JUNE 2020 – TANZANIA
BUDGET SPEECH 2020/2021 & TAX CHANGES
It is important that employers note the following:
Tanzania Budget Speech Highlights & Tax Changes
The 2020/2021 Budget Statement was delivered by the Minister of Finance and Economic Planning, Hon. Dr. Philip Mpango, on 11 June 2020.
- Real GDP growth rate for 2020 will decline from the initial projection of 6.9% to 5.5%, mostly due to the COVID-19 pandemic.
- Domestic revenue increased by 8.2% to 6.8 trillion shillings for the period January to April 2020, compared to 6.3 trillion shillings during the same period in 2019.
- TZS 34.88 trillion was allocated in the budget to development expenditure.
- Total national debt reached 55.43 trillion shillings at end April.
- Inflation remains stable at a single digit between 3.0 and 5.0% in 2020/21.
- Proposed amendments to the VAT Act to exempt agricultural crop insurance and allow exporters of raw products to claim input VAT on their purchases.
- Increase of the minimum threshold of primary cooperatives societies liable to income tax from TSZ 50,000,000 to TSZ 100,000,000 per annum.
- 100% allowable deduction for contributions made to the AIDS Trust Fund, as well as contributions made to the Government for fighting against the COVID-19 pandemic until the Government announces the end of the pandemic.
- Amendments to the Income Tax Act to increase the minimum threshold of employment income not liable to tax from TSZ 170,000 per month to TSZ 270,000 per month and adjustment of the income brackets accordingly.
The new tax rates, effective 1 July 2020:
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