Understanding Excise Duty in Zanzibar: A Detailed Guide under the Excise Duty Act No. 8 of 2017
Excise Duty is a duty charged on specific goods and services manufactured locally on varying rates. It is charged in both specific and ad valorem rates. In Zanzibar, excise duty is governed by the Excise Duty Act No. 8 of 2017, which provides a legal framework for the imposition, assessment, collection, and management of excise duties. This tax is aimed at generating revenue and regulating the consumption of certain goods deemed either luxurious or harmful to society.
Legal Framework: Excise Duty Act No. 8 of 2017
The Excise Duty Act No. 8 of 2017 was enacted by the House of Representatives of Zanzibar to introduce a standalone law governing excise taxation. Prior to this Act, excise matters were generally aligned with the laws of Mainland Tanzania, but Zanzibar has since moved to establish its own tax system for better autonomy and relevance.
It differs from VAT in that it targets specific goods rather than applying broadly to all taxable sales. Excise duty can be either:
- Specific – a fixed amount per unit (e.g., TZS 300 per litre)
- Ad valorem – a percentage of the value of the good or service (e.g., 10%)
Goods and Services Subject to Excise Duty in Zanzibar
Items charged under specific rates include:
Wine, spirits, beer, soft drinks, mineral water, fruit juices, Recorded DVD, VCD, CD and audio tapes, cigarettes, tobacco, petroleum products and Natural gas.
Items charged under ad-valorem rates include:
Money transfer services, electronic communication services, pay to view television services, imported furniture, motor vehicles, plastic bags, specified aircrafts, firearms, specified cases, cosmetics and medicaments.
Ad-valorem rates are: 0%, 5%, 10%, 17%, 15%, 20%, 25% ,30% and 50%.
| NO | ITEMS | DUTIES |
| 1 | Electronic communication services | 17% of dutiable value |
| 2 | Pay to view Television services | 5% of dutiable value |
| 3 | Services provided by financial institutions | 10% on charges or fees payable |
| 4 | Money transfer and payment services provided by
telecommunication service provider |
10% on charges or fees payable |
| 5 | Excisable Imported Goods | As Specified in the First
Schedule of the Act |
| 6 | Excisable Imported Services | As Specified in the Second
Schedule of the Act |
| 7 | Other imported services | 12% of dutiable value |
Time of supply
Time of supply of excisable services is the earlier of the time on which;
- Services are rendered
- The tax invoice is issued; or
- Payment is received
For imported goods, duty is due when the goods are
- at the port;
- From a warehouse
- Removed from an export processing zone; or
- In any other case at the time the goods are brought in Zanzibar
Persons Liable to Excise Duty
Excise duty in Zanzibar is imposed on;
- Imported goods – Importer
- Electronic communication services
- Financial Institutions and telecommunication companies – Charges or fees on money transfer and transfer service
- Payment for viewing satellite television by the service provider
- Imported service (paid by recipient or importer)
Due dates
The due date for payment of excise duty shall be;
- Local excisable services – 20th day of the month after the month of the return
- Imported excisable services – time of importation
Exemptions and Reliefs
Not all products or entities are required to pay excise duty. The Act allows for certain exemptions and reliefs, such as: Goods for diplomatic or consular use, Products used in humanitarian aid and Inputs for manufacturing exempt goods.
Liability to pay excise duty.
Excise duty shall become due and payable in respect of:
(a) any scheduled article imported, by the importer thereof at the time immediately before the article ceases to be subject to customs control or at such other time as may be directed by the Minister in the Gazette,
(b) any scheduled article manufactured in the United Republic of Tanzania, by the manufacturer:
(i) upon sale of the article by him, or
(ii) upon the article ceasing to be subject to customs control, or
(iii) upon removal of the article from the premises where it manufactured, whichever first occurs.
(c) any scheduled article manufactured or imported by any person free of duty and which is subsequently sold to any other person, by the purchaser at the time of the sale of the article by him;
(d) any electronic communication service supplied by electronic communication service provider at the time when such mobile, fixed or wireless phone is in use or when payment is received for the service whichever time shall be the earliest.
(e) any pay-to-view satellite television service provider when the service is supplied.
Practical Implications for Businesses
If you’re a manufacturer, importer, or distributor in Zanzibar, you should: Determine whether your goods are excisable, Register and obtain the necessary licenses, calculate excise correctly (specific or ad valorem) and File returns and pay duties on time.
Example Scenario:
A beverage company manufactures 10,000 litres of soda in June. At a rate of TZS 200/litre, they owe TZS 2,000,000 as excise duty and must pay this amount by 20th July.
Conclusion
Excise duty in Zanzibar, governed by the Excise Duty Act No. 8 of 2017, is an important tax both for government revenue and public health regulation. It applies to specific goods such as alcohol, tobacco, fuel, and luxury vehicles. For businesses, understanding the law, registering appropriately, and complying with tax filing and payment requirements is critical to avoiding penalties and ensuring smooth operations. Organizations seeking support in tax compliance can reach us, Auditax International a trusted firm with expertise in Zanzibar’s tax laws, to ensure full compliance and strategic guidance.
For more information and inquiries reach us out through info@auditaxinternational.co.tz