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Category Archives: Tanzania News

Clarification on 5% Withholding Tax on Services – Pracice Note No. 01/2013

Following the issue of Practice Note No. 01/2013  for Withholding Tax on Payments of Service Fee to a Resident Person under Section 83(1) (c) of the Income Tax Act, Cap. 332 was issued in  August 2013, a lot of issues have been  raised by various groups who are affected by the it.

TAX IM

Some people Confuse when the Law says Resident Person  Whether the Practice Note is applicable to Zanzibar residents or not;

The Practice Not number 01/2013 on withholding tax on service fee paid to a resident person under section 83 (1) (c) of the Income Tax Act, Cap 332 was made under Section 130 of the Act. Income tax is a Union matter, therefore the practice Note is applicable to all parts of the Union.

TAX LAW

This Practice Note is issued under Section 130 of the Income Tax Act, Cap. 332 as amended from time to time.

 This practice note was intended to address administrative problems arising from the wide scope of the recently introduced withholding tax on any service fee payable by a resident person to another resident person.

I will try to clarify on Some of issues Raised , This is to my Understanding of the practice as published by Tanzania Revenue Authority.

a)       Lack of clarity between paragraphs 5.1.2.1 and 5.1.2.3 about types of services subject to withholding tax

Generally, the services whose payments are subject to withholding tax are professional services or consulting services of independent business character. The practice note under paragraph 5.1.2.1 has gone further to list these services to be those of scientific, literary, artistic, educational or training activities of physicians, surgeon lawyers, engineers, architects, surveyors, dentists, accountants and auditors. This list represents services falling under ‘’professional or consulting ‘’. The objective of the practice note is to cover service whose payments are subject to withholding tax under section 83 © of the Income Tax Act, Cap 332.

(b) Are services not listed in paragraphs 5.1.2.1 and 5.1.2.3 are subject to withholding tax.

The intention of the practice Note is to narrow down the scope of the application of Section 83(1)(c) to professional or consulting service only where a resident person pays service fees to another person. Paragraph 5.1.2.1 of the Practice Note provides for the service that are of professional or consultancy nature which were intended to be subject of the withholding tax. This paragraph has listed some of the professional or consultancy services. However, this paragraph has only some of The professional or consultancy services falling within the withholding tax net and hence the list is not exhaustive. In so far as the service is a professional service or a consultancy service it falls within the ambit of paragraph 5.1.2.1

Paragraph 5.2.1.3 has provided a list of payments that are excluded from the scope of the 5% withholding tax that would have otherwise been subjected to the tax by virtue of Section 83 (1) (c).

Therefore, in order to determine whether a service fee payment is subject to withholding tax of 5%, one has to check whether the service fee is of a professional or consulting in nature. If the service is not professional or consulting in nature then the payment in respect of the service is not subject to withholding tax deduction. On the other hand, if the service is professional or consulting in nature and it is not specifically listed under paragraph 5.2.1.3 then the payment is subject to withholding tax.

List of  Services Not Applicable to WT Deduction:

SN                Type of Service Applicability of withholding tax
1 Hotel/ accommodation Not applicable
2 Security services Not applicable
3 Clearing Services Not applicable
4 Loading and offloading services Not applicable
5 Storage services Not applicable
6 Packaging Services Not applicable
7 Vehicle Rental Not applicable
8 Equipment rental Not applicable
9 Supply of agency staff Not applicable
10 Telephone Services Not applicable

 

Blessed Sunday ALL

MJ

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Dar es Salaam Stock Exchange Updates: weak performance compared to Last week results

THE Dar es Salaam Stock Exchange (DSE) performed dismally in both turnover and activity levels last week
as compared to the previous week’s trading.

Turnover amounted to 879m/-, a 92.3 per cent decline compared to 11.3bn/- of the previous week while activity
level shrunk, with shares traded declining to 1,344,490 from last week’s 34,679,010.

The weekly market commentary by Tanzania Securities Limited (TSL) shows that the DSE All Share Index (DSEI) gained grounds by 0.22 per cent to settle at 1,611.15.

The Tanzania Share Index (TSI) closed at 1,961.23, mainly contributed DCB, NMB and TBL counters that closed the week at 500/-, 1,760/- and 3,340/- share prices, respectively.

Both Indices strengthened with the banking segment Index gaining 2.32 per cent to close at 2,084.77 points, buoyed by gains made on the DCB and NMB counters.The Industrial and Allied Index closed at 2,063.09 points, thanks to gains on TBL counter.

Banks accounted for 94 per cent of the week’s total volume traded and 76 per cent of the market value. Mainly local investors dominated in CRDB counter trading during the week, with a mere one per cent of the counter turnover coming from foreigners.

The counter traded 851,308 shares at a price of between 320/- and 325/-. NMB transacted 151,528 shares at
between 1,740/- and 1,760/- per share.

Twiga was the most active counter among the Industrial and Allied sector during the week, moving 59,011 shares
at a price of 2,700/- each. Simba followed with 14,400 shares transacted at 2,400/- per share while TBL closed the week at 3,340/- per share having moved 7,700 shares.

A total of 3,553 shares of Swissport changed hands at 2,240/- each while TCC moved 100 shares at 6,800/-.

The PAL counter moved 400 shares at 475/- and TTP moved 50 shares at 600/- each share as TOL counter remained
dormant for the whole of the week.

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Tanzania gets $210m from World Bank For infrastructure projects, boosting regional trade.

Reported by : Reuters

Tanzania has signed a $210 million loan agreement with the World Bank for infrastructure projects aimed at boosting regional trade flows, the country’s finance ministry said on Wednesday.

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The loan, provided by the World Bank’s concessionary arm International Development Association (IDA), will finance construction of roads and a border post linking Tanzania to eastern and southern African countries.

“This support has come at a time when the government is in critical need of implementing interventions to facilitate the movement of goods and people … to enable Tanzania to become the transport and logistic hub of its neighbouring countries,” Tanzania’s finance minister, William Mgimwa, said in a statement.

The nation of 45 million people is among Africa’s biggest per capita aid recipients. In its 2013/14 (July-June) budget of 18.24 trillion shillings, Tanzania says it plans to borrow 2.86 trillion shillings from domestic and external sources.

 
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Posted by on August 2, 2013 in Tanzania News

 

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Be Updated on The USA’s Power Africa initiative

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With an initial set of six partner countries in its first phase, Power Africa plans to add more than 10,000 MW of electricity generation capacity on the continent. It will increase electricity access by at least 20 million new households and commercial entities with on-grid, mini-grid, and off-grid solutions.

The initial set of Power Africa partner countries are Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania. These countries have set ambitious goals in electric power generation and are making the utility and energy sector reforms to pave the way for investment and growth. Power Africa will also partner with Uganda and Mozambique on responsible oil and gas resources management.

The United States will commit more than US$7 billion in financial support over the next five years to this effort, including:

The U.S. Agency for International Development (USAID) will provide US$285 million in technical assistance, grants and risk mitigation to advance private sector energy transactions and help governments adopt and implement the policy, regulatory, and other reforms necessary to attract private sector investment in the energy and power sectors.

The Overseas Private Investment Corporation (OPIC) will commit up to US$1.5 billion in financing and insurance to energy projects in sub-Saharan Africa.

The US Export-Import Bank (Ex-Im) will make available up to US$5 billion in support of US exports for the development of power projects across sub-Saharan Africa.

The Millennium Challenge Corporation (MCC) will invest up to US$1 billion in African power systems through its country compacts to increase access and the reliability and sustainability of electricity supply through investments in energy infrastructure, policy and regulatory reforms and institutional capacity building.

OPIC and the US Trade and Development Agency (USTDA) will provide up to US$20 million in project preparation, feasibility and technical assistance grants to develop renewable energy projects. These efforts will be coordinated through the US – Africa Clean Energy Finance Initiative (US-ACEF) and supported by the recently launched US – Africa Clean Energy Development and Finance Centre (CEDFC) in Johannesburg, South Africa.

The US African Development Foundation (USADF) will launch a US$2 million Off-Grid Energy Challenge to provide grants of up to US$100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity benefitting rural and marginal populations.

In 2014, OPIC and USAID will jointly host an African energy and infrastructure investment conference. The conference will bring investors, developers, and companies together with US and African government officials to demonstrate the opportunities for investment and the tools and resources available from the U.S. government and other partners to support investment.
Power Africa will also leverage private sector investments, beginning with more than US$9 billion in initial commitments from private sector partners to support the development of more than 8,000 MW of new electricity generation in sub-Saharan Africa. Examples of commitments to-date include:

General Electric commits to help bring online 5,000 MW of new, affordable energy through provision of its technologies, expertise and capital in Tanzania and Ghana.

Heirs Holdings commits to US$2.5 billion of investment and financing in energy, generating an additional 2,000 MW of electricity capacity over next five years.

Symbion Power aims to catalyse US$1.8 billion in investment to support 1,500 MW of new energy projects in Power Africa countries over the next five years.

Aldwych International commits to developing 400 MW of wind power in Kenya and Tanzania – which will represent the first large-scale wind projects in each of these countries, and an associated investment of US$1.1 billion.
Harith General Partners commits to US$70 million in investment for clean, wind energy in Kenya and US$500 million across the African power sector via a new fund.

Husk Power Systems will seek to complete installation of 200 decentralised biomass-based mini power plants in Tanzania – providing affordable lighting for 60,000 households.

The African Finance Corporation intends to invest US$250 million in the power sectors of Ghana, Kenya and Nigeria, catalysing US$1 billion in investment in sub-Saharan Africa energy projects.

Power Africa directly addresses constraints to investment in order to accelerate progress. Instead of taking years or even decades to create an enabling environment for energy sector investment, Power Africa takes a transaction-centred approach that provides incentives to host governments, the private sector, and donors.

These incentives galvanise collaboration, producing near-term results and driving forward systemic reforms that pave the way to future investment.
To achieve these ambitions, Power Africa includes:

An interagency transactions solutions team to provide the catalysts needed to bring power and transmission projects to fruition by leveraging financing, insurance, technical assistance, and grant tools from across the US government and our private sector partners.

Field-based transaction advisors, who have already begun their work in each of the partner countries, to help governments prioritise, coordinate, and expedite the implementation of power projects, while simultaneously building the capacity of existing host government ministries to deliver results.

Building host-government capacity to develop, approve, finance and ultimately bring power projects on line is critical to the success of the initiative.

To support this need, Power Africa will work with host governments to launch or further develop delivery units charged with driving progress on specific projects. These delivery units will help increase technical skills and accelerate energy sector regulatory, market structure and enabling environment reforms.

In Tanzania for example, Power Africa will support the Big Results Now! program, which is establishing new delivery units within government ministries.

In Nigeria, Power Africa will provide staffing support, capacity building and technical assistance to an existing delivery unit. Establishment of a delivery unit in Ghana will be closely coordinated with the MCC’s Compact slated for signature in 2014.

Source: http://www.esi-africa.com

 
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Posted by on July 9, 2013 in Tanzania News

 

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Inflation drops to 7.6 per cent, on slow food prices

INFLATION continued to fall in the year to June due to slower rises in the prices of food and energy, the National
Bureau of Statistics (NBS) said yesterday.

The year-on-year rate of inflation fell to 7.6 per cent from 8.3 per cent in May, the lowest level in two years.

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NBS report released yesterday says: “The decrease of inflation rate explains that, the speed of price increase
for commodities in June has decreased compared to the speed recorded in May.”

The rate shows that the authorities in the country are ahead of International Monetary Fund (IMF) projection of
lowering inflation to 7.0 per cent by the end of December 2013.

Given the speed of declining, the IMF projection goal may be reached before the third quarter (September)
ends, even to reach the projected policy goal of 5.0 per cent before the year end.

Mzumbe University Dar es Salaam Business School Senior Lecturer (economics), Dr Honest Ngowi, said the
decline was the continuation of the downward trend experienced for several months now.

“The rate and trend are good. And we may soon reach our policy goal of 5.0 per cent in the very near future,”
Dr Ngowi said, “it reflects a good effort made by central bank for controlling money supply (in the economy).”

The senior economics lecturer said the worries are on taxes adopted for this fiscal year because some are inflationary
in nature and might derail the achievements. “We cannot reach the 5.0 per cent goal unconditionally.

The way forward is to safeguard the achievements by addressing structural issues that erode the desires to
achieve the policy rate,” Dr Ngowi said.

The initiatives, to address structural issues, like President Barack Obama’s Power Africa are commendable as
would lower the cost of electricity and ultimately production.

 
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Posted by on July 9, 2013 in Tanzania News

 

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The African First Ladies Summit : Panel Discussion on Subsistence to Security: Providing Opportunities & Improving Agricultural Outcomes for Female Farmers

The African First Ladies Summit : Panel Discussion on Subsistence to Security:  Providing Opportunities & Improving Agricultural Outcomes for Female Farmers

At the African First Ladies summit, second panel discussion topic underway. The discussion is on Subsistence to Security: Providing Opportunities & Improving Agricultural Outcomes for Female Farmers

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Moderator: Dr. Jemimah Njuki – Global Coordinator, Pathwaysband CARE Tanzania’s Women in Agriculture Program

Panelists:
Martin Fisher – Co-Founder and CEO, KickStart International
Josephine Okot – MD Victoria Seeds Ltd
Mary Rono – Dairy Farmer – Land O’Lakes Beneficiary Kenya
Sherry-Lee Singh – Project Manager, Massmart Supplier Development Fund.

Panel Overview.

Research shows that the majority of those who produce, process, and market Africa’s food are women. Specifically in Sub-Saharan Africa, women contribute 60 to 80 percent of the labor in both food production for household consumption and for sale. While women are at least half of the workforce in agriculture, access to resources such as land, credit and other services in rural communities continue to be limited, and inequality in different agriculture value chains is a substantial challenge. A Food and Agriculture Organization study found that national agricultural output could increase by as much as four percent if female farmers were granted equal access to resources like land and fertilizers. This panel addresses the most effective and innovative strategies to overcoming gender disparities and increasing women’s roles in agricultural development. Specifically, this panel highlights programs and technologies that are providing access to consumer markets, improving farming techniques, and using technology to increase yield and accelerate productivity. Finally, the panel highlights how governments, non-profits, and corporations can move the focus on agriculture beyond development and towards business growth, economic opportunity and food security.

Follow Live webcast for the African First Ladies Summit here : http://bit.ly/11WaC53 #investinwomen

MJ

 
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Posted by on July 2, 2013 in Tanzania News

 

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The African First Ladies Summit : Panel Discussion on Empowering Women through Training and Technology

The African First Ladies Summit : Panel Discussion on Empowering Women through Training and Technology

We start the Panel discussion with the Topic,
The Key to Global Growth: Empowering Women Entrepreneurs through Training and Technology

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Moderated by Mrs. Cherie Blair with the panelists Sabetha Mwambenja – MD Covenant Bank for Women, Ory Okolloh – Director of Investments, Omidyar Network and Happiness Mchomvu, Women Entrepreneurship Development.

PANEL OVERVIEWS
Compelling evidence shows that empowering women economically and fostering women’s entrepreneurship can further stability and growth across the globe. Globally, women own approximately 25 to 33 percent of all private businesses in the formal economy, but they generally do not own the means of production and win less than one percent of the business contract opportunities. Women invest up to 90 percent of their earnings on their families as compared to men who invest 30 to 40 percent of their earnings. Investing in women entrepreneurs is a strategic approach to building stronger communities, stable societies, and sustainable economies. In Africa, where it is predicted that seven of the world’s ten fastest growing economies will emerge over the next five years, financial inclusion is critical to fostering sustainable growth. The panel explores and spotlights ways that key stakeholders, including private, public and non-profit sectors are effectively applying technology to advance Africa’s development and improving lives of women through entrepreneurship. The panel emphasizes how digital advocacy, mobile technology, the collection of data, and internet connectivity are being used to increase access to: information and markets, global supply chains, increased financing for women-owned businesses, and developing skills and networks. This panel also shares stories of how First Ladies are advocating for women’s entrepreneurship.

Follow Live webcast for the African First Ladies Summit here : http://bit.ly/11WaC53 #investinwomen

MJ

 
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Posted by on July 2, 2013 in Tanzania News

 

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