BUDGET HIGHLIGHTS 2013/2014 GOVERNMENT BUDGET

NBAA AND TRA JOINT FORUM ON TAXATION AND BUDGET

Nicholaus M. F. Duhia

Paper presented at the Joint NBAA/TRA Forum and Budget Seminar held at Ubungo Blue Pearl Hotel Dar es Salaam on Saturday 6th July 2013.

 

Introduction and implementation of the NEW BUDGET CYCLE

whereby Ministries present their budget estimates before the

Budget Speech and execution of the Budget starts on 1st July

every year.

Introduction of new procedure of identifying national priorities

aimed at achieving the BIG RESULTS NOW initiative.

NEW MAJOR FEATURES OF THE 2013/2014 BUDGET:

In the fiscal year 2013/2014, the Government intends to

implement 6 main areas identified as national priorities. These

are:

Water;

Energy;

Transport;

Agriculture;

Education; and

Resource allocation

NEW MAJOR FEATURES OF THE 2013/2014 BUDGET:..

TANZANIA BUDGET OUTLOOKREVENUE SHS' MILLION EXPENDITURE SHS' MILLION

Domestic Revenue: Recurrent Expenditure:Tax Revenue 10,412,937 Consolidated Financial Services 3,319,156Non Tax Revenue 741,134 Wages and Salaries 4,763,196

11,154,071 8,082,352 Other Charges:

LGAs own Source 383,452 Ministries 3,738,316General Budget Support 1,163,131 Regions 49,701MCA (T) 2,692,069 LGAs 704,549Domestic Borrowing 1,699,860 4,492,566Non Concessional Borrowing 1,256,400 Development Expenditure:

Local 2,981,965 Foreign 2,692,069

5,674,034

TOTAL REVENUE 18,348,983TOTAL EXPENDITURE 18,248,952

Source: The Budget Speech 2013/2014

The changes in the various tax laws are based on the Finance

Bill, 2013 presented before the Parliament by the Minister for

Finance, Dr. William Augustao Mgimwa on 13th June 2013 and the

Schedule of Amendments presented subsequently at the second

reading of the Bill.

All the changes are effective from 1st July 2013.

REVENUE MEASURES INTRODUCED BY THE FINANCE BILL, 2013:

Ring fencing introduced for petroleum operations (in

addition to ring fencing of mining introduced in 2010) for

purposes of granting deduction on unrelieved losses – ss. 11

and 19.

Tax exemption on lease of aircrafts from non residents

abolished – s. 82 and 1st Schedule.

Time limit for making adjusted assessments on transfer pricing

arrangements enlarged to 6 years – s. 96.

Income Tax:

Penalties prescribed for failure to issue a receipt (fiscal or manual) for

shs. 5,000/= or more received for goods and services as follows [ss. 80A

and 98(3)]:

1st time offender – 5% of the value of manual receipt or un-receipted amount;

2nd time offender – 10% of the value of manual receipt or un-receipted amount;

3rd and subsequent time offender – summary conviction and fine ranging from shs.

25,000/= to shs. 500,000/= or prosecution and conviction with a fine ranging from

shs. 1,000,000/= to shs. 3,000,000/= and/or 3 years jail sentence (s. 104).

Commissioner empowered to prescribe procedures for imposition and collection of

penalties.

Income Tax:..

Withholding tax introduced on:

Services rendered by resident service providers (including

professional services) - 5%;

Money transfer agency commission (M-PESA etc agents) – 10%.

Payments by resident Government funded corporations to

resident persons for supply of goods – with or without TIN

registration – 2%.

NB: The bill is silent on withholding tax by the Government.

[Ss. 83 and 83A and 1st Schedule].

Income Tax:..

Monthly individual rates of income tax adjusted as follows:Total Monthly Income Rate of tax

Where total income does not exceed Shs. 170,000 NIL

Where total income exceeds Shs. 170,000 but does not exceed Shs. 360,000

13% of the amount in excess of Shs. 170,000

Where total income exceeds Shs. 360,000 but does not exceed Shs. 540,000

Shs. 24,700 plus 20% of the amount in excess of Shs. 360,000

Where total income exceeds Shs. 540,000 but does not exceed Shs. 720,000

Shs. 60,700 plus 25% of the amount in excess of Shs. 540,000

Where total income exceeds Shs. 720,000 Shs. 105,700 plus 30% of the amount in excess of Shs. 720,000

Income Tax:..

Introduction of 100% expensing of expenditure on equipment

used for prospecting and exploration of minerals and

petroleum – 3rd Schedule.

Income Tax:..

Zero rating of locally produced textile by local manufacturers

using locally produced cotton abolished – Para 17 - 1st

Schedule; instead:

Supplies of goods and services to local textile manufacturers

using locally produced cotton to be 100% relieved from VAT

– new Para 33 - 1st Schedule.

Value Added Tax:

14.5% excise duty introduced on electronic communication

services (the original Bill sought to charge excise duty on

telecommunication services – including mobile phone services) – s.

124.

NB: The definition of electronic communication includes cellular mobile

phone services but it has not been amended in the amended Bill.

Telecommunication sim cards to be charged excise duty of shs.

1,000/= per month – s. 124.

Excise Duty:

0.15% excise duty introduced on money transfers – in

excess of shs. 30,000 – s. 124.

Transfers between banks, financial institutions, government,

diplomats and diplomatic missions exempt from the new duty – s.

124.

Excise duty on aged non-utility vehicles (over 10 years old)

increased from 20 to 25 – s. 124.

Excise duty on soft drinks, fruit juices, beer, wines and spirits,

cigarettes and tobacco increased by 10% - 4th Schedule.

Excise Duty:..

Excise duty on petrol increased from shs. 339 per litre to shs. 346

per litre (originally to shs. 400 per litre) - 4th Schedule

Excise duty on diesel increased from shs. 215 per litre to shs. 217

per litre - 4th Schedule.

Excise duty on illuminating kerosene increased from shs. 400 per

litre to shs. 475 per litre - 4th Schedule.

No increase in the excise duty on bottled water - 4th Schedule.

Excise Duty:..

Excise duty on gas oil abolished - 4th Schedule.

Excise duty on cigar remains at 30% - 4th Schedule.

Excise duty increased generally on various products.

Excise Duty:..

Gaming tax on casino operations to be based on weekly instead

of monthly gross gaming revenue and continue to be paid

weekly.

Gaming Tax:

Fuel toll increased from shs. 200 per litre to shs. 263 per litre on

petrol and diesel to support rehabilitation of infrastructural road

networks – 2nd Schedule.

Road and Fuel Toll:

Petroleum levy of shs. 50 per litre introduced for financing rural

electrification. (Not in the Finance Bill).

Petroleum Levy:

Annual road licences increased as follows (with old rates in

brackets): (Not in the Finance Bill).

VEHICLE ENGINE CAPACITY ROAD LICENCE FEES (SHS.)

500cc or less NIL (50,000/=)

Exceeding 500cc but less than 1,500cc

150,000/= (100,000/=)

Exceeding 1,500cc but less than 2,500cc

200,000/= (150,000/=)

2,500 cc and above 250,000/= (200,000/=)

Road Licences:

• PPRA;• TPA;• TANAPA;• NCCA;• EWURA;• SUMATRA;• TCRA;• TFDA;• TCAA.

Government Agencies,

Regulatory Authorities and Public

Institutions to contribute 10%

of annual gross revenue to

Government coffers.

These agencies, authorities and

institutions are:

Contributions by Institutions, Government Agencies and Regulatory Authorities to the Government coffers:

SDL rate reduced from 6% to 5%.

Government departments or public institutions wholly financed

by the Government exempt from SDL. Institutions not

receiving Government subvention liable to pay SDL.

Skills and Development Levy:

Duty exemption on deemed capital goods reduced from 90% to 75%.

Investors to pay 25% of import duty due on deemed capital goods.

Following items removed from the list of deemed capital goods:

Office equipment, stationeries, furniture, sugar, beverages, spirits, tiles,

non utility motor vehicles, crockeries, air conditioners, fridges, petroleum

products, cutleries, beddings and electronic equipment.

Tanzania Investment Act:

Common External Tariff (CET) rates discussed and agreed

with EAC Partner States as follows:

Application of 35% CET on wheat grain delayed by one year.

Duty on rice and sugar to be 25% instead of 75% and 100%

respectively to cover the gap in the local market.

Machinery and spare parts imported by TRL exempt from duty

to improve railway operations.

Compliant Trader (inspection) Scheme abolished.

Import Duty:..

Import duty remission to soap manufacturers using LABSA

raw materials for one year to encourage local small and medium

scale soap industries.

Plastic bag biogas digesters exempted fro duty to promote

use of alternative sources of energy and protect environment.

Duty on millstones and grindstones for milling, grinding and

pulping increased from 0 to 25% to protect local industries in

the Region.

Import Duty:..

Water treatment effluent plant exempt from duty to promote

use in industries and protect environment.

Armed Forces to continue enjoying duty exemption for one

more year.

Goods imported by National Intelligence Services exempt

from duty.

Import Duty:..

“LET ALL OF US PLAY OUR PART RESPONSIBLY IN IMPLEMENTING THE AGREED POLICIES AND PLANS”

 THANK FOR YOUR KIND ATTENTION AND

AS THE HON. MINISTER FOR FINANCE HAS APPEALED IN HIS BUDGET SPEECH CLOSING SALUTATION: