Appeals board suspends tax on money transfers

The Tax Revenue Appeals Board has put on hold the newly imposed excise duty on money transfers, pending the hearing of the matter early next month.

Tanzania Bankers Association (TBA) had appealed to the board after it failed to reach a consensus with the government on the interpretation of the 0.15 per cent charge on money transfer and short notice for implementation.

According to TBA Chairman Charles Kimei (pictured), “The banks find it difficult to implement the tax as they don’t know exactly on whom the 0.15 per cent should be charged…the depositor or withdrawer.”

Dr Kimei said much as the banks would wish to have the clear interpretation of the law, they cannot implement the deduction until they adjust and update their systems, “… this is not done manually, we need an ample time to adjust ourselves.”

TBA and the Ministry of Finance and Economic Affairs last month failed to reach consensus on the contentious excise duty that was supposed to start July 1. The Finance Act 2013 wants banks to charge their customers the 0.15 per cent excise duty on all money transfers for amount exceeding 30,000/-.

But the bankers dispute the charges, saying there some contradictions and confusion on its execution. According to TBA, even though the treasury has given out the directive, it has not clearly indicated who should be charged.

The Finance Act, which was published in the Government Gazette of July 5, excludes government, diplomats, diplomatic missions and transfers between banks and financial institutions from the charge.

Some banks, however, have already started communicating to their customers about the charging of 0.15 per cent on all money transfers for amount exceeding 30,000/-. 

According to the communication by Standard Chartered Bank Tanzania to its customers, for instance, the bank had to start charging the 0.15 per cent on August 28, 2013.

But, TBA maintains that the charge was neither announced in this year’s budget speech nor included in the proposed Finance Bill. 

It was only introduced as an amendment to the Act. TBA says it first became aware of the charge following a communication dated 16 July 2013 from Tanzania Revenue Authority over the issue.

Meanwhile, travel agents have opposed the tax on money transfers, saying it will subject them to thrice taxation. Tanzania Society of Travel Agents (TASOTA) Chairman Moustafa Khataw said travel agents are always involved in money transfers. 

They arrange safaris on behalf of the airlines and transfer funds from passengers to airlines through IATA clearing houses, with each transaction subjected to 0.15 per cent tax.

“Worse still, we have to be charged again when receiving our commissions from the airlines,” Mr Khataw said. TASOTA members transact about 150 million US dollars (over 200bn/-) annually.
Source: Daily News, reported by Abduel Elinaza, from Dar es Salaam, Tanzania
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