On 12 June, the National Assembly passed the Law on the support of small and medium-sized enterprises (SMEs). The measure will help to improve the quality of growth and change the nation’s economic growth model.
Under the new law, SMEs include micro-enterprises and small- and medium-sized enterprises whose average number of employees with social insurance is less than 200 in the year. These companies must also meet one of the following two criteria:
- Total investment capital of a maximum of US $ 10 billion (US $ 4.4 million) and a total annual turnover of US $ 100 billion; or
- Companies must be operating in the fields of agriculture, forestry, fisheries, industry, construction, trade and services.
SMEs that meet these requirements can be eligible for various incentives, such as assistance with credit access, support for tax and accounting or support for the acquisition of production areas, among others. In addition, the new measures provide for specific support measures for innovative start-up companies and SMEs involved in industrial interconnection clusters and value chains in the area of production and processing.
The law will take effect from January 1, 2018.
The Minister for Finance and Planning (MoFP) on 8 June 2017, issued to the National Assembly the estimates of government revenue and expenditure for 2017. The government plans to organise and spend TZS 31,712.0 billion in the 2017/18 budget.
The Budget reflects priorities to speed up economic growth to achieve middle income status, keep back revenue leakage and resource wastage, develop infrastructure, and reform government bureaucracy to boost service delivery. The Budget Bill 2017 has been published, pending tabling before the National Assembly for debate and approval. It is assumed that this Bill will be enacted into law later in the year. It will be effective from 1st of July 2017 as specified in the Bill. The overview of tax proposals contained in Budget 2017 are given below:
- A 5% withholding tax (WHT) on payment made for specified minerals (minerals that a licenced dealer is authorized to deal with) or minerals supplied by a resident person.
- A reduction of the corporate income tax rate (from 30 per cent to 10 per cent) applicable for new plants to assemble vehicles, tractors and fishing boats or outboard engines for those who have a performance agreement with the Government for the first five years from commencement of operations.
- The bill provides for a rise in the threshold from TZS 15 million to TZS 30 million to apply for tax relief on non-commercial motor vehicles.
- A zero VAT rate is proposed for ancillary transport services in relation to goods in transit in Tanzania. This will reduce costs of transporting goods through Tanzania and will ultimately make Tanzanian ports more competitive.
- An extension of time to submit VAT returns to the first working day following a weekend or public holiday when the due date falls on a Saturday, Sunday or a public holiday.
- Tax exemption is proposed on machinery and plant used in textile, edible oil, leather and pharmaceutical (including veterinary) industries. It is geared towards promoting investments in small and medium scale industries.
- The Bill also includes some amendments to the Excise (Management and Tariff) Act. A 5% excise duty increase is proposed on specific non-petroleum products, including alcohol, soft drinks and tobacco (except locally produced water, fruit juices and spirits).
- A decrease of excise duty is proposed on locally produced fruit juices and wines.
- An increase in excise duty on petrol, diesel and kerosene by TZS 40 per litre.
- The Minister has proposed an increase of TZS 40 per litre in the excise duty on fuel.
- An increase of 5% or 3,481 per litre in excise duty is proposed for imported spirits.
The Minister of State for Finance and Economic Cooperation presented the draft budget to Parliament on 8 June 2017.
The Council of Ministers proposed to spend 320.8 birrs (USD 13.8 billion), which is a rise of 2.02 billion (16.9%) over the current financial year. Of this total, approximately $ 4.9 billion is allocated to investment spending, while some $ 3.55 billion is scheduled for regular spending.
Over $ 5.08 billion (around 36.6%) is allocated to subsidies to regional states. About 303 million US dollars are made available to implement the goals of sustainable development (SDGs).
The State Secretary said that the draft budget was designed to take into account socio-economic activities and the impact of the continental and global economic situation as well as the promises of the international donors.
After discussion, Parliament referred the draft budget to the committee for budgetary and financial matters for further consideration. It is expected to be approved by the end of June 2017.
On 19 June 2017, the Irish Revenue published the Tax and Duty Manual Part 41A-05-02 that has been amended in paragraph 1 in relation to the pursuit of outstanding returns and in paragraph 4 in relation to appeal provisions.
According to this manual, where a taxpayer has failed to submit a Form 11, CG1 or CT1, as appropriate, section 959O of the TCA 1997 provides that penalties under section 1052 and 1054 may arise. In addition, a surcharge under section 1084 may apply (refer to Part 47-06-01 of the Tax and Duty Manual). Notwithstanding the provisions of sections 1052, 1054 and 1084, outstanding returns are pursued under the Return Non Filer Programme and, where appropriate, prosecution is considered under section 1078.
Furthermore, where a taxpayer has not filed a return (be that a Form 11, CG1 or CT1), then a Revenue Officer may, under section 959AC, make a Revenue Assessment on that person for the amount of tax, which in the best of the officer’s judgment, is due.
The Malaysian government is going ahead with its tourism tax to be imposed from July 1, 2017. Under the new tax, hotel guests will be charged between RM2.50 and RM20 for every night’s stay, depending on the classification of the hotel.
According to Malaysian Tourism and Culture Minister Mohamed Nazri Abdul Aziz the money collected would be used to promote Malaysia overseas and refurbish tourism facilities. The Tourism Tax Bill 2017 was passed in the last Parliament sitting with a majority vote.
On 7 June 2017, the Commissioner of China’s State Administration of Taxation (SAT) signed, on behalf of Hong Kong, the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, which aims to close loopholes in the current bilateral tax treaties and lessen the opportunity for tax avoidance.
In implementing the Multilateral Instrument, Hong Kong has taken a pragmatic approach, opting into the provisions of the Convention that represent the minimum standards including the principal purpose test for preventing treaty abuse and the requirement for allowing a minimum three-year period for a person to present its case for Mutual Agreement Procedure (MAP). Hong Kong has opted out of other provisions that are not mandatory such as provisions addressing hybrid mismatches and changes to combat artificial avoidance of a permanent establishment.
On 15 June 2017, the Hong Kong Inland Revenue Department (IRD) issued a notice on the property tax obligations of property owners. Property tax is charged on property owners by reference to the actual rent receivable (including lease premium) in the relevant year of assessment. Owners in receipt of rental income must inform the tax department in writing if they are liable to tax and supply the particulars of the property not later than 4 months after the end of the basis period for the year of assessment (e.g. on or before 31 July 2017 for the year of assessment 2016/17), unless they have already received the appropriate tax returns.
A return issued by the IRD should be completed and furnished to the IRD within the stipulated time limit for official record updating purposes even if no rental was received in respect of the property concerned. Owners chargeable to property tax must keep sufficient rent records, such as lease agreements and duplicates of rental receipts for at least 7 years. They must inform the Department of any change of address in writing within one month.
Where a corporation has been exempted from property tax and there is a change in the ownership or use of the property, or in any other circumstances which may affect such exemption, the corporation must notify the Department in writing of the change within 30 days after the event. Heavy penalties may be incurred for failure to comply with the requirements of the Inland Revenue Ordinance.