassan, has presented the 2024/25 budget aimed at sustainable economic transformation and fiscal consolidation. The proposed changes focus on enhancing revenue collection, promoting local industries, and supporting strategic sectors such as agriculture, tourism, and energy. The budget also emphasizes improving the business environment, supporting social services, and addressing climate change impacts.
Key Changes Proposed in the Tanzanian 2024/25 Budget
1. Tax Reforms and Revenue Measures
- Value Added Tax (VAT)
- Zero-rated VAT on gold supplied to domestic refineries to promote local refining.
- Abolition of VAT exemption on the supply of precious metals.
- Zero-rate VAT on locally manufactured fertilizer, textile products, and double refined edible oil for one year.
- Income Tax
- Relief for tea processing companies from Alternative Minimum Tax for three years due to market price falls.
- Introduction of income tax on payments for agricultural produce, fishing, animal, and poultry keeping at a rate of 2%.
- Introduction of withholding taxes on digital content creation, digital asset transfers, and payments for industrial minerals at varying rates.
- Excise Duty
- Duty on Compressed Natural Gas (CNG) used in motor vehicles to fund road maintenance, set at 5%.
2. Customs and Tariff Adjustments
- Duty Remissions:
- Lithium-ion Electric Accumulators: Duty remission at a rate of 0% instead of 25% for one year on lithium-ion electric accumulators used in vehicle and motorcycle manufacturing.
- Unassembled Televisions: Duty remission at a rate of 0% instead of 10% for one year on unassembled televisions to promote local assembling schemes.
- Mobile Phone Inputs: Duty remission at a rate of 0% on various inputs used in the assembling or manufacturing of mobile phones to reduce costs and promote local investment.
- Protective Tariffs:
- Ceramic Tiles: Stay of application of the EAC CET rate of 35% and apply a duty rate of 35% or USD 3 per square meter, whichever is higher, for one year to protect local manufacturers.
- Flat-Rolled Products of Iron or Non-Alloy Steel: Stay of application of the EAC CET rate of 25% or USD 200/MT whichever is higher and apply a duty rate of 25% or USD 300/MT whichever is higher for one year.
3. Sectoral Support and Development
- Agriculture and Livestock
- Amendments to support livestock cooperatives and enhance infrastructure such as dips and ponds.
- Reduction in moving permit fees for fish and fish products from TZS 5,000 to TZS 3,000 to enhance the fisheries sector.
- Tourism
- Reduction in fees for tourist business licenses by 50% and changes to payment structures to attract investment and simplify operations.
- Energy
- Initiatives to support hydropower projects and renewable energy sources, including the Julius Nyerere Hydropower Project and Rusumo Hydropower Generation Project.
4. Social Services and Welfare
- Increased lump sum payments for retired pensioners from 33% to 40% to ensure the sustainability of social security schemes.
- Enhancements to the Public Service Social Security Fund to cover additional retirement benefits.
5. Governance and Administrative Efficiency
- Tax Administration Act
- Empowering the Tax Ombudsman to handle complaints related to tax decisions, procedural matters, service issues, and administrative matters.
- Increasing currency points from Shilling 15,000 to Shilling 20,000.
- Setting a maximum fine for failing to issue fiscal receipts at 1,000 currency points (equivalent to Shilling 20,000,000).
- Reinstating the mandate of collecting wharfage to the Tanzania Ports Authority to improve revenue collection.
Availability of Foreign Currencies
In 2023/24, Tanzania faced a shortage of foreign currencies due to factors such as COVID-19, global conflicts, climate change, and changes in the global financial architecture. To address this, the government increased national foreign currency reserves to USD 5.3 billion by March 2024, sufficient to import goods for 4.4 months. The trade deficit was reduced from USD 5.3 billion in 2022 to USD 2.7 billion by February 2024.
The government also directed that from 1st July 2024, all stakeholders should quote prices of goods and services in Tanzanian shillings, including government institutions that charge levies in foreign currencies.
Changes to External Tariffs
- Duty Remissions:
- Lithium-ion Electric Accumulators: 0% instead of 25% for one year.
- Unassembled Televisions: 0% instead of 10% for one year.
- Mobile Phone Inputs: 0% on various inputs used in assembling or manufacturing mobile phones.
- Protective Tariffs:
- Ceramic Tiles: Duty rate of 35% or USD 3 per square meter for one year.
- Flat-Rolled Products of Iron or Non-Alloy Steel: Duty rate of 25% or USD 300/MT for one year.
Conclusion
The 2024/25 budget demonstrates Tanzania’s dedication to economic growth through strategic investments, improved tax administration, and support for key sectors. These measures aim to create a robust economic environment, enhance social welfare, and ensure sustainable development amidst global economic challenges and climate change impacts.
For further details, refer to the full budget speech document provided by the Ministry of Finance.
DISCLAIMER
As always, anything on this site should not be relied upon in place of appropriate professional advice. Laws may change from time to time.
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