Tanzania

Finance Act 2024

Some of the significant changes brought in by the Finance Act 2024 include the following:

Tax administration 

• The deemed date of admission of an objection is now clarified to be the date the taxpayer has paid the tax deposit required to validate the objection.
• Document service to the commissioner or taxpayer to include those sent via emails, fax, or any other electronic means in accordance with written laws governing electronic transactions.
• Introduction of a new definition for the below term:
• 'Cargo consolidator’ to mean ‘a person licensed by a competent authority to operate cargo consolidation and deconsolidation business’. The cargo consolidator is required to comply with customs and other laws and procedures governing deconsolidation of cargo to its owners at the time of importation of goods in the country. Failure to comply leads to a fine equal to 30% of the customs value of imported cargo.

• ‘Currency point’ increased from 15,000 to 20,000 Tanzanian shillings (TZS).
• Penalty for the failure to use an electronic fiscal device (EFD) or issue a fiscal receipt has been capped to a fine of 200 currency points (currently TZS 4 million).

• Applications of/for (i) value-added tax (VAT) refund and (ii) remission of interest and penalties can now be done online through the Taxpayer Portal effective November 2023.

• The due date of filing income tax return for entities audited by the Controller and Auditor General (CAG) changed to nine months from the end of year of income (previously six months from the end of year of income).

Income tax 

• The definition of ‘asset’ to now include ’digital asset’.
• New definitions introduced for ’artisanal miner‘, ’digital content‘, and ’digital content creator’.
• Deductibility of expenditure for tax purposes to be supported by fiscal receipts (exemption for goods/services provided by non-residents with no permanent establishment [PE] and those not required to issue fiscal receipts).
• Limitation of the offset of tax losses to 60% (previously 70%) of the current year chargeable income where the entity has consecutive tax losses for previous four years.
• Change in control provisions (section 56 ITA 2004) will not apply where the change is a result of allotment of new membership interest in a resident entity. 

• The Finance Act 2023 had introduced a single instalment tax of 3% of the greater of the incomings or approved value of the asset (instead of 10% on the profits) to resident persons realising interest in land or building with no records of the cost. The Finance Act 2024 has restricted the applicability of this provision to resident individuals (i.e. it will not apply to resident entities).
• The scope of charitable organisations is extended to institutions dealing with the advancement of health services and environmental protection.
• Entities engaged in processing of tea are exempt from payment of alternative minimum tax (AMT) for a three-year period from 1 July 2024 to 30 June 2027.

• Introduction of withholding tax (WHT) at the rate of 3% on payment made to resident persons for transfer of digital assets.
• Introduction of WHT of 5% on payments made by residents and non-residents to resident digital content creators.
• Introduction of a final WHT tax of 2% on purchases of industrial minerals (except for salt) and metallic minerals from a primary mining licence holder or artisanal miner.
• The scope of WHT on rental payments is extended to payments made to a resident person for the use of construction equipment or machinery (applicable rate is 10%).
• WHT exemption on interest paid by resident financial institutions to non-resident financial institutions and funds having an agreement with the Government of Tanzania to provide lower interest loan rates to resident financial institutions.
• WHT on royalty payments to resident sports entities or the Tanzania Football Federation has been reduced to 5%.
• Payments made to a local government authority, local community, or a resident individual in respect of verified carbon emission reduction is a final withholding payment (as opposed to similar payments made to a resident entity).

Value-added tax (VAT)

• VAT scope expanded to cover ‘online data services’ provided by a non-resident supplier to an unregistered customer. ‘Online data services’ is defined as “any form of monetisation of user data, including the sale or licensing of, or access to, user data or information collected through user engagement with an online platform. This applies whether the data is sold or licensed directly or indirectly, aggregated or disaggregated, anonymised, or used in any other form”.
• New definitions for the terms ’gaming supply‘ (which is an exempt supply) and ’serviced apartment‘ (which is a taxable supply).
• Expansion of VAT deferral to capture capital goods under HS Code 8701.21.90.
• An introduction of a requirement to notify the Commissioner General within a period of 90 days after the end of the period in which a person registered as an ‘intending trader’ is expected to start making taxable supplies lapses and has not commenced making the supplies. Failure to notify the Commissioner will result in a deemed deregistration from VAT.
• Exemptions:
• Introduction of VAT exemption on importation or supply of water sanitation and treatment chemicals, namely chlorine of HS Code 2801.10.00, aluminium sulphate of HS Code 2833.22.00, calcium hypochlorite of HS Code 2828.10.00, powdered activated carbon of HS Code 3802.10.00, potassium permanganate of HS Code 2841.61.00, carbon dioxide of HS Code 2811.21.00, poly aluminium chloride (PAC) of HS Code 2827.32.00, hydraulic lime of HS Code 2522.30.00, sodium metabisulphite of HS Code 2832.20.00, sodium hydroxide of HS Code 2815.12.00, algae floc 19s of HS Code 2827.32.00, and water metres of HS Code 9028.20.00, by a water supply and sanitation authority upon approval of the Minister responsible for water.
• Introduction of VAT exemption on importation or supply of equipment and machinery for processing and storing bee products, namely honey settling tank of HS Code 8436.80.00, honey homogenizer tank of HS Code 8479.80.00, honey/wax press machine of HS Code 8436.80.00, wax steriliser of HS Code 8419.89.00, wax melter of HS Code 8419. 89.00, honey barrel of HS Code 7310.10.00, and sack for honey barrel HS Code 3923.29.00, by bee keepers upon approval of the Minister responsible for natural resources.
• Introduction of VAT exemption on supply of blended tea or fermented tea from locally grown tea leaves with HS Code 0902.30.00 and HS Code 0902.40.00.
• Introduction of VAT exemption on supply of video assistant referee (VAR) technology equipment and accessories upon approval by the Minister responsible for sports.
• Introduction of VAT exemption on supply of sewerage services by a water supply and sanitation authority.
• Expansion of scope to exempt the supply of goods, including material, supplies, equipment, machinery, and motor vehicle, for official use of armed forces as certified by the Minister responsible for defence.
• Extension of exemption on a supply of double-refined edible oil from locally grown seeds by a local manufacturer for another one year up to 30 June 2025.
• Expansion of the exemption scope to aircraft engine and aircraft parts to a local manufacturer or assembler of aircraft.

• Zero rating:

• Extension of zero rate on locally manufactured fertiliser for another year, up to 30 June 2025.
• Extension of zero rate on garments manufactured using domestically produced cotton for a period of one year, up to 30 June 2025.

• Introduction of VAT at a rate of zero percent on the supply of gold to the Bank of Tanzania.
• Introduction of VAT at a rate of zero percent on the supply of gold to licensed refineries in Mainland Tanzania.

Excise duty

• The new filing deadline for monthly returns is the 25th day of the following month (previously the last working day of the following month to which the return related). 
• Excise duty rate on bottled water reduced to TZS 56 per litre from TZS 63.8 per litre. 
• Introduction of excise duty imposition to service provider(s) for commercial advertisement on betting, gaming, or lotteries through print media, television, or radio broadcasting, excluding service provider(s) conducting non-commercial advertisement of promotions, national lottery, and licensed trial games.
• Introduction of excise duty on undenatured ethyl alcohol with an alcohol strength of 80% by volume or higher. Licensed manufacturers who acquire this alcohol, paid the excise duty, and use the alcohol as a raw material to produce finished alcoholic products, such as spirits, liqueurs, and other beverages under HS Code 2208, are allowed to offset the excise duty against that which ought to have been payable on the finished goods.
• Introduction of duty remission (subject to Commissioner’s approval) on undenatured ethyl alcohol under HS Code 2207, which should have been charged, levied, or collected. This applies when alcohol is used solely as a raw material for (i) the production of industrial energy by the producer of the undenatured ethyl alcohol and (ii) medical or laboratory use.

Other taxes and levies

• Railway Development Levy (RDL) rate increased to 2% (from 1.5%).
• Introduction of new levy called Industrial Development Levy (IDL) through the Imports Control Act (CAP. 276) to apply on customs value of selected imported goods entered for home consumption in Mainland Tanzania in accordance with procedures applicable under the East African Community Customs Management. Such goods are as shown below:

  Note that the levy does not apply to goods originating from East African Community Partner States that meet the East African Community Rules of Origin.

  Description	IDL rate (%)
  Wire rod	10
  Beer	5
  Wine	10
  Energy drink	5
  Non-alcoholic beer	5
  Other organic surface-active agents, whether or not put up for retail sale	10
  Cement clinkers	10
  Portland cement	10