2019 2020 Budget

Sustaining the
Momentum
National Budget Bulletin
2019/20
June 2019
In this bulletin…
1. Commentary 03
2. Direct Taxes 05
3 Other Administrative Matters 06
4. Indirect Taxes 07
5. The Economy 10
6. Financial Services Sector 17
7. Consumer Industrial Products and Services Sector 21
8. Government and Public Sector 25
9. Mining Sector 28
10. Appendices 32
Sustaining the Momentum: National Budget 2019/20 June 2019

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Commentary
In his speech on the Economy, the Minister Looking forward, the Minister’s macro-
for Finance and Planning Hon Dr Philip economic objectives for 2019/20 include
Mpango cited robust macro-economic continued strong growth (7.1% for 2019
statistics including robust GDP growth (7.0%) compared to 7% in 2018) and revenue
and single digit inflation. Against the collection (Tax to GDP ratio of 13.1%,
background of national development priorities compared to a projected 12.1% for 2018/19).
as set out in the National Five Year There is also an aim of controlling inflation to
Development Plan 2016/17-2020/21, he between 3.0% and 4.5%. To achieve this he
emphasised the importance of the emphasised the Government’s intention to
implementation of ongoing infrastructure improve the business environment in a bid to
development projects so as to set the attract foreign direct investment in priority
platform to nurture industrialisation. areas (including agriculture, construction,
manufacturing, mining, oil and gas,
Economic activities with the highest For the nine months to March 2019
telecommunications, tourism).
contribution to GDP including agriculture Government Revenue was only 3.9% up on
(28.2%) and construction (13.0%), both of prior year (based on Bank of Tanzania Apart from continued infrastructure
which had robust growth. Agriculture’s growth monthly economic reviews). If looking at tax investment there was recognition of the need
of 5.3% reflected favourable weather revenue in isolation (namely, excluding non- to rationalise and harmonise laws,
conditions that enabled a bumper harvest. tax revenue and Local Government Authority regulations and policies governing
Construction’s growth of 12.9% was a direct revenues both of which grew strongly investment; and to encourage investment in
consequence of the infrastructure during the year), then the growth was just public private partnerships. The focus on
investments, in particular in roads, railway 1.4%. The Budget speech mentioned improvement of the business environment is
and airports - and this was also reflected in underperformance of tax revenue collections well placed. The country’s ranking in various
the balance of payments which saw an which for the ten months to April 2019 were survey continue to indicate a challenge on
increase in the value of imported goods and equivalent to 87.4% of the target. this front - for example, ranking of 144th out
in particular construction materials. of 190 countries in the 2019 World Bank

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Commentary
Ease of Doing Business Ranking, or World implementation of the Blueprint for regulatory that with effect from next financial year, the
Economic Forum (WEF) Global streamlining. It also noted the need to Government will implement the Blueprint
Competitiveness Ranking (116th out of 140 address deficiencies in infrastructure services Action Plan exhaustively to improve business
countries in 2018). and skills. environment, so that the business
environment becomes more friendly, cost
In its January 2019 Tanzania Economic The Budget speech included reference to
effective and efficient”.
Update, the World Bank highlighted that “in steps taken to verify and pay arrears to
2017, FDI declined to 2.3 percent of GDP, suppliers, contractors and public servants, The TZS 23,045 billion domestic revenue
down from 3.9 percent in 2016” noting that and there was a commitment given to budget for 2019/20 comprised tax revenue of
“the decline in FDI inflows bodes poorly for “continue to set aside funds for payment of TZS 19,101 billion and non tax revenue of
future growth”. The report emphasised the verified arrears and [to] take various TZS 3,944 billion. This tax revenue budget
importance for the Government “to urgently measures to reduce accumulation of represents an increase of 18% on the
implement measures to foster greater private arrears”. However there was no explicit 2018/19 projected outturn of TZS 16,220
sector participation in the economy”. For the comment on steps to deal with pending VAT billion (a projected outturn which represents
short term it highlighted the need to improve refunds. The speech did include that TRA 90% of the 2018/19 budget of TZS 18,000
liquidity in the economy including (i) should not close businesses so as to enforce billion, and a 7% increase on the 2017/18
prioritisation of the payment of verified payment of tax and tax arrears without a actual outturn of TZS 15,191 billion). A
domestic arrears to private sector contractors written permission of the Commissioner significant focus in order to achieve the
and suppliers, (ii) speeding up the release of General of the TRA. revenue targets are various tax
VAT refunds to improve liquidity in the administration strategies highlighted in the
Reference was made to the meeting held on
economy, and (iii) ensuring tax collection speech.
7 June 2019 between the President and the
efforts do not unfairly burden
business community, and as an immediate
businesses. For the medium term the World
step the Budget speech included a number of
Bank emphasised the need to continue
initial measures to rationalise regulatory fees
reforms to address structural constraints on
and levies. The Minister gave the following
private investment, and to reduce the high
assurance “I wish to assure the business
cost of regulatory compliance through full
community, investors and citizens at large
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Direct taxes
Income tax – Companies Income tax – individuals

Income tax – Exemptions
Reduced Corporate Income Tax TZS 100m minimum annual Exemption of withholding tax on
(“CIT”) rate for new investors in turnover for filing financial fees related to loans financing
production of sanitary pads statements with the TRA Government projects
Reduction of CIT rate to 25% (from 30%) for The turnover threshold for a taxpayer to be
required to file audited financial statements Exemption of withholding tax on all fees
the two years from 2019/20 to 2020/21 to (such as commitment fees) on loans secured
encourage new investors to manufacture with the TRA is increased to TZS 100m (from
TZS 20m). by the Government from non-resident banks
sanitary pads, increase Government revenue, and financial institutions.
reduce foreign exchange used on importation The objective of the measure is to reduce
of the sanitary pads and create local compliance costs but also with the The intention is to enable the Government to
employment opportunities. expectation that it will result in voluntary secure loans at lower cost and in a timely
In practice, the benefit of this relief is unclear compliance and widen the tax base. manner which will facilitate the
as the expectation is that in the initial years implementation of Government projects.
Application of presumptive tax
there would be a tax loss due to recovery of
the investment costs by way of tax regime for taxpayers with annual A similar exemption was introduced last year
depreciation. Ideally, the reduced rate should turnover up to TZS 100m for interest costs incurred by the Government
apply from the time that an investor starts to be exempted from the 10% withholding tax
Presumptive tax rates will now apply to
making taxable profit. which applies on payment of interest.
individuals with annual turnover up to TZS
100m (previously presumptive tax only
applied to individuals with annual turnover
between TZS 4m to TZS 20m).
In addition, the presumptive tax rates have
been reduced – see Appendix 1.

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Other administrative matters
Tax Amnesty – deadline Transfer pricing – Building Other proposed measures to
extended to December 2019 capacity improve collection of
The Minister announced an extension of six One of the administrative strategies to be Government revenue
months to 31 December 2019 to comply with implemented to increase domestic revenue is • Integration of domestic revenue collection
existing amnesty applications. to strengthen capacity for monitoring and systems through Electronic Fiscal Device
controlling transfer pricing by international Management System to curb issuance of
In our view, this is due to the fact that a
companies. fake receipts, revenue leakages in
number of taxpayers are still waiting to hear
from the TRA on their amnesty application This is the first time that transfer pricing is processing of tax refunds.
and therefore the extension of the amnesty explicitly mentioned in a budget speech and • Introduction of a system to regulate
window will enable the process for these shows the level of importance placed by the gaming activities.
taxpayers to continue. Government on this issue. This measure is
likely to result in increased transfer pricing • Enhance utilisation of electronic system in
Proposal to establish an audits by the TRA in the future. collection of tax and non-tax revenues.
‘Office of Tax Ombudsman’ • Establishment of a dedicated desk by the
Amendment to The Road
coordinated under the TRA to receive complaints and disputes
Traffic Act, CAP 168 by taxpayers that will be dealt with in
Ministry of Finance and twenty four hours. This includes
Increase in validity period for a driver license
Planning to five years (from three years). complaints against tax assessments and
unrealistic valuation on imported goods.
There is a proposal to establish an Increase in driver license fees to TZS 70,000
independent office that will deal with (from TZS 40,000). • A relief period of six months from the date
complaints against TRA officials regarding of receipt of a Taxpayer Identification
tax administration including corruption, Increase in registration fees (currently TZS Number (TIN) to pay the relevant taxes.
arbitrary assessments and unlawful closure 10,000) to:
of businesses. • Motor vehicle – TZS 50,000
• Motorcycle – TZS 30,000
This measure is expected to enhance tax • Tricycle – TZS 20,000
administration and result in a friendly
business environment for the taxpayers.
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Indirect taxes
Petroleum Taxes – no change A new exemption is introduced for aircraft • Grain Drying Equipment of HS Code
lubricants imported by a domestic airline 8419.31.00. This exemption is expected to
Excise duty, fuel levy, road toll and petroleum operator, the National Air Force or airline
levy remain unchanged. reduce costs incurred in grain drying for
companies recognised in Bilateral Air
services Agreement. storage purpose. In addition this measure
Excise Duty will stimulate production of grain crops.
There are no adjustments for inflation on non- Value Added Tax (VAT)
petroleum excisable products including Exemptions – Airline Sector
alcohol, soft drinks and tobacco (whether Input VAT – agricultural exports
In addition to the existing exemptions on
imported or locally produced). The reason In order to facilitate export of agricultural and importation of aircraft, aircraft engine or parts,
given for no adjustment is the low inflation horticultural produce and enhance the new exemptions are proposed for:
rate (3.5%). competitiveness of these raw products in the
international markets, the VAT Act has been • Aircraft lubricants imported by domestic
To promote local manufacturing, the following amended to remove the restriction on operators of air transportation; and
minor changes are proposed: claiming of input VAT on export of raw
agricultural products. This restriction was • Imported airline tickets, flyers, calendars,
• Reduction in excise duty on wine introduced in 2017 and was to become diaries, labels and employees uniforms
produced using domestic fruits (such as operational from July 2019. The reversal has with the names of the Airline operator.
banana, cashew, rozera, tomatoes, etc.) therefore occurred before it became These items will be exempted if they are
to TZS 61/litre (from the current TZS operational. imported by airlines recognized under
200/litre). Bilateral Air Service Agreements.
Exemptions - agriculture
• Introduction of excise duty on artificial hair
VAT exemption as follows:
(10% if made locally; 25% if imported).
Imported refrigeration boxes of HS Code
• New 10% excise duty on imported pipes 8418.69.90. The measure is intended to
and plastic materials (such as tubes, pipes reduce production costs and promote modern
and hoses and fittings). horticultural farming in the country; and

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Indirect taxes
Apart from other benefits, Tanzania will now Our observation the suppliers could not claim input tax
be able to sign Bilateral Air Service incurred on locally manufactured
Agreements which could not be signed in the Although exempting the airline sector products sanitary pads, and this cost was
absence of such exemptions. will result in cost saving for the air transport subsequently passed to final
sector, it will make local suppliers of the same consumers by embedding the same in
Removal of exemption on sanitary products less competitive. the price of the sanitary pads. It
pads therefore also affected the competitive
As regards sanitary pads the intention of the of local manufacturers when
The previous budget introduced a VAT previous budget was probably not met because competing with imports (with no
exemption on supply of Sanitary Pads under embedded VAT cost).
HS Code 9619.00.00. The aim was to ensure
that this product is available and affordable to
women and girls, particularly school girls and
those in the village. However, this year the
proposal is to abolish this exemption because
the measure could not facilitate availability of
this essential product to the intended
beneficiaries at reasonable price but instead
the benefits have gone to the traders.
Zero rating: electricity supplies to

Zanzibar
The supply of electricity to Zanzibar is to be
zero rated.

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Indirect taxes
Customs Duty Other taxes and levies

The pre-Budget Consultation of the Ministers Removal of various fees and levies • Reducing and/or abolishing various fees
of Finance from the EAC Partner States that - Implementation of the Blueprint and levies; and,
was held on 3rd May, 2019 proposed to effect for Regulatory Reform
changes in the common External Tariffs • Eliminate the existing duplication of roles
As a move to start and continue with the among the Government regulatory
(CET) rates and the East African Community implementation of the Blueprint for authorities. Example food and cosmetics
Customs Management Act (EAC-CMA), 2004 Regulatory Reforms 2017 “the Blueprint”, the will be managed by TBS (previously under
for year 2019/20. The proposed changes are Government is proposing amendments to TFDA)
aimed at “Transforming Lives through various fees and levies in order to improve
industrialization and Job Creation for shared the business and investment environment See details in Appendix 3.
and encourage compliance. This includes:
Property among the people of the East
African Community.”.
The Ministers have proposed to effect new
changes in the Common External Tariff
(CET) for year 2019/20 and also agreed to
continue with implementation of some
measures that were effected during the
financial year 2018/19.
The changes, together with the number of
changes specific to Tanzania are
summarised in Appendix 2.

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The Economy
Real GDP - Tanzania Inflation – Tanzania Interest Rates – Tanzania

In 2018, the rate of inflation continued to During 2018, overnight interbank cash rate
The National Bureau of Statistics (“NBS”)
remain at a single digit level averaging 3.5% declined to an average of 3.18% compared
rebased the GDP statistics by changing
compared to 5.3% in 2017. The decrease is to 3.67% in 2017. The overall Treasury bills
the base year from 2007 to 2015. This
largely attributed to improved food supply, rate increased to an average of 8.07% in
revision resulted in changes to the size of
increased food production to 15.9 million 2018 from 7.75% in 2017. In addition,
GDP, GDP overall growth levels, sectoral
tons (compared to domestic demand of 13.3 interest rates charged on loans by
growth and the contribution of various
million tons) and implementation of prudent commercial banks decreased to an average
sectors to GDP as well as various
monetary and fiscal policies. of 17.15% from 17.93% in 2017. This trend
indicators of GDP.
of average lending rate declining was driven
According to the NBS, the economy of The inflation rate in April 2019 was recorded by banks to assist borrowers who had failed
Tanzania has continued to register high at 3.2% compared to 3.8% recorded during to repay loans on time. The Central Bank
growth levels with real GDP growth rate in the same period last year. also took various measures to ensure that
2018 of 7.0% compared to 6.8% in 2017 lending rates are kept low and consistent
(rebased from 7.1%). The growth was with the prevailing economic situation.
driven by increased investment especially
In order to reduce non-performing loans, the
in infrastructure, a stable supply of
Central Bank ensured that banks and
electricity, improvement in transport
financial institutions get accurate information
services and favourable weather
of the loan applicants by enforcing
conditions that resulted in an increased
requirements to use the credit reference
harvest of food and other crops.
system during the loan approval processes.
Economic activities with the highest
contribution to GDP including agriculture During 2018, the Government took various
(28.2%) and construction (13.0%), both of measure aiming at increasing the level of
which had robust growth with agriculture liquidity in the economy in order to enable
growing 5.3% and construction 12.9%. banks and financial institutions to stimulate
growth of economic activities. These
measures include:

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The Economy
• Provision of short-term loans to banks; Regional Economic External Trade

• Purchase of foreign currency from Performance During the period ended April 2019, the
commercial banks and government balance of payments recorded a deficit of
institutions; Real GDP – EAC USD 1,089.2 million compared to a surplus
• Reducing the bank discount rate from Nations within the East African Community of USD 299.2 million during the same period
9.0% to 7.0% in August 2018; and (EAC) recorded an increase in economic in 2018.
growth with Rwanda recording the highest
• Payment of arrears to contractors,
growth of 8.6%, followed by Tanzania, which
Export
service providers and civil servants by
recorded growth of 7.0%. Kenya recorded The value of goods and services exported
making payments of TZS 598.4 billion
economic growth of 6.3% and Uganda between July 2018 and April 2019 reached
of verified arrears between July 2018
6.1%. USD 7,210.6 million down from USD 7,291.9
and May 2019.
million recorded during the same period in
Due to these measures, banks and Inflation – EAC 2017/18.
financial institutions liquidity improved and Inflation rates in EAC member countries
money market interest rates decreased. have generally remained at single digit levels
Import
during 2018 to 2.9% from 7.9% in 2017. The The value of goods and services imported
average inflation rate for Uganda was 2.6%, between July 2018 and April 2019 reached
Burundi was 2.3%, Tanzania was 3.5%, USD 9,024.9 million compared to USD
Rwanda was 1.4%, and Kenya was 4.6%. 8,464.6 million recorded during the same
This outcome was attributed to strong food period in 2017/18 equivalent to an increase
supply within the EAC. of 6.6%. This was mainly due to an increase
in the importation of construction materials
for railway, airports, ports and roads projects
undertaken by the government.

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The Economy
Trend of Imports by Major Categories (in Millions of USD) Service Receipts
Year ending April
. 2017 2018 2019
2526.9
2098.2 2231.5
1105.4 1190.5 1225.6
434.5 401.6 332.8
Travel (Tourism) Transport Other Services
Service Payments
Trend of Imports by Major Categories (in Millions of USD)
Year ending April
2017 2018 2019
891.4 903.7
839.2 852.2 822.1
673.4
485.4 505.4
336.3
Travel (Tourism) Transport Other Services

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Past performance 2018/2019
Revenue/Collections • Loans from domestic sources, including from Development Partners which were
rollover of matured Treasury bills and directly disbursed to projects.
Total resources mobilised during the ten bonds, amounted to TZS 3.3 trillion,
month period from July 2018 to April 2019 Some of the strategic areas accorded priority
equivalent to 57.4 percent of the target;
amounted to TZS 21.16 trillion equivalent in the release of development funds during
and
to 65% of the annual target of 32.48 the period under review include:
trillion. These were mobilised from the • External non-concessional loans
Area Strategic Areas TZS
following sources: amounted to TZS 692.3 billion.
' bn
• Tax Revenue amounted to TZS 12.9 Expenditure Energy Construction of
Hydroelectric Power
723
trillion, which is equivalent to 87.4 Project at Rufiji
percent of the target; Development Expenditure
River
• Non-tax revenue amounted to TZS During the period ended April 2019, the Education Fee free basic
education and
616
2.04 trillion, which is equivalent to 122 Government had released TZS 22.19 trillion
to Ministries, Departments, Regional higher education
percent of the target. Non-tax revenue students’ loans
surpassed the target due to Secretariats and Local Government
Energy Rural electrification 269
improvement in the use of technology Authorities equivalent to 68.32% of the
project-phase III
in collection of the non-tax revenue in annual target of TZS 32.48 trillion. Out of under the Rural
the Government Agencies through this, TZS 16.75 trillion was for recurrent Electrification
Government Electronic Payment expenditure (equivalent to 81.83% of the Agency (REA)
Gateway (GePG); annual target of TZS 20.47 trillion) while TZS Transportation Procurement and 238
5.44 trillion was for development expenditure operation of new
• LGAs own source amounted to TZS (equivalent to 45.3% of the annual target of aircrafts
529.25 billion, equivalent to 72 percent TZS 12.01 trillion). The amount released for
of the target; Transportation Ongoing 27
development projects includes TZS 4.89
manufacturing of
• Grants and concessional loans from trillion local funds and TZS 547.38 billion
new ships for the
Development Partners amounted to foreign funds. However, the amount of great lakes regions
TZS 1.70 trillion, equivalent to 86 foreign funds do not include some funds
percent of the target;

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The 2019/2020 Budget Objectives and Targets
Macroeconomic policy • Agriculture: implementation of • Improvement of enabling business

Agricultural Sector Development environment and investment climate:
Based on macroeconomic objectives and Programme II; strengthening agricultural construction and rehabilitation of various
targets, the priority for 2019/20 will be: (i) crop boards; enabling availability of infrastructures for improving business
industries to foster economic growth and agricultural inputs, extension services, environment and attracting private sector
industrialisation with emphasis on storage facilities and markets for strategic investment
establishment of industries that will utilise crops; construction and rehabilitation of
local raw materials; (ii) economic growth irrigation schemes; and strengthening
• Monitoring and Evaluation: strengthen
monitoring and evaluation of the
and human development; (iii) research on quality sees and crops’
implementation of development projects
improvement of an enabling environment diseases
at all levels; strengthen administration of
for business and investment; (iv)
strengthening implementation
• Livestock and fisheries: strengthening tax and non-tax revenue
farms for producing quality heifers and
effectiveness of the National Five Year
centres for animal breeding; revamping
Development Plan 2016/17 – 2020/21.
Tanzania Fisheries Cooperation;
To achieve the objectives, the following construction of a fishing port;
projects will be implemented: procurement of large fishing vessel
• Industries: developing industrial parks • Economic growth and human
including TAMCO in Kibaha; Leather development: fee-free basic education;
Industrial Park in Dodoma; Special improved education infrastructure;
Economic Zone in Bunda and improved health facilities and supplies;
Dodoma; strengthening the research improved availability of water in rural and
centres of CAMARTEC, TIRDO, urban areas
TEMDO and SIDO

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The 2019/2020 Budget Objectives and Targets
• Enhance administration of tax exemptions

Revenue policies for by ensuring that they are directed to the Expenditure policies for
2019/20 intended projects; 2019/20
The Government is committed to • Ensure that non-tax revenues are In 2019/20, the Government will continue to
increasing and strengthening domestic collected through Government Electronic allocate funds in priority areas to ensure
revenue collections by pursuing the Payment Gateway System (GePG) in effective implementation of the 2019/2020
following policies: order to improve efficiency in domestic Annual Development Plan. The Government
revenue collection; and will sustain financial discipline in order to
• Increase efficiency in administration
and collection of domestic revenue • Strengthen monitoring systems in the realise the value for money. In implementing
Government institutions in order to this initiative, the Government will carry out
through implementation of Integrated
ensure that contributions from public the following:
Domestic Revenue Administrative
System (IDRAS); institutions are timely remitted to the Ensure that the budget deficit does not
Government Coffers. exceed 2.3% of GDP;
• Widen the tax base through
identification and registration of new Strengthen Cooperation with Allocated funds to priority areas and
tax payers as well as continue with the Development Partners productivity in order to stimulate economic
exercise of informal sector growth in industries and agriculture,
formalisation; Grants and concessional loans have economic growth and human development,
declined from an average of 26.3% in improvement of enabling business
• Invest in areas that have potential of
2010/11to 8.3% in 2017/2018. environment and investment climate, and
generating more revenues particularly
monitoring and evaluation;
in deep sea fishing through The Government will continue to engage
construction of fishing port and Development Partners through various Ensured discipline in the use of public funds
procurement of fishing ships; dialogues to ensure that the principles as and continue to reduce unnecessary
outlined in the Framework for Development expenditure; and
• Strengthen capacity for monitoring and
Cooperation endorsed by the government in
controlling of transfer pricing; Verify, clear and control further accumulation
2017 are complied with by all parties to
of arrears.
improve sustainable development and
disbursements of loans and grants.
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Summary of Targeted Revenue Collection for 2018/2019 and 2019/2020
2019/2020 2018/2019 2019/20
12 month 12 month v
Budget Budget 2018/19
TZS' bn TZS' bn Increase
Domestic Revenue:
Tax Revenue - TRA 19,101 18,000 6.1%
Non Tax Revenue 3,179 2,158 47.3%
22,280 20,158 10.5%
Local Government Authorities (LGA) own source 765 736 3.9%
Domestic Revenue + LGA 23,045 20,894 10.3%
Program loans and grants 273 546 -50.0%
Project loans and grants 2,311 2,005 15.3%
Basket support loans 35 34 2.9%
Basket support grants 165 92 79.3%
Non Bank borrowing /roll over 3,460 4,600 -24.8%
Bank borrowing ( Financing) 1,500 1,194 25.6%
Non-concessional borrowings 2,316 3,111 -25.6%
Total revenue 33,105 32,476 1.9%
Expenditure
Recurrent 20,857 20,469 1.9%
Development 12,249 12,007 2.0%
Total 33,106 32,476 1.9%
Recurrent expenditure
National Debt Service* 9,721 10,005 -2.8%
Wages and Salaries 7,559 7,410 2.0%
Other Charges 3,577 3,054 17.1%
20,857 20,469 1.9%
Development expenditure
Domestic Financing 9,738 9,876 -1.4%
Foreign Financing 2,511 2,131 17.8%
12,249 12,007 2.0%
*National Debt Service includes: domestic interest TZS 1,439 bn, domestic amortisation
(rollover) TZS 3,460 bn, external interest and amortisation TZS 2,963 bn, Government contribution
to pension funds TZS 1,256 bn, other expenditure under CFS TZS 603 bn

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Financial Services Sector
The financial sector in Tanzania has seen In August 2018, the central bank took over Non-performing loans
some turbulence over the past few months the administration of Bank M Tanzania due to
with the Bank of Tanzania (BoT) revoking the liquidity issues. In the early half of 2019, the The Non-Performing Loans (NPLs) of most
licenses of some banks during the first half of BoT authorised the merger between Azania banks in the country have been cited as
2018 due to inadequate capital requirements Bank and Bank M. among the major reasons that contribute to
and taking control of some banks due to declining profit margin. The rise in NPL ratios
In March 2019, Exim Bank Tanzania is driven by a combination of economic
liquidity and under capitalization. The BoT
announced that it was planning to acquire developments and poor credit risk
revoked the licences of Covenant Bank,
UBL Bank through a joint statement issued by management.
Efatha Bank, Njombe, Community Bank,
the two banks. One month later, Equity Group
Kagera Farmers’ Cooperative Bank, Mbinga
announced that it has entered into an Early in 2018, the BoT took measures to
Community, Bank and Meru Community
agreement with Atlas Mara, a pan Africa reduce the burden of unpaid loans. BoT
Bank.
focus banking group to acquire banking issued a circular entitled Measures to
Mergers and acquisition operations in four African countries including Increase Credit to the Private Sector and
Tanzania. Atlas Mara is the majority Contain Non-Performing Loans, in which,
The banking sector in Tanzania has also shareholder of BancABC Tanzania. among other things, it waved some
witnessed a number of mergers and provisions of Banking and Financial
acquisitions over the recent months involving CBA and NIC Bank Tanzania are also Institutions Regulations 2014 for two years up
both local and foreign banks. In August, the expected to undergo consolidation following to December 2020 to enable banks to collect
central bank ordered three state-owned the banks’ groups in Kenya approved the unpaid loans. Some of the other measures
banks namely TPB Bank, Twiga Bancorp and merger deal in their respective annual instituted by the BoT include directing banks
TWB Bank to merge. The BoT also issued general meetings in April 2019. During the to improve loan granting process, requiring
banking license to China Dasheng Bank in same month, Hakika Microfinance Bank banks with high non-performing loans to
November 2018, which was previously issued announced the intent to acquire Mwanga submit strategies to contain non-performing
with provisional license in November 2017. Community Bank based in Kilimanjaro region. loans as well as enforcing the requirement to

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use credit reference system by submitting total assets reaching TZS 30,215.9 billion at In terms of growth rates, credit to agriculture,
credit information to the system and using the end of December 2018, from TZS mining and quarrying, manufacturing and
that information to scrutinize credit 29,804.9 billion recorded at the end of personal activities grew faster as in February
applicants. December 2017. 2019. Noteworthy, credit extended by banks
to transport and communication activities
Interest rates cut As per the BoT monthly
recorded positive growth in March 2019 after
economic review for April 2019,
a sustained contraction since October 2018.
BoT also took other measures to boost sectoral composition of stock of
liquidity by cutting the discount rate three credit extended by banks to the
times in 18 months, from 16 per cent to 12 private sector remained almost
per cent in March 2017 and again to 9 per the same as in the previous
cent in August 2017 and further to 7 per cent month and corresponding
in August 2018. month of 2018. Personal loans,
often used to finance small and
Industry performance medium-size businesses, and
The Tanzania banking sector remains highly credit to trade activities
concentrated with two former state banks accounted for the largest share
CRDB and NMB, holding around 35% of total of the outstanding credit,
banking assets and a combined 40% of the holding 28.6 percent and 18.2
deposits. The top 5 largest banks have over percent in March 2019,
50% of the total banking assets. According to respectively.
the BoT mid-year review – 2018/2019, the
banking sector remains sound, stable and
profitable; with levels of capital and liquidity
above regulatory requirements. The sector Composition of Banks’ Outstanding Credit by Major
continued to maintain steady growth, with Economic Activities

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The BoT monthly economic review for April

2019 mentioned that the level of credit
extended by banks to the private sector grew
significantly by 9.6 percent in the year ending
March 2019 compared with 1.2 percent in the
corresponding period of 2018. The outturn
was because of sustained accommodative
monetary policy stance and measures taken
by banks to reduce the amount of non-
performing loans, including mandatory use of
credit reference system before loan approval.
Credit to the Private Sector by Banks

PwC 19
Foreign exchange bureaux

reforms
Early this year, the BoT initiated the process
to revoke licenses of bureau de change in
Dar es Salaam which were understood to be
operating without observing laws, regulations
and procedures guiding foreign exchange
businesses. As a result of this operation,
banks and financial institutions have been
urged to continue playing an active role in
providing foreign exchange services to the
public. Following this operation, the BoT
revised the rules for operating retail foreign
exchange bureaux in the country.
Insurance sector
In an effort to increase coverage and
stimulate growth in the Insurance sector, the
Tanzania National Insurance Regulatory
Authority (TIRA) announced early this year
that the sector is expected to undergo some
major reforms in 2019. This is being planned banks to provide insurance services. Currently banks act merely as insurance agents. In
when the sector experienced a 7.7% growth addition measures are expected to be taken to establish an appropriate legal and regulatory
during the first nine months of 2018. Such framework for Islamic insurance practices as demand for Islamic insurance products is
reforms will include policy reforms to allow considerably high.

PwC 20
Consumer Industrial Products and Services Sector
Telecommunication
Growth in information and communication Voice Telecom Subscription The mobile sector remains concerned with
remained buoyant at 9.1% in 2018. the high level of taxation on the sector as
Operator 2017 2018 % change
Technological disruption (by way of third- illustrated in the summary schedule below :
Airtel 10,855,955 10,954,621 1%
party instant call services or over-the-top Smart 131,501 132,292 1%
(OTT) platforms such as WhatsApp, Skype, 2017/18 to date
Halotel 3,799,691 3,941,237 4%
Viber and Facebook Messenger) have Tigo 11,062,852 12,583,640 14%
TZS TZS
continued to cause a drastic decline in voice TTCL 429,735 711,411 66% Gross charge before tax 100.0
revenue but this has been countered by Vodacom 12,866,059 14,143,657 10% 17.0% 17.0 17.0
Excise Duty
strong growth in mobile money and data Zantel 935,161 1,153,641 23%
revenue. As an example, the preliminary 117.0
Total 40,080,954 43,620,499 9%
results publicly issued by Vodacom PLC for VAT 18.0% 21.1 21.1
the year ended 31 March 2019 show a Mobile money subscriptions 138.1 38.1
decrease in mobile voice revenue by 1.1% 2017 2018 % change Local tax - service levy 0.3% 0.3
year on year but growth in M-Pesa and data Airtel Money 5,875,149 4,848,545 -17%
TCRA;UCAF
revenue by 14.5% and 17.9%. Tigo Pesa 6,863,349 7,586,240 11%
(0.8%;0.3% up to June
M-Pesa 8,085,684 9,014,088 11%
2017 and 1.1%;0.9%
Statistics from the Telecommunications Ezy Pesa 280,825 546,353 95% 2.0% 2.0
afterwards)
Regulatory Authority (“TCRA”) show the Halotel Money 781,476 1,342,206 72%
following share of voice subscriptions and TTCL 3,135 30,394 870% Total tax and levies
40.4
mobile money subscriptions as at December Total 21,889,618 23,367,826 7% on gross income
2017 and December 2018:
This budget saw no change to these rates.

PwC 21
Manufacturing
During 2018/19, the Government continued Effective 1 June, the Government has materials and other factor inputs needed for
with implementation of the industrialisation banned the use of plastic bags in the country the bags.
agenda whereby, 3,530 new industries have in order to preserve the environment. The
Manufacturing features strongly under the list
been established in various regions. The time lapse between the announcement of the
of priority projects and activities of r2019/20
established industries include manufacturing ban and the effective date was only 2
to be implemented as a continuation of the
industries for construction (cement, tiles, and months. This is a short period of time to
National Five Year Development Plan
steel bars) and agriculture, in particular, ensure that the demands of the country in
2016/17 - 2020/21. Specific projects to foster
processing fruits, oil and skin. replacing plastic bags has been met without
industrialisation include the development of
disruption in the supply of the bags. On the
A number of manufacturers have been industrial parksm and the encouragement of
positive side this will create opportunities for
affected by the roll out of the new electronic value addition in crop production and agro-
companies manufacturing specific bags that
tax stamp (ETS) system to replace the processing.
are not plastic and those who will supply
previous paper tax stamp process. While the
objective is a good one, namely to help
create transparency in assessing taxes on
these businesses, a number of manufacturers
are unhappy that the additional cost of the
system is borne by the taxpayer rather than
only the Government. Another concern for
the manufacturing sector remains the delays
in payment of VAT (for exporters) and excise
duty refunds.

PwC 22
Tourism
Tanzania is targeting India and China to Tanzania has not been a major player in to attract conferences and business
bolster tourism and drive growth in guest MICE (meetings, incentives, conventions and meetings.
nights. The country is stepping up its exhibitions) tourism but is looking to improve According to a forthcoming PwC Hotels
marketing and promotional activities in India its offerings. The Ministry of Tourism is Outlook: 2019 to 2023 report, 2018 saw a
and China to attract more tourists from those establishing a national convention bureau rebound in guest nights which returned to
countries. that will supervise the expansion of facilities their 2015-16 level. (Guest nights had
declined in 2017, with demand adversely
impacted by the introduction of the 18% VAT
on tourism services introduced in 2016 and
the fixed rate concession fee introduced in
2017.). There was also a benefit from an
increase in available rooms with the opening
of new hotels (for example, City Lodge and
Zuri Zanzibar and the full-year impact of a
new Melia hotel that opened in late 2017).
Looking forward a number of planned
openings in the coming years, are expected
to add around a 1,000 rooms cumulatively
over the next 5 years. We expect the tourist
initiatives and an emerging MICE market,
along with a strong global economy, to lead
to further growth in guest nights, which we
project will rise at a 3.5% compound annual
rate.

PwC 23
Agriculture
The agriculture sector grew by 5.3%

in 2018 compared to 4.8% in 2016.
This growth has contributed to
increased food security, decline in
food inflation to 2.7 percent in April
2019 compared to 7.3 percent in April
2016 and an increase in receipts from
export of traditional goods from USD
793.4 million in 2015 to USD 1,020.7
million in 2017, equivalent to an
increase of 28.6 percent.
For exporters of agricultural products
a continuing concern is the delay in
processing of VAT refunds - in
particular, for some companies VAT
refunds have not been processed for
over 3 years. Falling world commodity
prices for certain items (e.g. cloves
and coffee) also cause concern.

PwC 24
Government and Public Sector - Infrastructure
Rufiji Hydroelectric Project Tanga port in Tanzania. With an estimated

cost of USD 3.5bn, the EACOP will be the
In December 2018, Tanzania signed the longest electrically-heated pipeline in the
agreement to build the Stiegler’s Gorge Continent. It is expected that residents from
Hydroelectric Power Station, on the Rufiji 226 villages in Tanzania are set to benefit
River. The project is estimated to cost $2.9bn from the EACOP project. The start of the
and will be entirely financed by the construction of the pipeline awaits finalisation
Government of Tanzania. The hydropower of prolonged negotiations including in relation
plant is expected to be finalized in 42 months to provisions of the host government
and should have the capacity to produce agreement, shareholder agreements and
Since coming into office in 2015, the fifth- 2,115 MW by 2022, dramatically increasing transportation tariffs.
phase Government has prioritised initiatives the country’s current power production
to clampdown on corruption, improve public capacity of 1,560 MW. It will also include a Standard Gauge Railway
administration and manage public resources 400 KV substation and a transmission line (SGR)
for improved social outcomes. In seeking to integrated into the national electricity grid.
drive Tanzania towards a modern economy, SGR is the new railway project that will
in line with Tanzania’s Vision 2025 (of being a The East Africa Crude Oil eventually connect Dar es Salaam to Kigali
semi-industrialized middle-income country by Pipeline along 1,090 miles of track. The Government
2025), a key focus has been to focus on expects the first phase, costing USD 1.9bn
implementation of various infrastructure The Governments of the Republic of Uganda and covering 186 miles between Dar es
projects at an accelerated pace so as to and the United Republic of Tanzania signed Salaam and Morogoro, to be completed by
support the growth that this Vision the Inter-Governmental Agreement for the December 2019. In his budget presentation
contemplates. East Africa Crude Oil Pipeline (EACOP) for FY2019/2020, the Minister for Works,
Project in May 2017. The EACOP is a 1,445 Transport and Communication, requested for
Notable infrastructure projects that the km crude oil export pipeline that will transport TZS 2.5 trillion out of the total development
Government of Tanzania is implementing Uganda’s crude oil from Kabaale – Hoima in budget of TZS 4.8 trillion (52%) to be set
include the following: Uganda to the Chongoleani peninsula near aside for the construction of the SGR.
PwC 25
New Airports and Revival of new planes including a Boeing 787

Dreamliner. Long haul international flights
Air Tanzania were planned to commence from earlier this
The Government has continued with the year, but the expectation now is that these
construction and rehabilitation of several will first start from July this year.
airports in the country including the following:
New Selander Bridge in Dar
• Dar es Salaam: Construction of the
es Salaam
new Terminal III at Julius Nyerere
International Airport, now 90% When completed, the New Selander Bridge
complete; will be 6.2 kilometres long and 20.5 m wide
and will have four ways for cars and two
• Mwanza: Completion of the 500
pedestrian routes. The bridge is estimated to
meters extension of the runway and
cost TZS 256 billion and to be built in about
The actualisation of this project will make expansion of the apron at Mwanza
30 months. The funding is provided by a
Tanzania the third country in the region (after airport; and
concessionary loan from the Republic of
Ethiopia and Kenya) to have rolled out a • Dodoma: Design of the Msalato Korea through its Economic Development
modern standard gauge network, The trains International Airport in Dodoma is at Cooperation Fund (EDCF). The bridge will
to be used will be electric trains, and so the an advanced stage, and once link the areas surrounding Aga Khan Hospital
availability of reliable power supply will be constructed it will be the fifth and Coco Beach in Masaki and aims to
key. If all goes according to the plan, the international airport in the country. reduce traffic congestion.
entire project is expected to be completed in The financing (USD 200 million) is
five years’ time i.e. by 2023. from the African Development Bank.
The Government has also revived the state-
owned Air Tanzania Company Limited
(ATCL) with the purchase of half a dozen

PwC 26
Bus Rapid Transit (BRT) (total length of 20.3 km) which is expected to completion of: Dodoma – Babati (251.4 km);
commence in July this year and be Sumbawanga - Kanazi (75.0 km), Kanazi -
system of Dar Es Salaam completed in 36 months at an estimated of Kizi - Kibaoni (76.6 km); Sitalike – Mpanda
(DART) cost $160m (to be financed by AfDB and (36.9 km); Kyaka - Bugene (59.1 km); and
GoT), will include two flyovers of 24m width Uyovu - Bwanga (45 km). There is also
The Dar es Salaam BRT is planned as an and 150m length each, 29 bus terminals, a significant progress on the following road
extensive system of 137 km of corridors to be control centre and a garage. construction: Kidahwe - Kasulu - Kibondo –
built in six sequential phases. Nyakanazi road (310 km); Tabora – Ipole –
Dodoma – The Capital City koga – Mpanda road (373 km). In addition,
In its quest to restore Dodoma as Tanzania’s Kilombero and Kavuu bridges as well as the
Capital City, the Government is overhauling TAZARA flyover have been completed. The
Dodoma’s entire infrastructure. Except for the construction of the 266 meter Ubungo
President’s office, all other Government interchange, which was launched in March
Ministries, Departments and Agencies have 2017 is 25% complete. It is expected to be
shifted to Dodoma. The expectation is for fully completed by December 2020 with a
International Development Agencies and total cost of TZS 200.73 billion.
Embassies to shift headquarters to Dodoma Infrastructure-driven development will
in the due course of time once the supporting certainly foster economic growth,
infrastructure is complete. however to achieve sustainable results,
they need to be well-planned, carefully
Construction of the first phase (total length of Roads and Bridges implemented and make financial sense. In
21 km) was completed in December 2015 at
a total cost of EUR134m, funded by the
Infrastructure tandem with this, and because most of
these mega projects are financed by the
African Development Bank (AfDB), the World Significant investment continues in the Government, there is a need to constantly
Bank and the Government of Tanzania construction of roads that connect regional monitor benchmarks related to the level of
(GoT). Construction of the second phase headquarters and those that link Tanzania the resultant debt.
and neighbouring countries. These include
PwC 27
Mining Sector
Contribution to exports Production updates (based on 16.6% of AAL’s global 2018

Tanzania’s mining industry continues to be a publicly issued financial production). Acacia’s production was
significantly down on 2017 and 2016 (when
significant contributor to export earnings with accounts) production was 767,883 oz and 829,705 oz
estimated mineral exports in 2018 of USD
1,549 million representing 40% of the USD The sector is dominated by the gold mining respectively), with the majority of production
3,893 million total goods exports. sector, and in particular subsidiaries of now coming from the North Mara mine
AnglogoldAshanti Limited (“AAL”) and Acacia (336,055 oz). Although the Bulyanhulu mine
Mining Plc (“Acacia”) whose 2018 production is currently on reduced operations, with only
was 564,000 oz and 521,980 oz 40,485 oz produced in 2018, the provisional
respectively. A smaller contributor to the mix outcome of an optimisation study of the mine
was Shanta Gold’s New Luika Mine (81,872 indicates an estimated 18 year mine life with
oz). Production from AAL’s flagship Geita annual production of between 300,000 oz to
mine was 5% up on 2017 (and represents 350,000 oz.

PwC 28
Mining Sector
NRGI study of average effective tax rate from a gold project with development
costs of USD 420 million, per unit operating costs of $600 per ounce and a gold
price of $1,300 per ounce [based on a 10 percent discount rate, assuming that the
government continues to treat gold doré as a “raw mineral” and therefore not
eligible for VAT] refunds:
Fiscal and regulatory Table from Natural Resource Governance Institute (NRGI)
environment Average Effective Tax Rate
The delay and / or non-payment of VAT Tanzania 2017 74%
refunds continues to pose significant
challenges for existing operators. The sector Guinea 61%
has raised concerns as to the impact of
South Africa 59%
recent regulatory and fiscal changes, most
notably changes made in 2017. In a January Ghana 58%
2019 publication, the Natural Resources
Governance Institute issued a preliminary Tanzania pre-2017 51%
analysis of the current fiscal regime for
Tanzania’s mining sector and concluded that: Chile 48%
• The fiscal regime now places a Peru 45%

significantly larger tax burden on projects
Western Australia 45%
than other comparator gold mining
countries. Zambia 44%
• The tax mix, with high royalties and limited Kyrgyz Republic 39%
value added tax refunds, mean that this
difference is even greater for less 0% 20% 40% 60% 80%
profitable mines.
The publication was issued shortly after a review the 2017 fiscal regime if recent increased taxes could be seen to be hindering rather than
multi-stakeholder meeting between the helping efforts to collect more revenue from the sector. While the immediate focus was on
President and the mining sector, where he artisanal and small-scale mining and tax evasion, ultimately the same concerns can impact
had stated the government’s intention to large-scale investment.

PwC 29
Mining Sector
Looking forward
Grounds for optimism for further growth in the
gold sector includes a 6 September 2018
announcement of a completion agreement
between the Orecorp Group and Acacia
which (subject to certain conditions) paves
the way for Orecorp to move to 100%
ownership of the Nyanzaga Gold Project with
a view to its subsequent development.
Aside from gold, and other existing minerals
in production (for example diamonds), there
are expectations that a number of projects for
other minerals (including graphite, niobium,
rare earths, helium) could move to
development.

PwC 30
Contacts
David Tarimo Rishit Shah Joseph Lyimo Mirumbe Mseti

Partner Partner Partner Partner
+255 (0) 22 219 2600 +255 (0) 22 219 2601 +255 (0) 22 219 2613 +255 (0) 22 219 2616
[email protected] [email protected] [email protected] [email protected]

PwC 31
Appendix 1
Presumptive income tax rates
Current rates Proposed rates
Section 35 of the Section 35 of the TAA Section 35 of the Section 35 of the TAA
TAA 2015 is not complied 2015 is complied with TAA 2015 is not 2015 is complied with
with (Taxpayer maintains complied with (Taxpayer
(Taxpayer does records) (Taxpayer does maintains records)
not maintain records) not maintain records)
Turnover (TZS) Tax liability (TZS) Tax liability (TZS) Turnover (TZS) Tax liability (TZS) Tax liability (TZS)
< 4,000,000 NIL NIL < 4,000,000 NIL NIL

4,000,000 – 3% of amount in 4,000,000 – 3% of amount in excess
150,000 100,000
7,500,000 excess of 4m 7,000,000 of 4m
135,000 plus 3.8% of
7,500,000 – 7,000,000 – 90,000 plus 3% of
318,000 amount in excess of 250,000
11,500,000 11,000,000 amount in excess of 7m
7.5m
285,000 plus 4.5% of
11,500,000 – 11,000,000 – 230,000 plus 3% of
546,000 amount in excess of 450,000
11.5m
487,000 plus 5.3% of
16,000,000 – 14,000,000 – 450,000 plus 3.5% of
862,500 amount in excess of N/A
16m

PwC 32
Appendix 2 - Customs Duty
Increase of customs duty

rates
1. Stay of application of the EAC-CET rate of The measure is intended to protect 6. Stay of application of EAC-CET rate of 25%
25% and instead apply a duty rate of 35% domestic industries and employment or USD 200 per metric ton whichever is
on roasted coffee for one year (HS Code as well as addressing the challenges higher on reinforcement bars and hollow
09.01) to protect domestic industries and of under-invoicing and under– profiles and apply a duty rate of 25% or
increase Government revenue. valuation. USD 250 per metric ton whichever is higher
for one year to protect local manufacturers of
2. Imposing an import duty of 10% or USD 4. Imposing an import duty of 10% or
reinforcement bars in the region and
125 per metric ton on flat-rolled USD 250 per metric ton on flat-rolled
enhancing competitiveness of domestically
products of iron or non-alloy steel and products of iron or non-alloy steel,
produced iron and steel products (HS codes
flat-rolled products of other alloy steel whichever is higher for one year (HS
7213.10.00; 7213.20.00; 7213.99.00;
of width of 600mm or more, whichever Code 7212.60.00). The objective is to
7214.10.00; 7214.20.00; 7214.30.00;
is higher for one year. The referred protect domestic industries and
7214.90.00; 7214.99.00; 7215.10.00;
products are those under HS Codes employment and also addressing the
7215.50.00; 7215.90.00; 7225.90.00;
7209.16.00; 7209.17.00; 7209.18.00; challenges of under-invoicing and
7225.92.00; 7225.99.00; 7306.30.00;
7209.26.00; 7209.27.00; 7209.28.00; under-valuation.
7306.50.00; 7306.61.00; 7306.69.00; and
7209.90.00; 7211.23.00; 7211.90.00; 5. Imposing an import duty of 25% or 7306.90.00).
7225.50.00 and 7226.92.00. This is to USD 250 per metric ton on flat-rolled
protect domestic industries and address products whichever is higher for one
the challenges of under-invoicing and year (HS codes 7210.41.00;
undervaluation. 7210.49.00; 7210.61.00; 7210.69.00;
3. Imposing an import duty of 25% or USD 7210.70.00 and 7210.90.00) in order
200 per metric ton on flat-rolled to protect domestic producers of flat-
products of iron or non-alloy steels rolled products in the EAC region.
whichever is higher for one year (HS
Code 7212.30.00; 7212.40.00; and
7212.50.00).
PwC 33
Increase of customs duty Decrease of customs duty

rates rates 10. Granting duty remission and applying 0%
7. Staying application of the EAC-CET rate rate instead of 25% for one year on the
9. Granting duty remission and applying equipment and appurtenant used for
and applying a duty rate of 35% instead of 0% rate instead of 10% on raw
25% for one year on horticultural polishing and heat treatment of
materials used to manufacture baby gemstones (equipment falling under HS
products falling under HS codes diapers imported by manufacturers
0603.11.00; 0603.12.00; 0603.13.00; Codes 3606.90.00; 6804.10.00;
of this product. The measure is 6813.20.00; 7018.90.00; 7020.00.99;
0603.14.00; 0603.19.00; 0604.20.00; intended to reduce production costs,
0604.90.00; 0701.90.00; 0702.00.00; 8202.20.00; 8202.99.00; 8203.20.00;
create employment and increase 8205.10.00; 8423.89.90; 8513.10.90; and
0703.10.00; 0703.20.00; 0706.10.00; Government revenue (HS Codes
0710.10.00; 0710.21.00; 0710.22.00; 9002.19.00). This measure is intended to
3506.91.00; PE Film HS Code create value addition on gemstones,
0710.30.00; 0714.10.00; 0714.20.00; 3926.90.90; Super Absorbent
0804.30.00; 0804.40.00; 0804.50.00; creating employment and increasing
Polymer HS Code 3906.90.00; Wet Government revenue.
0805.10.00; 0805.40.00; 0805.50.00; Strength Paper HS Code 4803.00.00;
0806.10.00; 0807.11.00; 0807.20.00; Non Wovens HS Code 5603.11.00; 11. Granting duty remission and applying a
0808.10.00; and 0808.20.00. This Polyethylene Laminated Non Wovens duty rate of 0% instead of 10% for one
measure is expected to increase HS Code 5903.90.00; Spandex HS year on papers used as raw materials
Government revenue. Code 5402.44.00; and Dust Free for manufacturing of packaging
8. Stay of application of the EAC-CET rate of Paper HS Code 4803.00.00) materials for export of horticulture
0% and applying a duty rate of 10% on products (HS Codes 4805.11.00 and
monofilament (PVC Profiles HS Codes 4805.19.00). The measure is intended to
3916.10.00; 3916.20.00 and 3916.90.00) reduce production costs in order to protect
for one year in order to increase domestic industries against foreign
Government revenue. competition, attract investment in the
production of these products in the
country and ultimately promote exports of
horticultural products for foreign exchange
earnings.
PwC 34
12. Granting duty remission on 17. Granting duty remission and applying a
agricultural seeds packaging
2018/19 measures that
duty rate of 0% instead of 25% for one
materials and applying a duty rate of continue to be implemented year on printed aluminium barrier
0% instead of 25% for local producers in 2019/20 laminates under HS Code 3920.10.90.
of agricultural seeds for one year (HS This is to reduce production costs and
codes 3923.29.00; 6305.10.00; 14. Staying the application of the EAC-CET
rate of 0% and applying a duty rate of promote competitiveness of domestic
4819.40.00; 7310.29.90; 6305.33.00; industries producing toothpaste as well as
25% for one year on papers under HS
6305.20.00; 6304.91.90; 7607.19.90). Code 4804.11.00; 4804.21.00; promoting employment.
The aim is to ensure good quality 4804.29.00; 4804.31.00 and 4804.41.00
products and reduce costs to the seed in order to enhance competitiveness of 18. Granting duty remission and applying a
production institutions in the country. domestically produced papers and duty rate of 0% instead of 10% for one
paper products. year on RBD Palm Stearin (HS Code
13. Granting duty remission and applying a 1511.90.40) to ensure its availability for
15. Granting remission and applying an
duty rate of 0% instead of 25% for one import duty of 10% instead of 35% on stand alone soap industries. It is also to
year on aluminium alloys (HS Code wheat grain falling under HS Code take into account imposition of 25% import
7606.92.00) used as raw materials to 1001.99.10 and 1001.99.90 for one duty rate on crude palm oil.
manufacture aluminium pots. The year. This measure due to insufficient
measure is intended to reduce level of production to meet the demand 19. Granting stay of application of the EAC-
production costs, promote production in the EAC region. CET rate and applying a duty rate of 25%
of pots in the country and creation of 16. Stay of application of the EAC-CET rate or USD 1.35 per kilogram of safety
employment. of 10% and instead applying a duty rate matches (HS Code 3605.00.00)
of 0% for one year on Electronic Fiscal whichever is higher for one year as there
Devices (EFD’s) machines falling under is sufficient capacity to produce the
HS Code 8470.50.00. The measure is product in the EAC region.
intended to continue encouraging
taxpayers to use EFD machines for
accounting VAT and facilitate efficient
management control in the areas of
sales analysis and stock control.

PwC 35
20. Stay of application of EAC-CET rate and 24. Stay of application of the EAC-CET 28. Stay of application of the EAC-CET rate
instead apply a duty rate of 25% or USD rate on chocolates (HS Code 18.06) on meat and edible offal under Chapter
350 whichever is higher for one year on for one year and applying a duty rate 2 for one year and applying a duty rate of
nails, tacks, drawing pins, corrugated of 35% instead of 25%. The aim is to 35% instead of 25%. The measure is
nails, staples other than those of protect local production of the product intended to protect and encourage
heading 83.05. The objective of this as there is sufficient capacity to domestic processing and value addition.
measure is to protect local producers of produce in the region.
these products against imported cheap 29. Imposing import duty of 25% on crude
products. 25. Stay of application of the EAC-CET edible oil (for example sunflower oil,
rate on biscuits (HS Code 19.05) for palm oil, groundnuts oil, olive oil,
21. Staying application of the EAC-CET rate one year and applying a duty rate of maize corn oil etc.) for one year. The
of 25% and instead applying a duty rate 35% instead of 25% to protect local edible oils fall under HS code 1507.10.00;
of 35% for one year on sausages and production and promote employment 1508.10.00; 1511.10.00; 1512.11.00;
similar products (HS Code 1601.00.00) in the region. 1513.11.00; 1514.11.00; 1514.91.00;
to protect domestic industries which 1515.11.00; 1515.21.00; 1515.30.00. The
produce similar products in the region. 26. Stay of application of the EAC-CET
objective of this measure is to continue
rate on tomato sauce (HS Code
22. Staying application of EAC-CET rate on encouraging and promoting production of
2103.20.00) for one year and
chewing gum (HS Code 1704.10.00) edible oils by using locally produced
applying 35% rate percent instead of
and applying a duty rate of 35% instead seeds. It is also intended to protect
25%. The objective of this measure is
of 25% for one year. The measure aims domestic producers of edible oil and oil
to protect local production.
at protecting local production in the seeds and create both employment and
region. 27. Stay of application of the EAC-CET income to the farmers.
rate on mineral water (HS Code
23. Stay of application of EAC CET rate on 2201.10.00) for one year and instead
other sugar confectionary (sweets apply a duty rate of 60% instead of
under HS Code 1704.90.00) and 25% since there is sufficient capacity
applying 35% instead of 25% for one to produce this product in the country.
year to protect local industries in the Also, to create employment and
region and promote employment. Government revenue.

PwC 36
30. Stay of application of the EAC-CET 32. Imposing an import duty rate of 35%
rate of 25% and instead applying a
Amendments to the East
instead of 100% on sugar
duty rate of 35% for one year on semi (consumption sugar). The product is African Community Customs
refined, refined/double refined imported under special arrangements to Management Act 2004
edible oils (for example sunflower cover the shortage in the domestic
oil, palm oil, groundnuts oil, olive market. The intended objective is to
(EACCMA 2004)
oil, maize corn oil etc.). The referred protect domestic industries, 36. In order for the country to be able to sign
edible oil falls under HS Code HS employment and increase Government the Bilateral Air Service Agreement
codes 1507.90.00; 1508.90.00; revenue. (BASA) import duty exemption has
1509.90.00; 1510.00.00; 1511.90.10; been granted on lubricants for aircrafts,
33. Stay application of the EAC-CET rate
1511.90.30; 1511.90.90; 1512.19.00; and apply a duty rate of 35% instead of uniforms, calendars, diaries, and pens
1512.29.00; 1513.19.00; 1513.29.00; 35% or USD 0.40 per kilogram that are used in the provision of air
1514.19.00; 1514.99.00; 1515.19.00; whichever is higher for one year on services.
1515.20.00; 1515.50.00; and worn clothes. The intended objectives
1515.90.00. The aim is to protect and is to protect local manufacturers of Other matters
promote the processing of edible oil in finished textile products and make them
competitive against substandard imports 37. Individuals will be allowed to clear
the country using locally grown seeds from outside the country.
and save foreign exchange used in the goods without the use of Clearing and
importation of edible oil. 34. To provide duty remission on selected Forwarding Agents. However, this will
list of raw materials and industrial not apply for transit goods. TRA to
31. Stay of application of the EAC-CET inputs for the manufacturers of prepare guidelines and procedures in this
rate of 0% on Gypsum Powder (HS textiles and footwear (Harmonized
list). The objective of this measure is to regard.
Code 2520.00.00) and instead apply a
accelerate the industrialisation process
duty rate of 10% for one year in order in the textile and leather sector and
to protect local producers and promote creating employment opportunities.
production of gypsum powder by using
35. Imposing an Export Levy of 10% on
the locally available gypsum. wet blue leather. The measure is
intended to promote the processing of
leather in the country, value addition
and creating employment.
PwC 37
Appendix 3
Fees and levies abolished/reduced on implementation of the Blueprint
Tanzania Food and Drugs Authority (TFDA)

The following fees have been abolished:
• Retention fees for domestic products on registration of:

o Vaccines and Biologicals USD 150
o Herbal medicines USD 150
o medical devices USD 100
o diagnostics 250
o food USD 10
o antiseptics and diagnostics TZS 100,000
• Fees for duplicate certificates on diagnostic USD 100
• Inspection fees for new food selling outlets TZS 50,000
• Registration fees for Retails Veterinary Pharmacy TZS 50,000 to TZS 100,000
• Inspection fees for fish industries TZS 200,000 to TZS 250,000
• Inspection fees for new fish outlets TZS 50,000
• Annual business licence fees on fish outlets TZS 50,000 to TZS 300,000

PwC 38
Appendix 3
Fees and levies abolished/reduced on implementation of the Blueprint (cont’d)
Tanzania Bureau of Standards (TBS)

• Application fees for TBS mark TZS 50,000
• TBS mark guarantee fees (15 percent of overhead and transport costs)
• TBS mark licence fees (50 percent of cost of transport and testing of sample from the market)
• Application form fees for imported goods TZS 50,000
• Calibration of equipment based on industrial metrology fees. The amount payable depends on the distance covered from the office to the
place e.g. for Dar es salaam it is TZS 10,000
• Application form on imported cosmetics and medical devices including condoms, syringes, gloves, cotton wool and bandage (0.2 percent of
transport costs).

PwC 39
Appendix 3
Government Chemist Laboratory Authority (GCLA)

The following fees have been abolished/reduced:
• Service charge for cancellation and issuing of new permit USD 50

• Service charge for replacement of permit USD 50
• Registration of Clearing Agents Company USD 500 per registration period
• Change of registration information USD 100 per registration period
• Emergency Inspection USD 300 per inspection
• Annual maintenance fee for the following:
o Form industries USD 1000
o Paint industries USD 1000
o Textile industries USD 1000
o Leather industries USD 1000
o Plastic industries USD 1,000

PwC 40
Appendix 3
Government Chemist Laboratory Authority (GCLA) (cont’d)

The following fees have been abolished/reduced (cont’d):
o Other large industries USD 1,000
o Other small industries USD 250
o Large distributors USD 1000
o Medium distributors USD 500
• Reduce chemical registration and renewal fees from USD 20 to TZS 40,000 per chemical per registration
• Charge TZS 200,000 and TZS 50,000 for large and small scale certificate holder per registration period respectively
• Charge TZS 200,000 for large and small scale premises registration per registration instead of USD 100
• Reduce fee for sorting of obsolete chemicals from USD 300 to TZS 300,000 per day per person
• Reduce identification and approval of disposal method fees from USD 500 to TZS 200,000 per chemical
• Reduce fees charged on supervising of loading, transportation, unloading and disposal of obsolete chemicals from USD 300 to TZS 300,000 per
day per person

PwC 41
Appendix 3
Government Chemist Laboratory Authority (GCLA) (cont’d)

The following fees have been abolished/reduced (cont’d):
• Reduce premises inspection fees from USD 200 to TZS 300,000 per inspection
• Reduce Transportation Routes assessment and emergency inspection fees from USD 100 to TZS 150,000 per person per day
• Reduce escorting of chemical convoy fees from USD 100 to TZS 150,000 per person per day; and
• Transportation of on transit hazardous and other chemical will be charged as shown in below table:
Quantity of chemicals to be
Current Fees Proposed fee
transported in MT
(USD) (USD)
Between 0.1 and 10 10
10.1 - 200 1 per MT

201 - 1000 400
1001 - 5000 1-2 per MT 600
5001 - 10,000 800
10,001- 20,000 1,200
20,001- 40,000 1,500
40,001+ 2,000
All levies charged in USD will now be charged in TZS except for chemicals on transit.

PwC 42
Appendix 3
Ministry of Livestock and Fisheries

• License fee of TZS 5,000 and TZS 50,000 for milk producers below 51 and 201 litres respectively
• Registration fee of TZS 5,000 for milk producers below 51 litres
• License for registration of TZS 500,000 of carriers and containers permit for transportation of milk
• License fee of TZS 15,000 for small scale meat producers
• License fee of TZS 50,000 for Medium Scale Producers
• Registration fee of TZS 75,000 for Large Scale producers
• Registration fee of TZS 20,000 for Primary Markets Operator
• Registration fee of TZS 30,000 for Secondary and Border Markets operators
• Registration fee of TZS 50,000 for Secondary and Border Markets
• Registration fee of TZS 30,000 for Local and Primary market traders
• Registration fee of TZS 60,000 for secondary and border markets traders
• Registration fee of TZS 100,000 for meat exporter
• Movement permit fee of TZS 1,000 for transportation of day old chick per 100
• Movement permit fee of TZS 200 for transportation of Adult/Guinea fowl per each.

PwC 43
Appendix 3
Ministry of Natural Resources and Tourism

The following fees relating to professional hunting have been abolished:
• Trophy handling fees; and

• TALA fees.
Ministry of Water
• Fee on borehole which starts from TZS100,000 depending on the utilization of water; however the owners will be
required to register their borehole to the Water Board.

PwC 44
Thank you
www.pwc.co.tz
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act
upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is
given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or
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Sustaining the

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

Income tax – Companies Income tax – individuals

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

Zero rating: electricity supplies to

Sustaining the Momentum: National Budget 2019/20 June 2019

Customs Duty Other taxes and levies

Sustaining the Momentum: National Budget 2019/20 June 2019

Real GDP - Tanzania Inflation – Tanzania Interest Rates – Tanzania

Sustaining the Momentum: National Budget 2019/20 June 2019

• Provision of short-term loans to banks; Regional Economic External Trade

Sustaining the Momentum: National Budget 2019/20 June 2019

1105.4 1190.5 1225.6

434.5 401.6 332.8

Travel (Tourism) Transport Other Services

Travel (Tourism) Transport Other Services

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

Macroeconomic policy • Agriculture: implementation of • Improvement of enabling business

Sustaining the Momentum: National Budget 2019/20 June 2019

• Enhance administration of tax exemptions

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

The BoT monthly economic review for April

Credit to the Private Sector by Banks

Sustaining the Momentum: National Budget 2019/20 June 2019

Foreign exchange bureaux

Sustaining the Momentum: National Budget 2019/20 June 2019

This budget saw no change to these rates.

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

The agriculture sector grew by 5.3%

Sustaining the Momentum: National Budget 2019/20 June 2019

Rufiji Hydroelectric Project Tanga port in Tanzania. With an estimated

New Airports and Revival of new planes including a Boeing 787

Sustaining the Momentum: National Budget 2019/20 June 2019

Contribution to exports Production updates (based on 16.6% of AAL’s global 2018

Sustaining the Momentum: National Budget 2019/20 June 2019

• The fiscal regime now places a Peru 45%

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

David Tarimo Rishit Shah Joseph Lyimo Mirumbe Mseti

Sustaining the Momentum: National Budget 2019/20 June 2019

< 4,000,000 NIL NIL < 4,000,000 NIL NIL

Sustaining the Momentum: National Budget 2019/20 June 2019

Increase of customs duty

Increase of customs duty Decrease of customs duty

Sustaining the Momentum: National Budget 2019/20 June 2019

Sustaining the Momentum: National Budget 2019/20 June 2019

Tanzania Food and Drugs Authority (TFDA)

• Retention fees for domestic products on registration of:

• Fees for duplicate certificates on diagnostic USD 100

• Inspection fees for new food selling outlets TZS 50,000

• Inspection fees for fish industries TZS 200,000 to TZS 250,000

• Inspection fees for new fish outlets TZS 50,000