2013/2014 BUDGET ANALYSIS

0 0 Saturday, June 15, 2013 Edit this post

                               TAX VIEWPOINT   PROPOSED TAX CHANGES   Value Added Tax (VAT):-                 . Tourist ...



                               TAX VIEWPOINT
 
PROPOSED TAX CHANGES
 Value Added Tax (VAT):-
                .
    • Tourist Services no longer VAT exempt, tourist services were VAT exempt but from now on they will be taxable at statutory VAT rate of 18% .From Taxation perspective this is a win-win situation because, tour companies will now be allowed to claim their input VAT unlike when they were VAT exempt which technically they were not allowed to claim input VAT on exempt supplies but this may affect the final consumer that is the tourist whose final VAT will be passed to him. Note that import duty exemption on importation of items used in provision of tourist services will continue to be exempted.
    • Domestic manufacturer of Textiles using locally grown cotton are now VAT Special Relief:- this will help domestic textile industries in getting relief of input VAT for services and goods directly used production of fabric specifically using those locally grown cotton, how will they separate that this is directly going in production to local cotton is yet to be seen.
 Income Tax changes
  • Service Providers Beware:-there is an introduction of 5% withholding Tax on services including consultancy services and other services this as it stands will affect all service providers including the Media outlets, Accountants and Auditors, Counsellors, Lawyers, Engineers, Surveyors, Marketers, Internet and mobile service providers, to mention just a few.
  • Pay As You Earn: Additional TShs 1,900 take home for every employee , as the minimum Tax rate have gone down to 13% from 14% of last year, that is Tax rate on taxable income that exceeds TShs 170,000 but does not exceed 360,000 is now 13% that is 1% of TShs 190,000. Note that, other tax bands and rate remained the same.
  • Agents for Mpesa, Tigopesa, Airtel money and Ezypesa: will now be paid ten percent less in their Agency commission given the introduction of 10% withholding tax on the commission chargeable on money transfer through mobile phones regardless of if one is a TIN holder or not.
  • Introduction of 2% withholding Tax to suppliers of goods to government and its institution regardless of if supplier has TIN or not. Previously this tax was only withheld for all payment to resident’s persons without TIN.
  • An end to withholding Tax exemption on Aircraft Lease to non residents, therefore withholding tax on aircraft lease to non resident will now be charged a normal 15%.
 Changes in the Excise Duty
  • Not all old is gold: non-utility vehicles aged 10 years or more, excise duty has been from 20 percent to 25 percent. Utility vehicles aged 10 years or more will be charged 5%. However tractors and unassembled vehicles are exempted from these measures.
  • Petroleum products:- while the excise duty on diesel and petrol has increased by 2 and 61 Shillings respectively. Kerosene has remained the same.
  • To protect local furniture industry; excise duty rate of 15 percent on imported furniture has been introduced.
  • Excise duty on Mobile services: unlike last year where excise duty was charged on only airtime, this year excise duty will be charged on all mobile services by 14.5%
  • Non-Petroleum products:-Excise duty on non petroleum products including soft drinks, beers, and fruits Juices have increased by 10%.
 Skills Development Levy (SDL)
  • SDL has reduced from 6% to 5%
  • Government Institutions which do not receive substantial Government Subventions to start paying skills Development Levy. The subjectivity of wording substantial remains to be seen.
 Bajaj and Bodaboda prayers are answered:-
  • All annual Motor vehicle licence fee for vehicles between 501cc and above have increased by TShs 50,000 but all Motor Vehicles below 501cc are exempted from Motor vehicle licence fee.
 Rural Electrification:-
  • An introduction of Petroleum Levy of TShs 50 per litre for rural electrification to be directed to Rural Energy Authority(REA).
 Tanzania Investment Act

  • Reducing deemed capital goods import duty exemption from 90% to 75%

Changes in the East African Community Customs Management Act, 2004
  1. No more import direct release of goods under the Compliant traders scheme this has been introduced to curb emerging misuse of the scheme.
  2. Import duty exemption for plastic bag biogas digesters
  3. Import duty exemption for water treatment sewage plant.
  4. No import duty for Machinery and spare parts imported by TRL to be used in railways operations
  5. Imposition of a duty rate of 25 percent on rice and sugar instead of 75 percent and 100 percent respectively when imported to cover the gap in the local market.
  6. Extended application of CET rate of 35 percent on wheat grain under HS Code 1001.90.20 and HS Code 1001.90.90 and apply the CET rate of 10 per cent for the period of one year. This measure is intended to reduce cost of relating to the importation of wheat grain in the country as local production capacity does not satisfy the demand.
  7. Continue granting duty remission to soap manufacturers using LABSA as raw materials from 10 percent to 0 percent under HS Code 3402.11.00; HS Code 3402.12.00; and HS Code 3402.19.00 for the period of one year. The measure is intended to encouraged growth and production of soap manufacturing especially to small industries producing soaps in the country
  8. Continued import duty exemption for Armed forces and intelligence services


This Brief Budget Analysis has been prepared by:

Innocent W Makundi-Director Tax and Corporate Services
Innocent is an experienced Tax Consultant registered with Tanzania Revenue Authority (TRA), he is also a Certified Public Accountant (CPA). Innocent holds MBA in Corporate Management from Mzumbe University and possesses Diploma in French Language from French Ministry of Culture and Education via Alliance Francaise.
CONTACTS :
Mob: +255 755 497 655/+255-713-670126.
Facebook: www.facebook.com/innocent wilfred
Email: Innocentmakundi@gmail.com

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Lukwangule Entertainment: 2013/2014 BUDGET ANALYSIS
2013/2014 BUDGET ANALYSIS
Lukwangule Entertainment
http://lukwangule.blogspot.com/2013/06/20132014-budget-analysis.html
http://lukwangule.blogspot.com/
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http://lukwangule.blogspot.com/2013/06/20132014-budget-analysis.html
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