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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.
© 2020 C
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.

© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

MAURITIUS 2018/19 BUDGET SPEECH

The Prime Minister and Minister of Finance and Economic Development, Hon. Pravind K Jugnauth presented the National Budget on 14th June 2018.

The Budget identified seven key action areas which include: innovation and accelerating the adoption of digitisation, creating a strategic and modern infrastructure, focusing on sustainable development and creating an inclusive and caring society.

Key Highlights of the Budget Speech:

  • The GDP growth rate for the year 2017/18, would be 3.2 %
  • GDP is expected to grow by 4.1 % in fiscal year 2018/19 compared to 3.9 % in 2017/18
  • The inflation rate, estimated at 4.3 % for fiscal year 2017/18, is forecasted to fall to around 3.5 % in 2018/19
  • Revision to the taxation of Category 1 Global Business Licence (GBC 1) companies. The budget proposes a new harmonised fiscal regime for domestic and Global Business companies. The Deemed Foreign Tax Credit regime currently available to companies holding a GBC 1 Licence will be abolished from 31 December 2018. Consequently, GBC 1 companies will cease to benefit from an automatic effective tax rate of 3% on their foreign sourced income.
  • On the productivity side, a Work@Home scheme with tax incentives for employers is being introduced. increased by MUR 5,000, effective as from 1st July 2018.
  • A double deduction for tax will be granted on the wage and salary costs of employees operating under the Scheme for the first two years of operation.
  • Employers under the Scheme will be granted an annual tax credit of 5% for the first three years in respect of the investment made in the required IT system.

Income Tax Changes:

  • Income exemption threshold of all employees are increased by MUR 5,000, effective as from 1st July 2018
  • An individual having an annual net income of up to Rs 650,000, will be taxed at the rate of 10% instead of 15%.
  • The exemption threshold on the lump sum received as severance allowance, pension or retiring allowance will be raised from Rs 2 million to Rs 2.5 million
  • The Insurance Industry Compensation Fund will be exempted from income tax
  • A retired person will now be eligible to the enhanced income exemption threshold granted to retirees even if he derives emoluments provided that such income does not exceed Rs 50,000 in an income year
  • The deduction in respect of a dependent child pursuing tertiary education abroad has been increased from MUR135,000 to MUR200,000. Similarly, if the dependent is pursuing tertiary education locally, the relief has been raised from MUR135,000 to MUR 175,000

TANZANIA 2018/19 BUDGET SPEECH

Tanzania’s Minister for Finance and Planning, Hon. Dr. Philip I. Mpango has presented to the National assembly the Estimates of Government Revenue and Expenditure (the Budget) for 2018/19.

The budget aims to expand the tax base, formalize the informal sector and foster a conducive investment environment through simplification of the tax collection process.

Key Highlights of the Budget Speech:

  • Performance of the economy in the past five years (2012-2016) remained buoyant with real GDP growing at an annual average rate of 6.7%.
  • The Tanzanian economy grew by 7%, marginally missing the set target of 7.2% mainly on account of underperformance in the agriculture sector, which accounts for 28.9% of the GDP.
  • To improve tax compliance, the Minister has proposed to amend the Act by giving 100% amnesty on interest and penalties for six months starting from 1 July 2018 through 31 December 2018.
  • The Minister has proposed to reduce the corporate income tax rate from 30% to 20% for new investors in the pharmaceutical and leather industries for five years from 2018/19 to 2022/23.
  • In order to increase and strengthen domestic resources mobilization, revenue policies for the year 2018/19 will focus on widening the tax base, strengthen management of existing sources especially by intensifying the use of electronic collection systems and other administrative measures.
  • In widening the tax base, there are two main measures that the Government will undertake, namely formalization of the informal sector and improve investment environment in order to foster new sources of revenue from such investments.
  • Introduction of a “Treasury Single Account” which will be used for collection and payment of government funds.
  • Occupational Safety and Health Administration (OSHA) fees and levies – The following will be abolished in order to improve general business environment:
    Feesthe and levies imposed on application for working places
    Fines related to fire and rescue equipment
    OSHA compliance licence of Tshs 500,000
    OSHA consultancy fees of Tshs 450,000
  • No changes to the taxation of Individual Income or Employment Income.

 

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

© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

In as much as we are cognisant of the changes in South African labour law and feel passionate about the impact regulation has on business, we are just as acutely aware of changes to HR and labour law practices beyond South Africa’s borders… so, we want employers to be aware that Tanzania’s government had signed into law the Public Service Social Security Act, 2018, hereinafter referred to as the PSSS Act, which joins all pension funds into two major entities.

The immediate implication is that the entire labour force in both the public and private sectors will be served by the Public Service Social Security Fund (PSSSF)and the National Social Security Fund (NSSF).

What does this mean to business owners in Tanzania? Currently there are five social security funds in the country: the National Social Security Fund (NSSF), PPF Pension Fund, Public Service Pension Fund (PSPF), Local Authorities Pension Fund (LAPF) and Government Employees Provident Fund (GEPF).

Because of the new PSSS Act, the Public Service Retirement Benefit Act Cap 371, the LAPF Pensions Fund Act Cap 407, the GEPF Retirement Benefits Fund Act Cap 51 and the PPF Pensions Fund Act Cap 372 will be repealed.

It is important for employers to know that a member who changes employment from the public sector to employment in the private sector’s membership will be transferred to the National Social Security Fund, and all employees in the public sector who are members of the National Social Security Fund will be transferred to the PSSS Fund.

The new Act has also introduced two new benefits which were not granted earlier by the Pension Funds. These are Survivor Benefits and Unemployment benefits.

Survivors benefits would be paid to the Dependents of the deceased (widow, children or parents of the deceased).

The Act also specified retirement age as 60 years for compulsory retirement and 55 years for voluntary retirement.

Tanzania is gaining impetus as a progressive market that is slowly but surely working towards becoming a knowledge-based economy.

Skills and labour are at the heart of this growth trajectory.

We will continue to keep a close eye on developments in this exciting market.

GHANA 2018 TAX CHANGES

The Income Tax proposals presented by the Minister of Finance in the 2017/2018 Budget Statement of Ghana, has been assented by the President.

The Income Tax (Amendment) (No. 2) Act, 2017 pegs the tax-free income of a resident individual at the new national minimum wage of GHc9.68 per day which came into effect 1 January 2018.

Annual Personal Income Tax Brackets:

MOZAMBIQUE NEW SOCIAL SECURITY REGULATIONS

The new Regulation on Compulsory Social Security, Decree No. 51/2017, of 09 October has recently been published and enters into force 30 days after publication, which is 8 January 2018.

Highlights of the new regulation:

  • Employers registered with the INSS has an obligation to notify the INSS about changes in taxpayer / beneficiary data.
  • Foreign nationals working in Mozambique must provide documentary evidence that they are enrolled in a social security system in another country in order to avoid being obliged to contribute to Mozambique’s National Social Security Institute (INSS).
  • Monthly payments of contributions to the INSS can be made from the 20th of the respective month up to the 10th of the following month.
  • Interest arising from late payment of contributions increases from 1% to 2% for each month of delay.
  • An individual is entitled to the full old age pension benefits when they have completed 420 months of contributions, irrespective of their age. The previous legislation required 300 months.
  • An individual is entitled to partial old age pension benefits when they reach the retirement age of 55 for women and 60 for men and have contributed for at least 240 months. Previous legislation required 120 months.
  • The base for the calculation of the social security contributions include, but is not limited to, base salary, income replacement compensation, seniority and management bonuses, other bonuses, productivity and attendance rewards paid on a regular basis, overtime remuneration, subsidies, commissions and other benefits of similar nature paid on a regular basis.

NIGERIA 2018 BUDGET SPEECH HIGHLIGHTS

  • Nigeria has moved up 24 places from 169 to 145 on the 2018 World Bank’s ease of doing business ranking.
  • The 2018 budget deficit of about NGN2.005 trillion will be financed mainly through new borrowing of NGN1.699 trillion while the balance of NGN 306 billion is expected to come from the privatisation of non-oil assets.
  • Real GDP growth rate for the 2nd quarter of 2017 was 0.55%. The IMF projects a global growth of 3.7% for 2018.
  • There are no specific proposals to change, repeal or impose new taxes in 2018.

TUNISIA 2018 BUDGET PROPOSALS

The Tunisian Parliament has approved the budget for the 2018 fiscal year in December 2017.

It forecasts the budget deficit to fall to 4.9% of gross domestic product in 2018, from about 6% expected in 2017. Tunisia aims to raise GDP growth to about 3% from 2.3% in 2017.

The parliament approved a rise of 1 percentage point in VAT and imposed a new 1% social security tax on employees and companies.

Note: This contribution will be used to finance the social security funds.

The draft Finance Law 2018 was published by the Ministry of Finance and has been validated by a restricted ministerial council. The Finance Law provides for the revision of the Schedule of Income Tax for Individuals (IRPP) by a 100 basis point increase in the tax rate on each income bracket.

The new tax scale for 2018 is included in the draft budget law and will come into effect from 1 January 2018 upon approval and publishing of such approval.

ZIMBABWE 2018 BUDGET HIGHLIGHTS

Zimbabwe’s Minister of Finance & Economic Development, Hon. P. A. Chinamasa (M.P.), presented his 2018 budget statement to the Parliament on 7 December 2017.

The key proposals contained in the draft Finance Bill and highlights of the budget are as follows:

  • The Budget deficit for 2018, given total revenues available for Appropriation by Parliament of US$5.071 billion, and total expenditure and net lending of US$5.743 billion, translate to a fiscal deficit of US$672 million, representing 3.5% of GDP.
  • The 2018 Budget also contains administrative measures to improve administration of tax exemption for development partners funded projects.
  • A second tax amnesty has been proposed, expiring on 30 June 2018.
  • Several sections in the Income Tax Act which previously resulted in penalties and interest, are proposed to be repealed.
  • No income tax changes were proposed.

 

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

© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

TANZANIA 2017/18 BUDGET SPEECH

The Minister of Finance and Planning, Hon. Dr. Philip I. Mpango, presented the 2017/18 Budget Speech to Parliament on 8 June 2017.

Key Highlights of the Budget Speech:

  • No changes to taxation of Individual Income or Employment Income.
  • The Tax Tables remain the same.
  • Tanzanian Shilling remains stable in terms of the Exchange Rate and currently ranges between Tshs2,230/ US$ and Tshs2,260/ US$ in the 2017.
  • The Bank of Tanzania proposes to move to a fully-fledged interest rate based framework during the course of 2017.
  • Savings Deposit Interest Rate increased to 3.17% as at March 2017 and overall lending rate increased to 17.36% as at March 2017.
  • Tanzanian Government is currently finalizing a Bill to ensure that membership to the Community Health Fund (iCHF) is mandatory for all Tanzanians. This will enable children under the age of 18 to be enrolled on the contributing parties plan, regardless of their relationship.
  • GDP growth is expected to be vigorous averaging to 6.2% between 2017 and 2026.

 

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

© 2017 CRS Technologies (Pty)Ltd. All Rights Reserved.

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