Budget Highlights - 2008/09

Individuals
More money in the pocket for employees and individual income-earners
Broad bands for income
Current Revised band (TShs) band (TShs) 0 80,0000 80,001 180,000 180,001 360,000 360,001 540,000 Above 540,000 0 100,0000 100,001 360,000 360,001 540,000 540,001 720,000 Above 720,000 Rate (%)

You are encouraged to invest in Approved Collective Investment Schemes.. Capital gains tax will not be applicable where you sell units from an Approved Collective Investment Scheme.

15 20 25 30

Get that car back on the road Motor vehicle licence fees have reduced!! ..and excise duty on vehicles is now threetier:
Engine size (cc)
Below 1000 1000 - 2000 Above 2000

Reduction of motor vehicle licence fees

Engine size (cc)
Below 500 500 - 1500

Proposed (TShs)
30,000 50,000 120,000 140,000 150000

Current (TShs)
50,000 80,000 150,000 330,000 175,000

Proposed (TShs)
0% 5% 10%

Current (TShs)
10% on vehicles more than 2000cc

1500 - 2500 2500 - 5000 Over 5000

All changes take effect from 1 July 2008 other than widened scope of exported services for VAT purposes, which takes effect 1 Jan 2009

Motor vehicles From TShs 90,000 to TShs 120,000 Motorcycles From TShs 27,000 to TShs 35,000

But hold on the one-off fees have increased??

Reduction of mobile phone air-time tariffs may not pay off now that excise duty on air-time has gone up..
From 7% to 10%

2008 KPMG, the Tanzania member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Tanzania. The KPMG name and logo are trademarks of KPMG international

Companies
If you are in business, you are expected to be in it for a profit.. at least once every three years If not??
0.3% Alternative Minimum Tax (AMT) on gross turnover has been introduced for companies that report tax losses for three consecutive years.. yes, even where your tax losses arise due to claiming capital and investment allowances.

Have you won a tender to make any supplies to a Government body??

2% final withholding tax on payments made by Government to suppliers who do not possess Taxpayer Identification Numbers

Non-Governmental and non-profitmaking organisations applying for VAT special-relief there is more to be do ne ! !

(1) submit annual workplans to TRA, indicating how charitable activities will benefit the society. (2) certify that the VAT relief will only be used for the intended purposes, and not otherwise. (3) TRA will issue Tax Clearance Certificates to VAT special-relieved NGOs for them to continue enjoying special relief status. (4) household consumables will no longer enjoy VAT special relief.

Very welcome..
Excise duty on Heavy Furnace Oil (HFO) is down from TShs 117 per litre to TShs 97 per litre. Import duty on sodium sulphate is down from 25% to 10%

2008 KPMG, the Tanzania member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Tanzania. The KPMG name and logo are trademarks of KPMG international

Other sectoral changes

From 1 Jan 2009, service providers can now enjoy VAT zerorated status when exporting their services
As from 2009, services qualifying for VAT zero-rated status when exported will include:

Agriculture
Hand hoes and other inputs are not subject to import duty No more paying of annual licence fees on tractors!

Accounting, consultancy, legal, engineering; Radio and television broadcasting; Telecommunication; Auxiliary services in the transport industry.

Bags manufactured locally for packing imported bulk agricultural products are zero-rated!

Burning gel for domestic use will be VAT-exempt when sold to consumers.. When Moto Poa Ltd purchases inputs for producing Moto Poa burning gel, such inputs can enjoy VAT special-relief Prices of carbonated soft drinks, beer, wines and cigarettes may increase now that excise duty thereon has increased by 12%

Other import duty eliminated

Now VAT-exempt: - Bitumen, - Compressed Natural Gas (CNG), and - CNG cylinders

Data processing machines Crude palm oil Barley up to 20,000 Metric Tonnes imported by local brewery companies before 31 December 2009 Garbage-collection vehicles purchased by local authorities or their approved agents Inputs imported by Tanelec Ltd for manufacturing transformers and switch gears

2008 KPMG, the Tanzania member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Tanzania. The KPMG name and logo are trademarks of KPMG international