VAT AND INCOME TAX INCORPORATING TANZANIA FINANCE ACT 2010

Hello Guyz
i would like to share with you these Tax laws as per Tanzania Finance Act 2010/2011. Feel free to comment and if possible share with us the difference between this Finance Act and the one of your current residence.

Following the budget speech of 2010/11, the government has reviewed tax laws administered by TRA that grant exemptions with a view to controlling and instituting measures to improve supervision. The proposed measures cover the following tax laws:-

 

• The Value Added Tax Act, CAP148
• The Income Tax, CAP 332
• The Excise (management & Tariff) Act, CAP 147;
• The Motor Vehicles (Tax on Registration and Transfer )Act, CAP 124
• Road Traffic Act, CAP 168;
• The East African Community Customs Management Act, 2004;
• Tax Laws and Government Notices (GNs) granting exemptions on motor vehicles.

A: Amendments to the Value Added Tax Act Cap 148

VAT Exemptions

• VAT on transportation ( intra- transport) of agricultural products i.e. transportation of sugar cane, sisal and tea plantations to the processing industry; This is applicable to organized farming only;
• VAT on machines and equipments used in the collection, transportation and processing of milk products;
• Milk cans (HS Code: 7310.29.90)
• Milk pumps-( HS Code no. 8413.81.00);
• Milk hoses-( HS Code no. 8413.70.20);
• Compressors used in refrigerating equipment-(HS Code no. 8414.30.00)
• Milk Storage tanks- (HS Code no. 7309.00.00);
• Milk Tankers ( HS Code 8716.31.90);
• Milk pasteurizers-( HS Code no. 8434.20.00);
• Butter churns- (HS Code 8434.90.00);
• Storage chillers– HS Code no. 8415.81.00); and
• Chees pressers - (HS Code no. 8434.20.00).

 

• VAT on animal feeds or seed cake ( locally known as mashudu)
• VAT on agricultural implements i.e. combine harvesters, pick-up balers, hay making machinery and mowers used in agricultural production and livestock;
• VAT on Airfreight charges for transportation of flowers;
• VAT on Breeding services through artificial animal insemination;
• VAT on supply of packaging materials for fruit juices and milk products;

 

 

VAT Special Reliefs - Third schedule to the Act

• Supply of equipments to a registered Veterinary Practitioner
• Importation by or supply of green houses to growers;
• Supply of goods and services to the organized farms and farms under registered cooperatives unions for the purpose of building infrastructures such as irrigation canal, construction of road networks, godowns and similar storage facilities;
• Supply of building materials and construction services to EPZ developers;
• Practice of classifying certain goods deemed capital goods have been reinstated; Inter disciplinary committee under TRA will oversee its implementation to avoid abuse of this facility.

 

Zero Rate:

VAT on locally produced edible oil using local oil seeds by local processors;

 

 

B: The Income Tax Act 2004 Cap 332

• Sect. 11 of income tax Act has been amended to introduce Ring fencing within the mining area. The measure restrict companies to utilize losses of one mine against the taxable income of another income of another mine while determining tax liabilities.
• Reduce individual income tax rate from 15% to 14% for employees

 

RESIDENT INDIVIDUAL INCOME TAX RATES WITH EFFECT FROM 1/7/2010

SN	MONTHLY TAXABLE INCOME	TAX RATE
1	Where income does not exceed Tshs. 135,000/=	NIL
2	Where total income exceeds Tshs. 135,000/= but does not exceed Tshs. 360,000/=	14% of the amount in excess of Tshs. 135,000/=
3	Where total income exceeds Tshs. 360,000/= but does not exceed Tshs. 540,000/=	Tshs. 31,500/= plus 20% of the amount in excess of Tshs 360,000/=
4	Where total income exceeds Tshs. 540,000/= but does not exceed Tshs. 720,000/=	Tshs. 67,500/= plus 25% of the amount in excess of Tshs 540,000/=
5	Where total income exceeds Tshs. 720,000/=	Tshs. 112,500/=plus 30% of the amount in excess of Tshs 720 ,000/=

SOURCE: http://www.tra.go.tz/documents/SUMMARY%20of%20budget%20changes