EVERYTHING associated with tax is almost always bad, or so it seems. You’ve probably heard the old catch phrase ‘only two things are certain on the face of the earth, for man and woman—taxes and death.'
The subject of tax is almost never presented like a nice thing anywhere on earth. Religious buffs will quote from the Bible where it talks about a short man who collected taxes and stole from both the poor and his government, and here again tax is associated with something ugly, theft.
I’ m told there are memories in African history where rulers conquered tribes in distant places to collect girls, cows, and of course taxes. Chief Mkwawa of the Wahehe Chiefdom is said to have conquered one half or so of the present day lower half of Tanzania, with his empire extending from parts of Ruvuma all the way to Tabora.
Subjects paid tax and they didn’t like it very much. When the Germans came, at the turn of the 20th century, taxes began to get paid through a whip, twenty-five lashes on your butts if you couldn’t come up with eggs and chickens to give the Germans.
But are taxes still that bad in Tanzania? I doubt it. My inclination is that some of the stuff we now read about taxes in this country are exaggerated versions of a problem the government has bee working very hard to solve. No… don’t believe everything you read about taxes here.
There is a remark I picked from the media for instance, charging that Tanzania had one too many taxes. Well, maybe so, but which country doesn’t? could it be that this particular media outlet simply wishes to sound anti-government to increase sales. Well, that too is a possibility.
I wish to advance the view that this country has been working very hard in matters of fiscal policy to create an amicable environment, using everybody from businessmen to people known to be in the opposition.
If I remember correctly, Edwin Mtei used to oppose Mwalimu Nyerere in his socialist policy way before the re-establishment of multi-party politics in Tanzania. The system sort of knew this. During the Ali Hassan Mwinyi administration, the system gave a task to Edwin Mtei to do a paper for the Tanzania government on changing the tax regime in the country.
He worked on this assignment so well and made recommendations to bring about most of the changes we now see—introducing value added tax and so on. Now the rates Mtei envisaged may not be what the government adopted, but the general idea originates from the Edwin Mtei Task Force.
We are a country of reason. We listen to reason and work on the reasoning. At the moment most taxes are negotiated between the state and the tax payer, an outcome of dialogue between the government and the private sector through the business council and other stakeholders, I believe.
A write-up which seeks to ridicule achievements made by the state in creating good fiscal policy should be considered, let’s see--I can’t say that word here. Just don’t believe tabloid news on taxes. They don’t know what they are talking about!
Read the following passages on taxation matters for various types of business enterprises I got out of a government site. And these too seem to be an old version lacking the recent revisions made during the 2009/10 budget session to include the downward revision of Value Added Tax.
What I like about our country is that our leaders listen. Don’t believe everything you read about taxes in this country. Some of it is sheer tabloid news to hike sales. Believe me. Edwin Mtei did a nice job suggesting a major shift from socialist taxes to capitalist taxes. President Mwinyi did an equally good job noticing his talent. They say it takes two to tango. I guess they are right.
Here is how part of our tax regime looks like:
Personal income taxes: Tanzania uses a progressive personal income tax for monthly income over 30.000/-. Marginal tax rates peak at 35 percent assessed in monthly income. All employers are required to collect income tax for the Government from employees.
Housing levy: A Housing levy of four percent of gross emoluments is collected by the TRA
Corporate income tax: Once a file number has been established, the business is expected to complete Provisional Tax Return form. The provisional tax return must be submitted within three months of the beginning of the starting accounting date; the provisional tax is payable quarterly.
A Final Tax Return form must be submitted 'within a period not exceeding nine months from the date of the final audited accounts of business’. The corporate income tax rate is 35 percent for both resident and non-resident companies. (This is not the rate applicable to TIC certificate holders). Exemptions from payment income tax can be requested by letter from the Commissioner of Income Tax.
Wear and tear deductions: There are three rates of wear and tear deductions allowed depending on the type of equipment. Class 1-- tractors, combine harvesters, and heavy, self-propelled equipment -- is allowed a 37.5% annual deduction. Class 11 -- light, self-propelled equipment 25% and Class III e.g. office furniture etc. 12.5% p.a.
Withholding taxes: (Not applicable to TIC Certificate holders) Withholding taxes are levied on several kinds of transactions
Capital gains tax: The Capital Gains Tax has been abolished. The Specified Building Tax, Training Levy, and Estate Duty have also been repealed.
Double Taxation treaties: Double taxation treaties have been signed with Canada, Denmark, Finland, India, Italy, United Kingdom, Norway, Sweden, and Zambia. Tanzania is also in the process of negotiating treaties with several countries including Belgium, Burundi, Iran, Lebanon, Malaysia, Mauritius, Pakistan, Rwanda.
In the past there used to be several types of transaction taxes in Tanzania, which were primarily segmented into three categories: sales tax; stamp duty, and excise duty. Those taxes were replaced by VAT after July 1998.
Any business which is manufacturing or selling goods on which sales tax is payable must register with the Tanzania Revenue Authority by completing Form Sales Tax 01.This registration should be effected prior to commencement of operations. Tanzania Revenue Authority will physically inspect the site before issuing Sales Tax number.
Once operational, businesses are required to submit "Monthly Sales Return" -- along with a payment to the nearest TRA office not later than the 15th day of the following month.
Sales taxes are applicable on both goods and services.
Registered Dealer Certificates (RDC)
Manufacturing firms can apply for an exemption on sales tax after being registered under RDC scheme. In addition the RDC allows manufacturers to avoid double taxation.
Excise taxes are assessed on cigarettes, and a few other items that are considered luxuries. There are both ad valorem and specific rates depending on the product.