The national budget of Tanzania has been lauded by the Institute of Chartered Accountants of India (ICAI), which claims that the budget has the potential to boost the country's economy and encourage investments.
The ICAI branch in Dar es Salaam made its sentiments known during a Continuing Professional Education (CPE) event that was sponsored by the organization. Professionals in accounting and finance gathered at the event to talk about and examine substantial tax and budget developments in Tanzania.
Several topics were discussed, including the examination of macroeconomic statistics, the collection of excise and value-added taxes, and the decrease of the Skills and Development Levy (SDL) rate.
The budget, according to Mr. Narender Kumar, Second Secretary (Commerce) in the Office of the Indian High Commissioner, aims to promote the growth of the country by expanding investment possibilities and establishing a more efficient single-window licensing system.
He did issue a warning against excluding royalties from mining corporations' list of allowable costs for income tax purposes.
According to him, mining businesses may incur greater costs as a result. “Not allowing royalty paid for mineral payments as expenses is an additional cost for mining companies,” he said.
The budget modifications and the lower rate of the Skills and Development Levy (SDL), according to participant Mr. Dharmendra Agrawal, would have a favorable effect on employment expenses.
The Tanzania Revenue Authority (TRA) is responsible for collecting SDL, a tax that is levied pursuant to Section 14 of the Vocation Education Training Act, Cap. 82. The rate for SDL has been lowered from 4% to 3.5% in accordance with the adjustments made to the Finance Act of 2023.
“Tanzania Revenue Authority (TRA) should also make the returns filing portal more user-friendly and add an option for corrections of returns,” he said.
The National Assembly approved the Sh44.39 trillion national budget for the next fiscal year in June 2023, an increase over the Sh41 trillion budget for the fiscal year 2022–2023.
Finance Minister Dr. Mwigulu Nchemba proposed the exemption of the VAT on the supply of precious metals, gemstones, and other precious stones at buying centers, mineral markets, and Gem houses designated by the Mining Commission under the Mining Act or refinery located in Mainland Tanzania, giving a clear indication that the government was becoming more investor-friendly and eager to support businesses.
A change to Section 11 of the VAT Act has also been recommended by the government in order to include locally produced capital goods to the list of capital products that are eligible for deferral.
Dr. Nchemba also suggested amending the VAT Act, CAP 148 to exclude inputs used to create packaging materials in an effort to relieve local producers of pharmaceutical packaging and improve their competitiveness in the market.
The minister also suggested a one-year term of zero rate VAT on fertilizer produced locally and textile items made using domestically grown cotton.