A QUICK OVERVIEW OF TANZANIA 2018/19 FINANCIAL YEAR BUDGET.

A QUICK OVERVIEW OF TANZANIA 2018/19
FINANCIAL YEAR BUDGET.

The Finance and Planning Minister Dr. Philip Mpango on 14th June 2018 tabled in the Parliament, a Tanzania
Shillings Thirty-Two Trillion budget for the 2018/19 financial year.

The 2018/19 budget which to the large extent aimed on the reforms for the boosting of industrial development
and protecting locally manufactured products and stimulating local industrial production, has outlined five
priority areas to include agriculture, industries particularly to improve business environment in order to attract
private sector investments, social services including distribution of clean water, financing of free education
and, improving health facilities, other priorities comprise of tourism and infrastructures.

Among the proposed reforms include the amendment of the Income Tax Act to reduce the corporate income
tax rate from 30% to 20% for new investors in the pharmaceuticals and leather industries for five (5) years
from 2018/19 to 2022/23, although it is still not clear whether the intention is to apply the reduced rate for a
period of five years or apply the reduced rate for new investors investing in such industries in the period
between 2018/19 to 2022/23. According to Dr. Mpango this measure is expected to promote investment in the
manufacture of pharmaceutical and leather products, create employment and increase government revenue.

In another move to spearhead the proposed reforms, the Income Tax Act will be amended to empower the
Minister of Finance to exempt from income tax Government projects financed by non-concessional loans, now
the withholding tax applies where payment of interest is made to a resident financial institution. The
Government propose such exemption should be applicable to non-resident financial institution, specific in a
case where the payer of interest is the Government.

AMONG THE PROPOSED REFORMS INCLUDE THE
AMENDMENT OF THE INCOME TAX ACT TO REDUCE THE
CORPORATE INCOME TAX RATE FROM 30% TO 20% FOR NEW
INVESTORS IN THE PHARMACEUTICALS AND LEATHER
INDUSTRIES FOR FIVE (5) YEARS FROM 2018/19 TO 2022/23

On the proposed budget, the Government proposed to exempt the Value Added Tax (VAT) on sanitary towels
in the 2018/19 financial year. The Finance and Planning Minister also waived Value Added Tax (VAT) on
packaging materials produced specifically for use by local manufacturers of pharmaceutical products.

In a stir of implementing an industrial economy, the government propose retaining of the current excise duty
rates imposed on locally produced non-petroleum products and increasing excise duty rates for imported
non-petroleum products, whilst excise duty on soft drinks, mineral water, fruit juices, beers, energy drinks,
wines and cigarettes manufactured from locally produced raw materials remain unchanged.

The Income Tax, taxation of individuals, also remain unchanged there is no any proposed changes on the tax
threshold while the Skill and Development Levy remains at 4.5% as per the last financial year.
The Members of Parliament will deliberate and debate the tabled budget for seven (7) days before assenting
their votes on 26th June 2018.

FURTHER INFORMATION:

This editorial is intended to give you a general over view of the Law. If you would like further information on any issue raised in this column, please contact.

Patrick Sanga 
Partner
E: p.sanga@vemmaattorneys.co.tz
M: +255 686 999 993

Bernard Nkwabi
Legal Officer
E: b.nkwabi@vemmaattorneys.co.tz
M: +255 653 374 414