The
government has made 10 changes in the 2012/13 Budget in a move that takes on
board proposals that MPs gave during the debate on the revenue and expenditure
plan tabled by Finance minister in Dodoma on June 14.
The
Budget was approved by the august House last Friday, so the changes are to be
included in the Finance Bill 2012 to be tabled in Parliament at the end of the
session in August.
Eight
of the changes concern the tax structure and would amount to increasing taxes
for telecommunications companies, according to a speech by the Finance minister
speech seen by The Citizen.
The
other two changes involve banning the export of raw hides and skins as well as
letting MPs approve the use of the compensation cash from the radar scandal.
The
government has accepted proposals from the Shadow budget to tax assets of
multinational corporations changing hands through mergers and acquisations.
In
his Budget speech, minister for Finance William Mgimwa said in 2012/13, the
government would tax multinationals when shareholding changes hands.
But
the Shadow minister for Finance Zitto Kabwe proposed in his “alternative
Budget” the imposition of capital gains tax of 30 per cent in the case of
change of asset ownership. The government, however, said it would charge 15 per
cent capital gains tax.
The
government has also adopted a proposal from the opposition camp on raising more
taxes from the telecommunications companies by working with the new facility
procured by Tanzania Communications Regulatory Authority (TCRA) to monitor
phone traffic.
“The
exemptions extended to telecommunication companies especially on depreciation
allowance is hereby removed,” reads part of Dr Mgimwa’s speech, a brief of
which he read in Parliament on Friday.
He
also said taxes on foreign companies providing services to mining, oil and gas
firms would henceforth be different from those charged to local ones in the
withholding tax. A local firm would be one with at least 51 per cent shares
held by Tanzanians.
Imported
edible oil would also be charged 10 per cent import duty in order to protect
local industries. But the decision has to be ratified by other East African
Community finance ministers.
In
the financial year 2012/13, business firms owned by the government
(parastatals) will start paying the skills development levy (SLD) as proposed
by legislators. But the rate will be reduced from six per cent to a smaller
rate to be announced at the tabling of the Finance Bill 2012 by Dr Mgimwa.
In
their proposals, the Confederation of Tanzania Industries argued for a
reduction of SDL to four per cent in the 2012/13 Budget and to two per cent in
the 2013/14 Budget.
The
Budget has also increased the threshold of presumptive charged to small
businesses to Sh4 million of annual turnover from the Sh3 million Dr Mgimwa had
proposed. The Shadow budget had proposed the removal of the tax on Sh3 million
turnover but the government compromised by increasing the threshold to Sh4
million.
In
the new changes, the government has also removed the Value Added Tax (VAT) on
raw materials for textile firms.
Zero
rating VAT on textile products was proposed by the Parliamentary Finance and
Economic Committee as well as MPs from the Lake Zone.
The
government has also reintroduced excise duty exemptions on car imports for
legislators and government employees.
The government had proposed to remove the exemptions as part of efforts
to increase the tax base but MPs resisted.
This
has been viewed in some quarters as double standard by MPs who are have
appeared to be up in arms against tax exemptions.
Experts say charging capital gains tax on
assets of multinationals when they change hands would increase tax revenue.
Source: The Citizen
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