New VAT rate for Selected VAT Relieved Beneficiaries

16 Jun

Dodoma, Tanzania
Ministry of Finance has proposed an introduction of a new VAT rate of 10 per cent for selected VAT relieved beneficiaries.

This measure will compel all beneficiaries enjoying special relief under the third schedule of the Value Added Tax Act to pay VAT for their taxable supplies requirements at a reduced rate of 10 per cent instead of 18 per cent.
The Finance Minister, Dr Mgimwa said those who would be affected, among others, are private companies, individuals and TIC Certificate holders except those who are enjoying exemptions under the existing agreements.
 Ministry For Finance Dr. Mgimwa presenting the Budget in Dodoma
Furthermore, it will affect Non Governmental Organizations (NGOs) except those which are providing donations such as food supplies and medicaments to children and orphanage care centers and schools.
Also, Dr Mgimwa asked the house to approve, amending item 19 of the second schedule to the VAT Act in order to include “Electronic Fiscal Devices” in the list of exempt items.
“The measure intends to make the product affordable to the business community and encourage its use for the improvement of compliance,” the finance minister said.
A report dubbed one billion question: How Can Tanzania Stop Losing So Much Tax Revenue, estimates that Tanzania one of the poorest countries in the world is losing around 1 billion US dollars (1.6tr/-) in tax revenue annually mostly through tax evasion, capital flight and tax incentives.
Also, the minister wants to exempt VAT on various equipments (Compressed Natural Gas and Piped Natural Gas) that will be used for storage, transportation, and distribution of natural gas.
This measure is intended to promote the usage of natural gas in various sectors of the economy including motor vehicles, domestic and industrial use.
“The measure is also expected to preserve forests, reduce environmental degradation and encourage production of gas cookers in the country,’ Dr Mgimwa said.

Meanwhile, Minister for Finance and Economic Affairs said yesterday in a bid to implement effectively new finance bill 2012/13 all unproductive and unnecessary expenditures should be avoided.
Dr William Mgimwa said therefore it is important for the ministries, departments, regions and local authorities to give opportunities to the private sector to contribute in building the economy.
“…every citizen is called upon to participate effectively in the utilization of available opportunities by providing services and engaging in productive activities in order to increase income,” the minister told the Parliament when reading the budget.
He said this budget directs investment of national resources in few priority areas with a view to accelerate economic growth and reduction of poverty.
The minister caution follows the fact that in 2011/12 domestic revenues, including revenues from Local Authorities, were below target and donor commitment to budget basket is not delivered on time.

Data show that total collection up to this April reached 5.68tr/- equals to 80 per cent of estimates of collecting shillings 7.13tr/- for year 2011/12.


Posted by on June 16, 2012 in Uncategorized


Tags: , , , , , , , , , , , ,

2 responses to “New VAT rate for Selected VAT Relieved Beneficiaries

  1. Peace K.

    June 16, 2012 at 7:42 pm

    Hey gal!, I love your blog, its very interesting specially for someone like me with my 101 economics…lol!.. now back to to that “infinite” budget!, Dr. Mgimwa mentioned that in order to implement effectively the new Finance bill 2012/13 unproductive and unnecessary expenditures should be avoided but, know what?? there’s two things I would love to know from Dr. Mgimwa first, what does his own ministry do to implement that? secondly, as a brand new minister what necessary steps is he going to take, differently from the old one and how, in order to make things a little better.

    And for you monica, as a finance guru…lol!… what did you think of the budget? just briefly!

    • monfinance

      June 19, 2012 at 2:44 pm

      Hi Peace, Thanks my dear.Karibu sana!

      My Views on the budget, I can’t say It is Perfect but It is Fair basing on assumptions given! Also Given the time Mgimwa had to prepare it.
      The main issue that everyone is complaining is the ratio of 7 to 3 on recurrent expenditure and Development expenditure, sounds really bad! But again as per last year budget results we looking at only 22% of the development goals will be reach, so Mgimwa decided to be realistic i guess, why put 35% or 40% while we cant even reach 30%?
      Some cracks on the budget that caught my attention;
      1. The 5,000,000 on private plate numbers- No research done or specific figure given as to how many people will opt for this for the government to earn more revenue.
      2. The waive of 35,000 to businesses less than 3Million and tax workers earning 170,000 per month (2,040,000). While we all know business men cheats on their incomes more than workers! Unfair for workers.
      3. The government intends to reduce poverty, But no Specific strategy outlined to meet towards this end.
      4. The government doesnt show clearly how they will implent the Tax collection task. To my knowlodge A lot of money is lost on Taxes due to impoper Tax collection management
      All in all, high displine is needed to the ministry, Regions,Districts, LGAs in Revenue collection and uses of public funds. DISPLINE!!

      As for Mgimwa’s question.. i think he needs to reply these questions himself ha haa. i will try forward them to the Ministry and see if we get his reaction.

      Thanks again Peace!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: