Tanzania’s Finance Bill, 2016 & Finance Act, 2016

Tanzania’s Finance Bill, 2016 is released to public on 13 June 2016.

The following are summary of the proposals as per the first draft (as compared to and in addition to the Budget Speech):

UPDATE:

23 June 2016 : The Tanzanian Finance Act, 2016 has been passed by parliament. The relevant changes are highlighted in red bold italics below.

Value Added Tax (VAT) Act, 2014

• Financial services except health, life & aviation insurance, are now Taxable. Interest on Loan was explicitly mentioned by the minister as an exception but the Bill doesn’t mention it.
• Security will not be required on application for VAT deferral on importation of capital goods.
• Locally manufactured goods in Mainland Tanzania to be zero rated if supplied to a Zanzibar VAT registered person. And vice versa.
• VAT return filing within 20 days after end of the relevant tax period.
• VAT applicable on tourist guiding, ground transport, water and game safaris, animal and bird-watching as well as park fees.

Tax Administration Act, 2015

• Objection to an assessment to require a deposit of 100% of the disputed amount. The requirement of paying 100% has been  scrapped in favor of payment of amount not in dispute or one third (whichever is greater). Failure to pay the amount within 30 days of service of the tax assessment/decision, the assessed tax decision shall be confirmed as final tax assessment in terms of the Tax Revenue Appeals Act.

Skills & Development Levy (SDL)

• Skills & Development Levy reduced to 4.5%

Income Tax Act, 2004

• Changes in several definitions
• 9% Income Tax for income of between TZS 170,000 to ZS 360,000 per month.
• Withholding tax to not be deducted on dividends paid to non-resident shareholders.
• 35% 30% income tax rate applicable for petroleum operations
• Each mining and petroleum operation to be accounted for separately from any other business activity
• Chargeable Income (for mining and petroleum operations) and resulting Income Tax liability to be calculate independently for each year of income.
• Withholding Tax of 15% on all services rendered by non-residents  Services rendered by non-residents outside Tanzania are not to be subjected to withholding tax.

The Finance Bill, 2016 (third reading) is now available to read and download.