Category Archives: Finance,Taxation and Investment

Treasury bonds oversubscribed‏

HIGH demand from investors greeted the second 10-year treasury bonds attracting bids almost two times the amount offered to the market for bidding, thus ending up the
show overly subscribed.

The first 10-year treasury bonds auctioned on February, this year, attracted few bids
from investors ending the show under subscribed.

Funds raised from the sale of the long-term debt government securities are targeted to finance development projects like road and railway infrastructures that are necessary cutting down cost of transport.

Some of the key investors in government securities include pension funds, insurance firms, some microfinance companies and few commercial banks.

The second 10-year treasury bonds was auctioned last week and is expected to mature in
April 2026. It attracted bids 105.14/- compared to 49.20/- offered for bidding.

The Bank of Tanzania (BoT) auction summary shows, however, that the government retained only 21.70bn/- which is far below even the amount sought to be raised.

The weighted average yield to maturity increased slightly to 18.84 per cent compared to
18.82 per cent of the session held in February, this year.

The weighted average coupon yield also made slight increase to 17.03 per cent
compared to 17.00 per cent of the previous session.

The weighted average price for successful bids declined to 67.14 compared to 67.26.

Only seven bids that were received out of 75 emerged successful. The highest bid offered at the auction was 69.36 while the lowest is 57.50; the minimum successful bid/100 was 67.01.


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Acacia Mining to pay $20m in corporate tax in 2016‏

ACACIA Mining PLC is to pre-pay 20 million US dollars in corporate taxes this year after signing a Memorandum of Understanding with the Tanzania Revenue Authority (TRA) last month in Dar es Salaam.

According to the Acacia’s CEO, Bradley Gordon, this proactive move was initiated by Acacia Mining PLC in recognition of the time the company has been operating in the country.

Acacia Mining, which entered the Tanzania mining sector as Barrick and later as African Barrick Gold 15 years ago has been making profit, according to Mr Gordon, in his internal communication to Acacia staff at the weekend.

However, much as the company has in most cases declared net profit across the mines it owns the fact of the matter is it has not yet recouped the USD 3.8bn it has invested into building and developing the three mines it owns.

Under Tanzanian mining law and the terms of the Mineral Development Agreements between Acacia Mining PLC and the government any profit made is used to offset the initial investment and therefore during that period the company is not required to pay any corporate tax.

Mr Gordon says in elaborating the issue of profit that “when running a business one needs to first exclude all costs from your income before you can declare a profit – the cost in this case is the initial capital cost that has been invested to develop the mines”.

“Whilst we make net profits, these are not taxable and our current projections are we aren’t due to pay corporate taxes until 2018”, he says.

According to Mr Gordon, the fact that the MOU between Acacia and TRA has been signed and has been recognised as a pre-payment by all parties makes it clear that in the TRA’s opinion, no corporate tax is currently owed by Acacia and therefore none has been evaded.

In its recent ruling, the Tax Revenues Appeals Tribunal (TRAR) accused the gold mining giant of running a sophisticated tax evasion scheme in the country.

Acacia has since appealed to the Court of Appeal against the ruling asserting that the company’s financial reports conformed to international best practices and were audited by global accounting firms and government organisations.


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Here is the last part of the 2014 Tanzania National Budget review. Fiscal measures The proposed fiscal changes are as follows:

•• Reduce duty rate on:
— Buses under HS Code 8702.10.99 carrying more than
25 passengers, from 25% to 10% for a period of 1 year.
— Papers under HS Codes, 4805.12.00 and
4805.30.00 only, from 25 % to 10 %.
•• Increase duty rate on:
— Chemical based (petroleum) aerosol spray under HS Code
3808.91.39 from 10% to 25%.
•• Grant duty exemption on:
— Machinery spares and inputs for use in development and
generation of wind and solar energy.
— Importation of Electronic Fiscal Devices for a period of one
year (Tanzania only).
— Importation of goods used in the manufacture of gas
•• CET rate:
— Extend the stay of application of the CET rate of 35% on
wheat grain under HS Codes 1001.90.10 and 1001.99.90,
and apply a CET rate of 10 % for the period of one year.
•• Continue to grant duty remission to:
— Soap manufacturers using LABSA raw materials under HS
Code 3402.11.00; HS Code 3402.12.00 and HS Code
3402.19.00, from 10% to 0% for a period of one year.
— The Armed Forces Canteen Organisation for another year.
•• Duty exemption
— Remove duty exemption on splints used in manufacturing
•• Taxes due on the importation of petroleum products must be
remitted on importation, rather than 45 days later.
•• The removal of cement from the list of deemed capital goods
which are tax exempted under the Tanzania Investment Centre.
•• An increase in the minimum capital requirement for foreign
investors through Tanzania Investment Center from US$ 20
million to US$ 50 million.
•• The amendment of the Business Licensing Act, No. 25 of 1972 to
enable the Government to impose new business licensing fees.
•• Reductions of the export levy on raw hides and skins from
90% or TZS 900 per kilogram to 60% or TZS 600 per kilogram,
whichever is the higher.
•• The amendment of the Vocational Education and Training Act,
CAP 82, in order to include additional institutions in the list of

Financial Sector
•• Launching of the National Financial Inclusion Framework (NFIF).
•• Tanzania Agricultural Development Bank (TADB) is established.
It’s operationalization is in progress.
•• Growth in the number of Banks from 51 in 2013 to 53 in 2014.
and insurance companies from 28 in 2013 to 30 in April 2014.
•• Capital requirement for community and commercial banks
remain unchanged – compliance is expected by 2015.

Infrastructure Development
Transport infrastructure
•• Total budget of TZS 2,109.0 billion has been set aside for
procurement of wagons, rehabilitation of the central railway line
and for the construction and rehabilitation of roads and bridges.
•• Infrastructure development is geared towards reducing
congestion in urban areas, costs of transport and transportation
of goods and services.
•• TZS 90 billion set for construction of Kinyerezi I gas fired
electricity generation plant.
•• TZS 290.2 billion is for Rural Electrification Agency (REA) for
distribution of electricity in rural areas.
Oil and Gas
•• TZS151billion set for the completion of gas pipeline from Mtwara
to Dar es Salaam.
•• Introduction of new natural gas laws.
•• Agriculture created 130,974 jobs.
•• Budget set aside a total of TZS 1,084.7 billion for strengthening
irrigation infrastructure, construction of warehouses and markets
and to create available loans for promotion of food and cash
crops production.
Human Resource Development
•• Government plans to support youth skills development in oil and
gas courses in the country and abroad. Currently 124 students
will be financed by the Government and 35 students will be
awarded scholarships by Development Partners.
•• Total of TZS 1,588.2 billion has been set aside for procurement
of medicines, prevention of epidemic diseases, and immunization
for children, construction of hospitals and dispensaries and HIV
and malaria control.
Water and sanitation
•• Total of TZS 665.1 billion has been set aside to improve urban
and rural water infrastructure which includes continuing with
the construction of 10 water wells in every Local Authority.


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Credit card myths busted

Credit card myths busted When it comes to credit cards, there are a lot of nasty myths and misconceptions passed around. These can often scare off first-time applicants for standard and balance transfer credit cards, but most are untrue and are not worth paying attention to.To clear things up, let’s bust some credit card myths.Myth

via Credit card myths busted.


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.


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.


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 and 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 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 and 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 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

Paragraph 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 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



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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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Gold outlook worst in commodity survey

Gold outlook worst in commodity survey



Gold has the worst 12-month outlook among commodities and will trade below $1,400 an ounce in a year, according to an investor poll by Credit Suisse Group AG.

Sixty percent of respondents named bullion as having the worst outlook, 18 percent picked copper and 16 percent selected corn, the bank said in an e-mailed report today. Fifty-one percent predicted gold will fall under $1,400 in 12 months, it said. The bank polled 185 investors including hedge funds, pension funds and family offices on May 15 in London.


Gold has the worst 12-month outlook among commodities and will trade below $1,400 an ounce in a year, according to an investor poll by Credit Suisse Group AG.

Sixty percent of respondents named bullion as having the worst outlook, 18 percent picked copper and 16 percent selected corn, the bank said in an e-mailed report today. Fifty-one percent predicted gold will fall under $1,400 in 12 months, it said. The bank polled 185 investors including hedge funds, pension funds and family offices on May 15 in London.

“Bearishness for gold was a very clear consensus,” said Kamal Naqvi, the head of commodities sales for Europe, Middle East and Africa at Credit Suisse. “It’s not about just not buying gold, it’s about shorting it,” or wagering on a drop.

Gold slumped into a bear market last month as investors lost faith in the metal as a store of value. Bullion is down 17 percent this year, compared with the 2.9 percent drop for the Standard & Poor’s GSCI gauge of raw materials.

Fifty-three percent of investors expect commodity prices to stay near current levels, Credit Suisse said. Most were underweight raw materials or had zero exposure, while they expected to be overweight or neutral in 12 months, the bank said. Investors named relative value trades, fundamentally based directional trades and volatility as the best ways to extract value from commodities.





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