1.1 Alternative Minimum Tax Exemption to tea processing companies

Change:

Section 4(8) of the Income Tax Act, cap. 332 has been amended in order to exempt tea processing companies which persistently make losses from paying Alternative Minimum Tax for three years from 1^st July, 2024 to 30^th June,2027.

Implication:

The measure is intended to relieve the tea industry which is currently facing losses due to falling of market prices.  This is also expected to resolve existing disputes with TRA.

1.2 Excise Duty introduced on Un-denatured Ethyl Alcohol of an alcoholic

Change:

Un-denatured Ethyl Alcohol of an alcoholic strength by volume of 80% vol or higher (HS Code 2207.10.00)

• Local: Charge at TZS 5,000/L
• Imported: Charge at TZS 7,000/L
• Except: Remission of duty for Un-denatured Ethyl Alcohol used in production of industrial energy and medical/laboratory . Offset of duty on importation with duty on finished goods for use as raw material.

Implications/intentions:

• Revenue generation
• differential rate is recommended for the purpose of protecting domestic industries

1.3 Establishment of Industrial Development Levy

Change:

Section 18A has been inserted in the Import Control Act, CAP 276 to introduce Industrial Development Levy on customs value of imported goods on selected imported goods as follows: 10 percent on wire rods with HS Code 7213.91.90; 10 percent on beer under heading 22.03; 5 percent on non-alcoholic beer with HS Code 2202.91.00; 5 percent on energy drinks with HS Code 2202.99.00; and 10 percent on organic surface-active agents – detergents with HS Code 3402.50.00; and 10 percent on liquid (other organic surface active agents) with HS Code 3402.90.00. Cement Clinkers HS Code 2523.10.00 and portland cement HS Code 2523.29.00. Not apply to goods originating from EAC.

Implication:

The measure is intended to support local manufacturing, spur investments and increase exports

1.4 A requirement to have Electronic Fiscal Receipts (EFDs) receipts to support Expenditure Deduction

Change:

Section 11 of the Income Tax Act, Cap 332 has been amended by adding a requirement to use electronic fiscal receipts to authenticate purchases made in a particular year of income. The measure will exclude sellers of goods or suppliers of services who are foreign citizens with no permanent establishment in Tanzania or any person who is not required to issue electronic receipts as per section 36(2) of the Tax Administration Act.

The government objective is to emphasize the issuing of electronic receipts and protect government revenue.

Implication:

Financial Institutions will need to ensure purchases are supported by EFDs and a robust record keeping system is in place. However, disputes could arise with the tax authority when only electronic fiscal receipts are recognised. These could arise from expenses recognised through accrual accounting, those whose suppliers cannot issue receipts, quality of receipts etc. Taxpayers can apply for private or class rulings for TRA to provide clarity on the challenges. TRA can also consider issuance of a practice note to provide more guidance to taxpayers.

1.5 Illegal to transact in other currencies

Change:

Section 26 of the Bank of Tanzania Act has been amended to make transactions using any other currencies other than the legal tender issued by the Bank, illegal except as prescribed by the Minister in the regulations.

Implication:

This implies that all transactions within Tanzania must be done in Tanzania shillings. The regulations will provide more guidance.

1.6 Excise Duty Relief to locally produced bottled water (HS Code 2201.10.00 & 2201.90.00)

Change:

Reduced rate from TZS 63.80/L to TZS 58 /L

Implication:

Support the growth of local small scale factories producing water; provide relief to consumers and promote the use of clean and safe water.