The Budget for 2012-2013 is generally effective from 1 July 2012. The key points of the Budget are summarized below:
Corporate taxation
Introduction of a 10% withholding tax on interest income earned by non-residents from banks, as is the case with residents. The exemption from withholding tax on dividends paid by resident companies to resident corporate shareholders will be abolished and these dividends will now be taxed at a reduced rate of 5%.
The withholding tax on interest payable on loans from foreign banks to strategic investors will be abolished; and the Dar es Salaam Stock Exchange (DSE) will be exempt from income tax.
Personal taxation
The proposed changes include adjustments to the presumptive income tax rates and bands applicable to business income derived by individuals to provide for a tax-exempt lower band not exceeding TZS 3 million of turnover and the income tax-free threshold for PAYE will be increased from TZS 135,000 to TZS 170,000 per month.
Capital gains tax
Capital gains tax is imposed on the sale of shares in a local company by the parent/offshore company.
