On 13 June 2019, Philip Mpango, the Finance Minister of Tanzania, presented the Budget for financial year (FY) 2019/2020 to the National Assembly. The finance minister said that total domestic revenue including Local Government Authorities (LGAs) own sources is estimated at TZS 23.05 trillion, equivalent to 69.6% of the total budget. The Income Tax measures altogether are expected to increase Government revenue by TZS 35,192.5 million. Tax revenue is estimated at 13.1% of GDP in 2019/2020 from the likely outturn 12.1% in 2018-19.

The Budget also contains a number of measures related to amendments the Income Tax Act, CAP 332. The amendments related to income tax act are as follows:

  • Reduction of corporate income tax for new investors involved in the production of sanitary pads from 30% to 25% for two years from FY 2019/2020 to 2020/2021. This is subject to the investor signing a performance agreement with the government;
  • Exemption of withholding tax rate on various fees charged to Government on loans received from non-residential banks and other international financial institutions. The fees to be exempted includes commitment fees, Insurance Premium fees, Insurance Management fees, Arrangements fees and any other fees imposed as part of costs of such loans. This measure will help Government to secure Loans at lower costs and in a reasonable time. It will also facilitate implementation of Government projects timely
  • The turnover threshold for individuals and businesses to prepare and file audited financial statements is now increased from TZS 20 Million to TZS 100 Million;
  • Current presumptive tax rates structure:
Turnover Thresholds Rates
turnover does not exceed TZS 4 million 0%
turnover exceed TZS 4 million up to TZS 7 million tax rate 3% of turnover in excess of 4 million
turnover exceed TZS 7 million up to TZS 11 million tax will be TZS 90,000 plus 3% of turnover in excess of TZS 7 million
turnover exceed TZS 11 million up to 14 million tax will be TZS 230,000 plus 3% of turnover in excess of TZS 11 million
turnover exceed TZS 14 million up to 1 billion tax will be TZS 450,000 plus 3.5% of turnover in excess of TZS 14 million

Finance minister also proposed to amend Section 70(2) of the Tax Administration Act, CAP 438 in order to extend for six months up to December 2019 the period given for 100 percent Tax Amnesty on interest and penalties. The extension is granted to taxpayers who had already applied for amnesty and this measure is taken due to positive response from taxpayers after the Tax Amnesty was announced in July 2018.

The Budget is effective as of 1 July, 2019.