INTRODUCTION
The Tanzania Finance Act, 2024 (Act No. 6 of 2024) has amended various tax and non-tax laws with a view of bringing reforms through the imposition and alteration of certain taxes, duties, levies and fees to enhance the collection, management of public revenues and the business environment. The amended laws are, the Banking and Financial Institutions Act, Cap. 342, The Bank of Tanzania Act Cap. 197, the Budget Act Cap. 439, the Cashewnut Industry Act, Cap. 203, the Excise (Management and Tariff) Act, Cap. 147, the Export Tax Act Cap. 196, the Gaming Act Cap. 41, the Imports Control Act, Cap. 276, the Income Tax Act Cap. 332, the Land Act Cap. 113, the Local Government Authorities (Rating) Act Cap. 289, the Local Government Finance Act Cap. 290, the Mining Act Cap. 123, the Motor Vehicle (Tax on Registration and Transfer) Act, Cap. 124, The National Industries Licensing and Registration Act, Cap. 46, The National Parks Act, Cap. 282, the Ngorongoro Conservation Area Act, Cap. 284, the Plant Health Act, Cap. 133, the Ports Act, Cap. 166, the Railways Act, Cap. 170, the Sugar Industry Act, Cap. 251, the Universal Health Insurance Act, Cap. 161, the Microfinance Act, Cap. 407, the Road and Fuel Tolls Act Cap. 220, the Tax Administration Act Cap. 438, the Tax Revenue Appeals Act Cap. 408, the Value Added Tax Act Cap. 148, the Vocational Education and Training Act Cap. 82, the Wildlife Conservation Act, Cap. 283.
The amendments set out in the Finance Act, 2024, are effective from 01st July 2024 unless specifically stated otherwise. This update reviews some of the amended laws to highlight the changes brought about by these amendments with the view of enlightening important regulatory and compliance requirements as well as providing necessary general legal information to our esteemed clients and the general public.
THE BANKING AND FINANCIAL INSTITUTIONS ACT, CAP. 342
- Section 46 (3) is amended to mandate the Central of Bank of Tanzania to dispose of all abandoned properties surrendered to it by a bank or financial institution, whereby 90% of the abandoned properties to be submitted to the Consolidated Fund; and 10% to be deposited in the General Reserve Fund maintained by the Central Bank.
- Equally Section 47(2) is amended to provide the timeline for determining abandoned property to be 10 years instead of 15 years as previously.
THE BANK OF TANZANIA ACT, CAP. 197
Section 26 of the Act is amended by creating an office for any person who transacts using any other currency other than the legal tender issued by the Central Bank (Tanzania Shillings). Hence, from 01st July 2024 onwards transacting in Tanzania using any currency other than the Tanzania Shillings is an offence. However, the amendment requires the Minister for Finance to issue regulations to clarify on this matter.
THE BUDGET ACT, CAP. 439
The Act is amended to mandate the funds from Contingency Fund to be utilized to finance emergency repairs of deteriorating road infrastructure. Also, section 35 is amended to provide for new sources of fund such as 50% of the Railway Development Levy, revenue generated from windfall fuel toll, and funds appropriated from the Consolidated Fund in any financial year.
THE CASHEW NUT INDUSTRY ACT, CAP. 203
Section 17A is amended to require all the revenue from the Cashew Nut Export Levy to be remitted to the Cashew Nut Board for 5 years effective from 01st July 2024. The purpose is to stimulate the development of cashew nut sector, facilitating the availability of funds for subsidy, research and contribution to the economic growth.
THE EXCISE (MANAGEMENT AND TARIFF) ACT, CAP. 147
Section 124 imposes an Excise Duty of 10% on the value of stake on betting, gaming and National lottery to ensure the collection of revenue that will be remitted to the Universal Health Insurance Fund to cover the health insurance of indigents and special groups, particularly pregnant women and children below the age of 5 years.
- The amendment also introduces excise duty at the rate of 10% on the charges for commercial advertisement on betting, gaming, or lotteries for the purpose of raising revenue to compensate for the externalities caused by excessive gaming.
- Furthermore, a new section 146A is introduced to grant remission on undenatured ethyl alcohol of HS Code 2207 used in the production of industrial energy where the person produces the undenatured ethyl alcohol or used for medical or laboratory purposes. The amendment intends to enhance production by local industries and the availability of goods produced.
- The amendment also introduces excise duty at the rate of 10% on the charges for commercial advertisement on betting, gaming, or lotteries for the purpose of raising revenue to compensate for the externalities caused by excessive gaming.
- Furthermore, a new section 146A is introduced to grant remission on undenatured ethyl alcohol of HS Code 2207 used in the production of industrial energy where the person produces the undenatured ethyl alcohol or used for medical or laboratory purposes. The amendment intends to enhance production by local industries and the availability of goods produced.
- More importantly is the Reduction of Excise Duty on Locally Produced Bottled Water from TZS 63.80 to TZS 56 per litre to reduce production costs, support the growth of small-scale factories and promote the use of clean and safe water.
THE EXPORT TAX ACT, CAP. 196
The Act is amended to Impose 10% Levy in Respect of Crude Sunflower Oil, Sunflower Cake and Sunflower Seeds exported outside Tanzania. The aim is to ensure the availability of affordable sunflower oil within the country and to protect local sunflower oil producers.
THE GAMING ACT, CAP. 41
Section 26 is amended to introduce a licensing requirement for persons who wish to engage in selling tokens used in gaming machines and to impose a requirement to obtain a dealer’s license. More important, is the amendment of Section 73 to restrict the use of coins in gaming activities in order to ensure the longevity of coins.
THE IMPORTS CONTROL ACT, (CAP. 276)
A new section 18A is added as well as the Schedule to introduce a new levy known as the “Industrial Development Levy” to be charged on the customs value of the goods imported in Tanzania for home use. The Industrial Development Levy would not apply to goods originating from East African Community Partner States that meet the East African Community Rules of Origin. Items subjected to Industrial Development Levy includes, Wire Rod, Wine, Energy Drink, Non-Alcoholic Beer, Cement Clinker, and Portland Cement, among others.
THE INCOME TAX ACT, CAP. 332
The Act has been amended to introduce and define Digital Content and Digital Content Creator
- Digital Content is defined to include any electronic content that may be downloaded, streamed or accessed in any other manner, including e-books, magazines, news, journals, periodical, database, music, movie, software, mobile phone applications, images, text, sound effects, website, webinar, webcast, which is not simultaneously broadcasted over any conventional radio or television network in Tanzania.
- Likewise Digital Content Creator has also been defined as any person who produces digital content in formats that can be shared using a digital medium or platform over the internet”.
Therefore, payments to creators of digital contents will be subject to 5% withholding tax (Section 83B 83C and 83D).
Exemption from Alternative Minimum Tax (AMT) by tea processing companies that make losses for a period of 3 consecutive years are now exempted from a requirement to pay alternative minimum tax for a period of 3 years (from 01st July 2024 to 30th June 2027). In Tanzania, a company is required to pay 0.5% to the turnover if the company has perpetual unrelieved tax losses for 3 consecutive years.
Fiscal Receipts to Support Deduction of Expenses
Section 11 is amended to require persons claiming deductions for income tax purposes to support claims on expenditure of goods or services with fiscal receipts except where the supplier of the goods or service is a non-resident person with no physical presence in Tanzania or has been excluded from a requirement to issue fiscal receipt in accordance with section 36 of the Tax Administration Act, Cap. 438.
Limitation of Utilization of Unrelieved Tax Losses
Section is amended 19 to restrict utilization of tax losses carried forward after a period of 4 years of consecutive losses such that only 60% (previously, 70%) of the taxable income of an entity in the fifth year of income can be set-off against losses brought forward and the balance of unutilised tax losses can be carried forward to the succeeding year. This means, loss deferral is now restricted and reduced to offset only 60% of current year profits.
Allotment of Shares in Resident Entity Excluded
Section 56 is amended to exclude the allotment of shares in a resident entity. The purpose of this amendment is to align with the policy intention of taxing gains resulting in a change in underlying ownership of the entity due to indirect disposal of shares and not as a result of an increase in share capital.
Charitable Status for Organization Dealing in the Advancement of Health and Environmental Protection
Section 64(8)(a) is amended to broaden the definition of charitable organizations. The amendment now includes public entities that provide Health Services and engage in Environmental Protection as recognized charitable organizations. Prior to this amendment, only resident entities involved in the reliefs of poverty or distress, the advancement of education, or the provision of public health, education, water or road construction or maintenance were eligible to apply for Charitable Status. With the current amendments, the scope for application for charitable organizations status has significantly widened. As required by law, to obtain a Charitable Status. An organizations must formaly apply and issued with the Ruling to be recognized as charitable organizations.
Payment of Withholding Tax for the Use of Construction Equipment and Machinery
Section 82 (2) has been amended to impose payment 10% Withholding Tax for the rent of construction equipment and machinery by a resident lessee to a resident lessor for the lease of construction equipment or machinery.
Exemption on interest payments on Concessionary Loans
Section 82 is also amended to exempt withholding Tax to a resident financial institution from the obligation to withhold tax when making payment of interest to a non-resident financial institution or funds as a result of a loan agreement entered with a non-resident financial institution or fund that has an agreement with the Government of Tanzania to provide concessionary loans to resident financial institutions that on-lend the funds to resident borrowers.
Final withholding payments: Income tax withheld on payments made by a resident person to an individual who is a Primary Mining Licensee or an Artisanal Miner, and on payments made to a local government authority, local community, or any resident individual in respect of verified Carbon Emission Reductions, is now final.
Withholding Tax on Digital Assets Payments made by residents or non-residents to residents for the exchange or transfer of digital assets are now subject to withholding tax at the rate of 3%.
Exclusion of non-resident Employees from Filing Returns: Section 97 was amended to relieve Non-resident employees to file an individual tax return if they have only Tanzania-sourced employment income from which their employer has already withheld income tax.
Adjustment of Tax Bands and Rates Applicable in Transportation of Passengers
Further, the First Schedule to the Income Tax Act, Cap. 332 has been amended to adjust tax bands and rates applicable to an individual engaged in the transportation of passengers. The amendment appears as shown in the table below;
| Class A: Passenger Service Vehicles | ||
| SN | Number of Passengers | Tax Payable |
| 1. | Up to 15 | 250,000 |
| 2. | 16 to 30 | 650,000 |
| 3. | 31 to 45 | 1,100,000 |
| 4. | 46 to 65 | 1,600,000 |
| 5. | Above 65 | 2,200,000 |
THE MINING ACT, CAP. 123
The requirement to Set Aside Amount of Gold for Processing, Smelting, Refining and Trading within the Country
Section 59 amended providing for a requirement for mineral right holders and licensed mineral dealers (other than those having an agreement with the Government), to set aside amount of gold for processing, smelting, refining and trading within the country. However, the amount of gold to be set aside will be determined by the Minister for Minerals and should not be less than 20% of the gold.
Central Bank as Statutory Gold Dealer
A new section 72A has been added to recognize the Central Bank of Tanzania (Bank of Tanzania) as the Statutory Gold Dealer.
Reduction of Royalty Rates on the Supply of Gold to Domestic Refineries
Section 87 has been amended to reduce the royalty rate from 4% to 2% on the supply of gold to be sold to domestic refineries.
Reduction of Royalty Rates on Supply of Gold sold to Bank of Tanzania
- The section is further amended to reduce royalty rate from 6% to 4% on the supply of gold to be sold to the Bank of Tanzania.
- Equally supply of gold to the Bank of Tanzania is exempt from the 1% inspection fee.
THE MOTOR VEHICLE (TAX ON REGISTRATION AND TRANSFER) ACT, (CAP. 124)
The First Schedule to this Act is amended to include electrical motor vehicles in the scope of vehicles that are subjected to registration fees previously the law was silent on electrical motor vehicles but also the assessment was based on the Carrying Capacity (CC). With electric motor vehicle the assessment entails Kilowatt (KW).
THE NATIONAL INDUSTRIES (LICENSING AND REGISTRATION) ACT, CAP. 46
Performance Agreements for Registered and Licensed Industries.
A new section 17A was introduced to require owners of registered or licensed industries to enter into a performance agreement with the Minister for Finance aiming at ensuring exemptions and remissions granted are appropriately used. This condition applies to Industries registered or licensed under the Act or granted certificates of Incentives under the Tanzania Investment Act, Cap. 38 and granted with exemption or zero rate under the Value Added Tax Act, Cap. 148 or duty remission under the East African Community Customs Management Act, 2004, or a stay of application of East African Community Common External Tariff.
THE VOCATIONAL EDUCATION AND TRAINING ACT, CAP. 82
Section 19 amended to exempt payment to casual laborers employed in the execution of water projects managed by water authorities from Skills Development Levy (SDL).
THE RAILWAYS ACT, CAP. 170
The Railway Development Levy (RDL) charged on all imported goods has been increased from 1.5% to 2% of CIF value whereby 50% of the revenue collected from this source shall be used for railway infrastructure development and the remaining 50% used for road infrastructure maintenance.
THE SUGAR INDUSTRY ACT, CAP. 251
- The Sugar Board is required to establish average production costs of sugar per metric tonne at the beginning of every production season.
- Sugar manufacturers must declare and publish the names of their sugar distributors for each region in Tanzania at the beginning of every production season.
- The amendment also granted the National Food Reserve Agency (NFRA) an exclusive mandate to import, store and distribute sugar in Tanzania for domestic consumption to cover sugar gaps or to maintain buffer stock.
THE TAX ADMINISTRATION ACT, CAP. 438
Cargo consolidators must comply with customs and other laws governing the deconsolidation of cargoes to their owners at the time of importation of goods. Failure to comply is an offence that attracts, upon conviction, a fine equal to 30% of the customs value of the imported cargo.
Electronic Servicing of documents: Section 34 amended to allow the taxpayer to effect service of documents to the tax authorities or a person when duly sent by fax, email or any other electronic means as per laws governing electronic transactions.
Admission of Tax objections: An objection to a tax assessment or notice of a tax liability is deemed to be admitted by the tax authorities when the objector has paid a tax deposit equivalent to the greater of the tax not in dispute or one third of the assessed tax.
Capped fines for offences relating to fiscal devices and fiscal receipts: The fine for failure to acquire or use an Electronic fiscal device, or failure to issue a correct fiscal receipt is capped at 200 currency points (equivalent to TZS 4 million).
Adjustment of Currency Points: The Second Schedule was amended to increase currency point value from TZS 15,000 to TZS 20,000.
THE TAX REVENUE APPEALS ACT, CAP. 408
- Section 4 was amended to specify the qualifications of a person to be appointed as a Chairperson of the Tax Revenue Appeals Board to be at least 7 years and with sufficient knowledge of Tax.
- Furthermore, section 22 is amended to set 60 days as time limit for Mediation of tax disputes at the Tax Revenue Appeals Board or Tax Revenue Appeals Tribunal.
THE VALUE ADDED TAX ACT, CAP. 148
- A new Section 29(4) is added to require Notification that Businesses that are registered for VAT as intending traders but fail to commence production of taxable supplies must notify the Commissioner General within 90 days after the expiration of the period in which they had indicated they would commence production of taxable supplies. Failure to notify results in a deemed deregistration from VAT.
- Section 52 amended to include VAT on Online data services that are delivered or provided through an internet or telecommunications network by non-resident service providers are included in the definition of electronic services under place of supply rules.
Zero Rating of VAT
- Section 55A amended to zero rate A supply of locally manufactured fertilizer up to 30th June 2025.
- Section 55B amended to zero rate VAT on the supply of locally manufactured garments made from locally grown cotton up to 30th June 2025.
- Section 55C and 55D amended to zero rate VAT on the supply of gold to local refineries and the Bank of Tanzania.
Payment of VAT Refunds
Section 84 is amended to require VAT refunds to be paid within 30 days from the date of submission of the refund applications.
Abolished VAT Exemption
The Schedule to the Act is amended to remove VAT exemption on the following:
- Imports of spades, shovels, mattocks, and picks.
- Supply of precious metals, gemstones, and other precious stones at refineries.
VAT Exemptions
- Specified water sanitation and treatment chemicals, and water meters imported or supplied by a water supply and sanitation authority upon approval by the Minister for Water.
- Specified equipment and machinery for processing and storing bee products imported or supplied by beekeepers upon approval by the Minister for Natural Resources.
- A supply of double refined edible oil from locally grown seeds by a local manufacturer is to be extended and exempted up to 30th June 2025.
Imports exempted from VAT:
- All Goods, including material, supplies, equipment, machinery, and motor vehicles for official use of armed forces as certified by the Minister responsible for Defence
- Blended tea or fermented tea from locally grown tea leaves; and
- Single axle tractors.
Supplies exempt from VAT
- Aircraft and aircraft maintenance are supplied to a local operator of air transportation.
- Aircraft engines and aircraft parts supplied to a local manufacturer or assembler of aircraft or to a local operator of air transportation.
- A supply of video assistant referee (VAR) technology equipment and accessories upon approval by the Minister for Sports. Sewerage services are supplied by a water supply and sanitation authority.
