Download Tanzania issues 2016/17 budget

9 June 2016
Global Tax Alert
Tanzania issues
2016/17 budget
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Executive summary
On 8 June 2016, Tanzania’s Minister of Finance presented the 2016/17 budget.
The Finance Bill 2016 has not been made public yet.
According to the budget, the Government revenue estimates for 2016/17 are
TZS29.53 trillion of which TZS18.46 trillion are internally sourced (tax and
non-tax revenue) representing 62.3% of the GDP. The projected internal revenue
TZS15.11 trillion will be generated from various taxes; TZS2.69 trillion non-tax
revenue and TZS665.4 billion will generated from Local Government Authority’s
(LGA’s) own resources.
The 2016/17 budget focuses on achieving the following macroeconomic
objectives and targets:
(i)
Real GDP is projected to grow to 7.2% in 2016 from 7% in 2015
(ii)
Inflation is expected to be maintained at a single digit increase
(iii)Domestic revenue including LGA’S own sources is projected at 14.8% of
GDP in 2015/16 and will maintain an upward trend to 16.9% of GDP in
2016/17
(iv) Tax revenue is projected at 13.8% of GDP in 2016/17
(v)
Total expenditures are estimated to increase to 27% in 2016/17
(vi) Fiscal deficit is projected at 4.5% of GDP in 2016/17
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Global Tax Alert
(vii) T
he ratio of current account deficit to GDP is narrowed
down to 7.5% in 2016/17
The East African Community (EAC) Customs
Management Act, 2004
(viii) G
ross official reserves sufficient to cover at least four
months of projected imports of goods and services by
are anticipated by June 2017
The Ministers for Finance from EAC Partner States agreed
to effect changes in the Common External Tariff (CET) and
amend the EAC Customs Management Act, 2004 for the
financial year 2016/17. The changes in the CET which were
recommended and agreed are as follows:
This Alert outlines the key tax proposals.
Detailed Discussion
Income Tax Act, 2004
The following amendments were proposed:
•Elimination of tax exemption on the final gratuity to
members of Parliament
•Elimination of capital gains tax (CGT) exemption on sale
of shares listed on the DSE by an individual holding less
than 25%
•Reduction of Pay As You Earn (PAYE) to 9% minimum tax
•Imposition of withholding tax on payments to approved
retirement funds for leasing and lending
•Granting of powers to the Commissioner General of the
Tanzania Revenue Authority to determine the minimum
market value of rental income for withholding tax purposes
Value Added Tax, (VAT) 2014
•Exemption of Raw Soya Beans, petroleum products, all
un-processed vegetables and unprocessed edible animal
products
•Exemption of vitamins and food supplements (micronutrient
compound), water treatment chemicals in the list of
exempted items which have been approved by the Minister
responsible for Health
•Exemption of aviation insurance
•Imposition of VAT on tourism services e.g. tourist guiding,
game drives, water safaris
•Imposition of VAT on fee based financial services (excluding
interest on loans)
Motor Vehicle (Tax on Registration and Transfer)
Act, CAP 124
•Increase in Motor vehicle registration fee from TZS150,000
to TZS250,000 and motor cycle registration fee from
TZS45,000 to TZS95,000
•Increase in personalized registration number fee from
TZS5,000,000 to TZS10,000,000
•Increase import duty on cement from 25% to 30%
•Increase the CET rate on flat rolled products of iron or nonalloy steel from 0% to 10%
•Increase import duty rate on bars and rods of iron steel from
10% to 25%
•Impose import duty rate of 0% one year and thereafter 25%
used in construction of bridges and bridges sections
•Impose import duty rate of 10% on automotive bolts and
nuts for one year and thereafter 25%
•Increase the import duty rate on fishing nets from 10%
to 25%
•Increase import duty on oil and petrol filters from 10%
to 25%
•Grant duty remission of 0% to air filters and splints which
are raw material used to manufacture matches, bolts and
nuts and aluminum cans
•Increase progressively the import duty remission of sugar
confectionery to 15%, 20% 25% for 2016/17, 2017/18 and
2018/19 respectively
•Increase the CET rate on aluminum milk cans from 10%
to 25%
•Increase duty on worn clothes and shoes from 0.2 USD/kg
to 0.4 USD/kg
•Continue to impose a duty rate of 25% of US$200 per
metric tons for one year on flat-rolled products of iron or
non-alloy steel
•Grant application EAC CET rate of 35% on wheat grain
instead of 10% per one year and manufacture of crude oil
and apply 10% instead of 0% for one year
Additional amendments proposed in the EAC Customs
Management Act (CMA), 2004 include:
•Amend the 5th Schedule to EAC-CMA (Chapters 84 and 69)
to include incinerator’s equipment and materials used in
hospitals to burn waste, refrigeration equipment for human
dead bodies for use in Hospitals, city councils or funerals
and to remove import duty exemption on uniforms for
hospital staff
Global Tax Alert
•Grant duty remission to the manufacturers of Inputs for
the manufacture of deep cycle batteries and inputs or raw
materials for use in the manufacture of solar equipment’s
•Increase duty from 15% to 20% on imported furniture
•Amend the 5th Schedule to the EAC-CMA to include blood
collection tubes
•Extend excise duty of 10% on charges/fees payable by a
person to telecommunication service provider on money
transfer
The Excise (Management and Tariff) Act, CAP 147
•Adjust for inflation with 5% increase of excise duty rates
on non-petroleum products such as soft drinks, locally
produced fruit juices, imported juices, beer made from
local un-malted cereals, other beers, non-alcoholic beer,
wine produced with domestic content exceeding 17%, wine
produced with more than 25% imported grapes, spirits,
cigarettes without /with filter tip containing domestic
tobacco, cut rag or cut filler, lubricating oils, lubricating
greases and natural gas
•Abolish manufacturing selling, buying and use of plastic
bags of less than 50%
The Finance Act 2016 is expected to be in force from 1 July
2016 after the Finance Bill 2016 has passed Parliament and
is assented by the President. An Alert on the Finance Act
2016 will be issued as soon as the Act is available.
For additional information with respect to this Alert, please contact the following:
Ernst & Young (Tanzania), Dar es Salaam
• Silke Mattern
• Laurian Justinian
+255 22 2666853
+255 22 2666853
[email protected]
[email protected]
Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg
• Justin Liebenberg
+27 11 772 3907
[email protected]
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
• Leon Steenkamp
• Gonçalo Dorotea Cevada
+44 20 7951 1976
+44 20 7951 2162
Ernst & Young LLP, Pan African Tax Desk, New York
• Dele A. Olaogun
• Jacob Shipalane
+1 212 773 2546
+1 212 773 2587
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[email protected]
[email protected]
[email protected]
[email protected]
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