The Tanzanian government has introduced several key tax measures in its 2024/2025 budget aimed at enhancing the country’s competitiveness and industrialization. These measures are designed to stimulate economic growth, increase tax revenue, and support various sectors.
In this article are some of the key technological tax measures to be effected in Tanzania for FY 2024/25, as elaborated by Robert Mbaziira, a Senior Tax Manager at Ernst & Young, during a post-budget breakfast meeting held to analyze the key notes to take from the budget readings done across East Africa.
3% Withholding Tax on Digital Asset Transfers
The budget proposes a 3% withholding tax on the transfer of digital assets. This tax will be applicable to digital platforms and other entities that facilitate these transfers.
The withholding agent, whether resident or non-resident, will be responsible for collecting and remitting the tax. This measure, as Mbaziira elaborates, aims to broaden the tax base and increase revenue from digital transactions.
Read About: 5 Key Tech Tax Measures to be effected in Uganda for FY 2024/25
5% Withholding Tax on Payments to Digital Content Creators
The budget introduces a 5% withholding tax on payments made to resident digital content creators by both residents and non-residents. Mbaziira states that this measure aims to increase the tax base and provide a new source of revenue.
However, the definition of “digital content creation” will need to be clarified in the Finance Bill to ensure smooth implementation.
Exemption on Aircraft, Aircraft Engine, Aircraft Parts, and Aircraft Maintenance
The budget proposes an exemption on the supply of aircraft, aircraft engines, aircraft parts, and aircraft maintenance to local manufacturers, assemblers, or producers. This measure aims to enhance competitiveness in the aviation industry, attract investment, and support the tourism sector by reducing costs for local operators.
Exemption on Video Assistant Referee (VAR) Equipment and Accessories
The budget introduces an exemption on the supply of VAR equipment and accessories, subject to approval by the Minister responsible for sports. This measure aims to ensure that the country has the necessary sports equipment for hosting the 2027 African Cup of Nations (AFCON), which will bring various benefits to the country, including increased foreign exchange reserves and enhanced national image.
Also Read: 7 Key Tech Tax Measures to be effected in Kenya for FY 2024/25
Expanding the VAT Base – Online Data Services
The proposal is to incorporate online data services in the Value Added Tax (VAT) base. However, in the absence of a definition of what constitutes “online data services” and other details in terms of how VAT on the same will be administered, it is difficult to understand the implication. We expect further guidance to be provided in the Finance Bill.
