It is a stimulus budget

Dodoma. Finance and Planning Minister Phillip Mpango yesterday came up with a raft of amendments to Tanzania’s tax laws as the government seeks to stimulate local production capacity and attract investment to foster the country’s industrialization agenda.

In line with the implementation of the Blueprint for the improvement of Tanzania’s business environment which was approved during the 2017/18 financial year, Dr Mpango, who formerly worked as economist at the World Bank, proposed abolishment of several fees and charges charged by regulatory agencies like Tanzania Bureau of Standards (TBS), Tanzania Food and Drugs Authority (TFDA), Government Chemist Laboratory Authority (GCLA) as well as those charged by some ministries.

“The focus is to continue with the efforts to build foundation for industrial economy in order to create more employment opportunities to stimulate economic growth and sustainable social welfare and ultimately to eradicate poverty, ignorance and diseases,” Dr Mpango said as he presented the government’s Sh33.1 trillion budget in the National Assembly.

Apart from instructing Tanzania Revenue Authority (TRA) to wait for six months from the time a business starts before it (TRA) can start making tax assessment, Dr Mpango seemed to have been working on a number of issues that have been on the list of complaints of members of the business community.

Similarly, Dr Mpango warned TRA against closing businesses in tax claims.

Dr Mpango completely avoided the allure of raising excise duty rates on the ‘usual suspects’ (beer, spirits, cigarettes, wines, mineral water) in a deliberate effort by President John Magufuli’s administration to boost local production and contain inflation to single digit levels.

Under the proposed plan for revenue and expenditure for the financial year 2019/20, TFDA will now stop charging retention fees for domestic products on registration of vaccines, biologicals, herbal medicines, medical devices, diagnostics and antiseptics. Similarly, Dr Mpango proposed to abolish fees for duplicate certificate on diagnostics as well as inspection fees for new food selling outlets.

Registration fees for retails veterinary pharmacies, inspection fees for fish industries, inspection fees for fish outlets and annual business license fees have all been abolished.

TBS will also abolish application fees for TBS mark, mark guarantee fees overheads and transport fees and application fees on imported cosmetic fees among others.

In the same vein, the GCLA is abolishing a total 15 fees while charges associated with its (GCLA’s) ten charges are slashed down.

The Ministry of Livestock and Fisheries Development is also scrapping 15 associated with the business of milk, meat and fish while the Ministry of Natural Resources and Tourism is removing trophy handling fees. As for the Ministry of Water, the fees on boreholes has now been scrapped.

Winners

In line with the proposals, horticultural players will have several reasons to smile as the exempts Value Added Tax on imported refrigeration. This also goes in line with the granting of a zero per cent import duty on papers used as raw materials for manufacturing of packaging materials for exporting horticultural products.

Similarly, grain producers will also put on broad smiles as the government has exempted VAT on Grain Drying Equipment.

Consumers of electricity in Zanzibar must also be happy as Dr Mpango has zero rated VAT on supply of electricity services from Mainland to the Semi-autonomous Indian Ocean archipelago.

Domestic air operators, the National Air Force and Airline Corporations also stand to benefit from Dr Mpango’s plan as the government has exempted VAT on importation of aircraft lubricants. It has also exempted the services from excise duty.

Airline tickets, flyers, calendars, dairies, labels and employee uniforms, imported by domestic airlines will also be exempted from VAT.

Despite reinstating VAT on sanitary pads, local producers of the poducts also stand to win as Dr Mpango reduces corporate tax on their operations for two years from 30 per cent to 25 per cent.

In line with reforms at TRA, Dr Mpango now sends good news to small scale business operators as the government is amending the Income Tax Act in order to raise the minimum amount that is required for one to start filling the accounts to TRA from Sh20 million to Sh100 million. The measure will reduce costs incurred by taxpayers to engage a Certified Public Accountant for preparation of financial accounts.

The government is maintaining its tax amnesty for six more months for those who have decided to pay voluntarily.

Those with babies should start celebrating as baby diaper manufacturers have been granted an import duty of zero per cent on importation of raw materials as the government seeks to reduce cost of production locally and create jobs.

Local manufacturers of agricultural seeds, importers of roasted coffee and standalone soap manufacturers will all enjoy some relief in import duties for raw materials.

Losers

VAT is back on sanitary pads.

Locally made artificial hair will now attract an excise duty rate of 10 per cent . Pipes and plastics will now attract an excise duty rate of 10 per cent while driving license fee will now cost Sh70,000, up from Sh40,000.

Registration card fees for motor vehicles will increase from Sh10,000 to Sh50,000 and for motorcycle from Sh10,000 to Sh30,000 and for tricycles from Sh10,000 to Sh20,000

Importers of flat-rolled products or iron or non-alloy steels will now be required to pay a 25 per cent import or 10 per cent depending on type and HS Code.

Importers of safety matches will now receive a 25 per cent import duty as the government seeks to protect local industries.

Importers of nails tacks, drawing pins, corrugated nails and staples will now have to pay 25 per cent import duty.

Sausages and similar products will now pay 35 per cent instead of 25 per cent import duty.

Chewing gums, sweets, tomato sauce, semi-refined edible oil meat and edible offal will all have their import duties adjusted upwards from 25 to 35 per cent.

Mineral water will now attract an import duty rate of 60 per cent instead of 25 per cent.

Crude edible oil will attract an import duty of 25 per cent.