On the 12th June 2018, the Finance Bill, 2018 which aims at imposing and altering certain taxes, duties, levies, fees and to amend certain written laws relating to the collection and management of public revenues was published to the special Gazette of the United Republic of Tanzania No. 4 (the Bill). The Bill once signed will come into law and come into operation on 1st July 2018. The intention of the law is to increase Government revenue, promote economic growth particularly in the industrial, agricultural and transport sectors and employment opportunities.
Salient features of the Bill
- Waiver of VAT on packaging materials produced by local manufacturers of pharmaceutical products;
- reduction of corporate income tax rate for a period of five years from the start of production from 30% - 20% for new investors in the pharmaceutical and leather industries;
- increase in gaming tax rates; and
- no increase in excise duty for beverages locally manufactured.
Value Added Tax Act, CAP 148
The Bill intends to exempt VAT on capital goods such as edible oil, textile, leather and pharmaceutical (including veterinary) industries. It is proposed to have zero rate VAT on ancillary transport services in relation to goods in transit when in Tanzania. This is a notable change as such amendment will promote investments in small, medium and large-scale industries by providing relief of taxes in the purchase of machines and plants and to reduce the costs incurred by transporters when using Tanzanian ports and hence making Tanzanian ports affordable and competitive.
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