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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.

Economic Highlights:

  • 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.

Tax Measures:

  • 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:

Contact our legislation team at info@crs.co.za if you require any additional information.
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RS Technologies (Pty)Ltd. All Rights Reserved.

Tanzania Budget Speech for 2019/2020

The 2019/2020 Budget speech was delivered on 13 June 2019 by the Minister for Finance and Planning, Hon Dr Philip Mpango.

The budget focuses on the National Five Years Development Plan 2016/17-2020/21 to build an industrial economy and improve the citizens’ welfare.

Highlights:

  • Tanzania’s GDP in quarter 3 2018 grew by 6.8%, compared to 5% during the same period in 2017.
  • The economic activities that showed the fastest growth were health (13.2%), transportation and cargo storage (12.4%), water (10.7%), construction (7.4%), information and communication (7.3%), manufacturing (7.3%), and business and maintenance (7.3%).
  • The inflation rate is stable. Inflation fell from an average of 4% in January 2018 to reach 3.4% in June 2018 and continued to decline further to 3%.
  • Budget deficit is estimated at 2.3% of GDP in 2019/20 from the likely outturn of 2% of 2018/19.
  • Tax revenue is estimated at 13.1% of GDP in 2019/20 from the likely outturn 12.1% in 2018/19.
  • The Tanzanian government intends to increase and strengthen domestic resource mobilisation aiming at financing government operations, including infrastructure projects and social services.
  • To attain the estimated domestic revenue targets, the government has prepared specific administrative strategies that will be implemented in the medium term.

Proposed income tax measures

  • Amend the Income Tax Act to increase the minimum amount of turnover required for taxpayers to start filling the accounts to Tanzania Revenue Authority from twenty million shillings (20,000,000) to one hundred million shillings (100,000,000).
  • Amend the First Schedule of the Income Tax Act to introduce a presumptive tax regime to taxpayers with an annual turnover from four million shillings (4,000,000) and one hundred million shillings (100,000,000), who will not be obliged to submit financial accounts to the Tanzania Revenue Authority for determining income tax. The objective of this measure is to reduce the tax compliance burden on small businesses and align the tax rates with the minimum amount of turnover required for businesses to use the electronic fiscal device (EFD) machine, where the current amount is fourteen million shillings (14,000,000).
  • Amend Section 70(2) of the Tax Administration Act, CAP 438 to extend the period given for 100% tax amnesty on interest and penalties, for six months up to December 2019. The extension is granted to taxpayers who had already applied for amnesty. This measure follows the positive response from taxpayers after the tax amnesty was announced in July 2018.
  • No changes to personal income tax rates were proposed.

 

Contact our legislation team at info@crs.co.za if you require any additional information.

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