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Tanzania Budget Analysis
Highlights of Tanzanian Budget 2017
Economic Review
1
TANZANIA ECONOMY
Real GDP is projected to grow by 7.1%
in 2017 (real growth of 7.0% in 2016);
Controlling inflation rate and
maintaining it at a single digit, between
5 and 8 %;
Increase of domestic revenue
collections (Central Government and
Local Government Authorities) to 16.5
percent of GDP;
Increase tax revenue collection to 14.2
percent of GDP;
Government spending projected at
24.9 percent of GDP;
Budget deficit including grants is
projected at 3.8 percent of GDP;
Tanzania to maintain adequate foreign
exchange reserves to cover a minimum
of four months of importation of goods
and services;
For 2016, growth of per capita income
to 2,131,299 shillings compared to
1,918,897 shillings in 2015, an increase
of 11.1 percent;
Per capita income averaged in USD
increased rather at slow pace from USD
967.5 in 2015 to USD 979.1 in 2016;
In 2016, the inflation rate averaged 5.2
percent compared to 5.6 percent in
2015; slightly increased to 6.4 percent
in April 2017;
In 2016, credit to the private sector
grew by 7.2 percent to 16,608.9 billion
shillings from 15,492.7 billion shillings
in 2015;
Interest rates for time deposits
declined from an average of 9.30
percent to an average of 8.78 percent.
In addition, interest rates for one-year
deposits declined from an average of
11.16 percent in 2015 to 11.03
percent in 2016.
Capital formation, at market prices, in
2016 increased by 3.4 percent to
25,558,140 million shillings from
24,717,206 million shillings recorded in
2015;
The value of exports increased from
USD 8,918.1 million in 2015 to USD
9,285.6 million in 2016, equivalent to
an increase of 4.1 percent;
The value of imports declined from
USD 12,528.2 million in 2015 to USD
10,772.3 million in 2016 equivalent to
a decrease of 14.0 percent;
In 2016, trade deficit of USD 1,489.5
million, it was yet an improvement as
compared to a deficit of USD 3,594.7
million in 2015, representation of 58.6
percent improvement;
Up to December 2016, foreign currency
reserves were USD 4,325.6 million
compared to USD 4,093.7 million
recorded in December 2015;
The human development index (HDI)
improved from 0.521 points in 2014 to
0.531 points in 2015;
Highlights of Tanzanian Budget 2017
Economic Review
2
Spending Plan for development activities:
Expected Sources Amount in
Billion Shs
Domestic Sources 8,702.70
Foreign Sources 3,117.81
Total 11,820.50
Tanzania economy has continued to register
high economic growth whereas Tanzania was
among the top five African Countries:
The ratio of liquid assets to demand
liabilities stood at 35.9 percent in
March 2017 compared to the minimum
legal requirement of 20 percent.
Customer deposits in commercial
banks increased by 0.3 percent from
shillings 18.84 trillion in March 2016 to
shillings 18.89 trillion shillings in March
2017.
The ratio of nonperforming loans to
gross loans (NPLs) increased from 8.3
percent in March 2016 to 10.9 percent
in March 2017.
The discount rate reduced from 16.0
percent as applied since November
2013 to 12.0 percent which became
effective on 6 March 2017.
Highlights of Tanzanian Budget 2017
REVIEW OF 2016/17 BUDGET IMPLEMENTATION
REVENUE (in Billion Shillings)
Particulars
July 2016 to
April 2017
Annual
Target
% of Annual
Target
Tax revenue 11,645 15,105 77.09%
Non tax 1,611 2,693 59.82%
LGAs own source 399 665 60.01%
Loans from domestic sources 4,716 5,374 87.74%
Disbursement of grants and external
concessional loans 2,340 3,601 64.99%
External Non-concessional Loans 2,101
TOTAL 20,711 29,539
EXPENDITURE (in Billion Shillings)
Particulars
July 2016 to
April 2017
Annual
Target
% of Annual
Target
Recurrent expenditure 15,481 17,719 87.37%
Development expenditure 4,556 11,821 38.54%
TOTAL 20,036 29,539
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Highlights of Tanzanian Budget 2017
Tax Reforms
Proposals for Tax Reforms
Policy and Administrative measures
Direct exportation of minerals not
allowed from the mines to other
countries. A clearing house to be
established at the international
airports, mining and other
appropriate areas. A clearing fee of
1% of the value of minerals to be
imposed.
Amendments in The Value Added Tax Act,
CAP 148
VAT on ancillary transport services
in relation to goods in transit to be
zero rated.
VAT on capital goods exempted on
Machines and Plants used in Edible
oil, textile, leather and
pharmaceutical (including veterinary)
industries.
Locally produced compounded
animal feeds under HS Code 2309,
exempted from VAT.
Supply of Fertilized eggs for
incubation exempted from VAT.
Amendments in The Income Tax Act, CAP
332
Amendment First schedule is aligned
in line with Section 4 to read three
consecutive years in place of five
consecutive year, for Alternate
Minimum Tax.
Amendment of Third Schedule to
revise the ceiling on the value of non-
commercial motor vehicle for
claiming wear and tear from existing
Tzs 15 Million to Tzs 30 Million.
Corporate income tax for new
assemblers of vehicles, tractors, and
fishing boats shall be 10 percent
instead of 30 percent for first five
years from commencement of
operations.
Introduction of 5 percent final
withholding tax of the total market
value of minerals to all small miners. (
It appears that the proposal is to
apply 5 percent final withholding tax
on procurement of minerals from
small minors, though wording is not
clear).
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Highlights of Tanzanian Budget 2017
Tax Reforms
Amendments in The Excise (Management and Tariff) Act, CAP 147
The excise duty rates on the following items have been revised by 5% as under:-
Item Existing Rate
(Shillings per litre)
Revised Rate
(Shillings per litre)
Soft Drinks 58 61
Imported Water including mineral
waters containing added sugar or other
matter or flavour
58 61
Locally produced water 58 58
Locally produced fruit juices 9.5 9
Imported fruit juices 210 221
Beers made from local unmalted cereals 429 450
Other beers 729 765
Non- alcoholic beers (including energy
drinks and non-alcoholic beverages) 534 561
Wine produced with domestic grapes
with contents exceeding 75 percent 202 200
Wine produced with more than 25
percent imported grapes 2,236 2,349
Imported spirits 3,315 3,481
Item Existing Rate
(Shillings thousand
cigarettes)
Revised Rate
(Shillings thousand
cigarettes)
Cigarettes without filter tip and
containing domestic tobacco more than
75 percent
11,854 12,447
Cigarettes with filter tip and containing
domestic tobacco more than 75 percent 28,024 29,425
Other cigarettes 50,700 53,235
Item Existing Rate
(Shillings per
kilogram)
Revised Rate
(Shillings per
kilogram)
Cut rag or cut filler 25,608 26,888
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Highlights of Tanzanian Budget 2017
Tax Reforms
Increase in excise duty by 40 Shillings per Litre as follows:
Item Existing Rate
(shillings per litre)
Revised Rate
(shillings per litre)
Petrol 339 379
Diesel 215 255
Kerosene 425 465
Amendments in The Road Traffic Act, CAP 168
Annual Motor Vehicle Licence Fee abolished.
Motor Vehicle Licence fee on first registration to be revised as under:-
Category of Vehicle Existing Fee
(shillings)
Revised Fee
(shillings)
With Engine Capacity between 501cc and
1500 cc 150,000 200,000
With Engine Capacity between 1501cc and
2501 cc 200,000 250,000
With Engine Capacity above 2501 cc 250,000 300,000
Amendments in The Local Government Finance Act, CAP 290
Reduction in Produce Cess charged by Local Government Authorities as under:
From 5 percent to 3 percent for cash crops.
From 5 percent to 2 percent for food crops.
Produce Cess shall not be charged on transportation of crops of less than one ton from
one local government authority to another.
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Highlights of Tanzanian Budget 2017
Tax Reforms
Amendments in The East African
Community Customs Management Act,
2004
The following amendments have been
proposed:
Duty remission on wheat grain
falling under HS Codes
1001.99.10 and 1001.99.90 and
apply duty rate of 10 percent
instead of 35 percent for one year.
Duty remission on Linear Alkyl
Benzen Sulphuric Acid (LABSA)
falling under HS Codes
3402.11.00, 3402.12.00 and
3402.19.00 and apply duty rate of
0 percent instead of 10 percent
for one year.
Continue to grant duty remission
on CKD kits for motorcycles at a
duty rate of 10 percent instead of
25 percent for one year.
Extend stay of application of the
EAC CET rate in Crude Palm Oil
falling under HS Code 1511.10.00
and apply duty rate of 10 percent
instead of 0 percent for one year.
Grant stay of application of the
EAC CET rate and instead apply a
duty rate of 25 percent or USD
250 per metric ton whichever is
higher on Flat Rolled Products of
iron or non alloy steel falling under
HS Codes 7210.41.00;
7210.49.00; 7210.61.00;
7210.69.00; 7210.70.00;
7210.90.00; 7212.30.00;
7212.40.00; 7212.50.00;
7212.60.00 for one year.
Continue stay of application of the
EAC CET rate and instead apply a
duty rate of 25 percent or USD
200 per metric ton whichever is
higher on Steel Rods and Bars and
Hot-rolled Angles, sections of iron
or non alloy steel falling under HS
Codes 7213.10.00, 7213.20.00,
7214.10.00, 7214.20.00,
7214.30.00; 7214.91.00,
7214.99.00, 7216.10.00,
7216.21.00, 7216.22.00 and
7216.50.00 for one year.
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Highlights of Tanzanian Budget 2017
Tax Reforms
Grant duty remission on inputs
falling under HS Code 7228.20.00
and apply duty rate of 0 percent
instead of 25 percent or USD 200
per metric ton whichever is higher
for manufacturers of leaf spring.
The measure takes into account
that during the year 2016/17 there
was manufacturers of leaf spring in
Tanzania who were adversely
affected by the introduction of
import duty of 25 percent or USD
200 per metric ton whichever is
higher on their raw materials.
Grant stay of application of EAC
CET rate and instead apply a duty
rate of 10 percent or USD 125 per
metric ton whichever is higher on
Flat-rolled products of iron or non-
alloy steel, with a width of 600
mm or more, cold rolled or cold
reduced falling under HS Code
7209.15.00, 7209.16.00,
7209.17.00, 7209.18.00,
7209.25.00, 7209.26.00,
7209.27.00, 7209.28.00,
7209.90.00, for one year.
Continue to provide duty
remission at duty rate of 0 percent
on inputs for manufacturers of “air
filters” in the region. The measure
is aimed at supporting the local
manufacturers of the products in
the region and create
employment;
Grant stay of application of EAC
CET rate on Gypsum Powder
falling under HS Code 2520.20.00
and apply a duty rate of 10
percent instead of 0 percent for
one year.
Grant stay of application on the
reduction of remission level on
sugar for industrial use under HS
Code 1701.99.10 and apply duty
rate of 10 percent. During the
financial year 2016/17, it was
agreed to reduce progressively the
import duty remission levels from
90 percent to 75 percent so that
the import duty rate moves from
10 percent to 25 percent for the
period of three years.
Grant stay of application of EAC
CET rates on Electronic Fiscal
Devices (EFDs) Machines falling
under HS Code 8470.50.90 and
apply duty rate of 0 percent
instead of 10 percent for one year.
To extend the stay of application
of the EAC CET rate and apply a
duty rate of 25 percent instead of
10 percent on paper products
falling under HS Codes
4804.11.00; 804.19.90;
4804.21.00; 4804.29.00;
4804.31.00; 4804.39.00;
4804.41.00; 4804.51.00;
4804.59.00; 4805.11.00;
4805.12.00; 4805.19.00;
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Highlights of Tanzanian Budget 2017
Tax Reforms
4805.24.00; 4805.25.00;
4805.30.00; 4805.91.00; and
4805.92.00 for one year.
Grant duty remission of on inputs
for use in the assembly of
equipments specifically designed
for use by disabled persons at 0
percent.
Grant stay of application of EAC
CET rate on aluminium structures
of HS Codes 7610.90.00 and
instead apply duty rate of 25
percent instead of 0 percent for
one year.
To change a wording of tariff code
4911.99.20 to include
examination answer sheets so that
the import duty of 0 percent
applies for both examinations
question papers and examination
answer sheets; and
Grant duty remission on inputs for
use in the assembly and
construction of ships at 0 percent.
This measure is intended to
provide relief to the assemblers
and promote the fishing industry,
marine transport and job creation.
Amendment in Part B of the 5th
Schedule of EAC CMA 2004 by
deleting para 25 in order to
remove import duty exemption on
Compact Fluorescent Bulbs (CFL)
and Light Emitting Bulbs (LED).
These are finished products;
Amendment of Section 203 of the
EAC CMA by replacing the USD
10,000 fine with USD 20,000 or
50 percent of the dutiable value of
the goods, whichever is higher.
Currently the maximum fine
Customs can charge on such
offences was only USD 10,000.
Amendment of Section 218 of
EAC-CMA 2004 to give the powers
of the restoration of seized items
to Commissioner of Customs
instead of EAC Council of
Ministers;
Amendment of Para 30 of the 5th
Schedule to the EAC-CMA, 2004
to include distribution of Oil and
Gas. This measure is intended to
provide import duty exemption on
projects of Heated Crude Oil
Pipeline implemented by Partner
States Governments;
Amendment of Various Fees and Levies
imposed by Ministries, Regions and
Independent Departments
To abolish fees imposed on
fertilizer (standards inspection,
radiation inspection and weight
and measures) by the Tanzania
Bureau of Standards (TBS),
Tanzania Atomic Energy
Commission (TAEC) and Weight
and Measures Authority (WMA).
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Highlights of Tanzanian Budget 2017
Tax Reforms
To abolish standards inspection
fee on cash crops such as cotton,
tea, cashewnuts and coffee
imposed by the Tanzania Bureau
of Standards (TBS).
To abolish Service Levy imposed
on guest houses which are subject
to Guest House Levy;
To abolish a Levy imposed on
posters that direct people to the
places where public services such
as schools, and hospitals or
dispensaries are available. The
Tanzania Revenue Authority will
start collecting levy on posters
intended for commercial purposes
by 1st of July, 2017;
To abolish permit fees issued by
Local Government Authorities on
various activities for example
permit fees charged on
slaughtering places (not including
slaughtering and meat inspecting
fees), permit fee on transportation
of livestock and on establishing
pharmacies;
To abolish fees imposed on
livestock when they are in the
market for auction; and
To increase the amount of fine
imposed on the people who fail to
comply with the Local
Government Finance Act from not
more than shillings 50,000 and 12
months sentence up to between
shillings 200,000 and shillings
1,000,000 or between 12 months
and 2 years sentence.
100
Highlights of Tanzanian Budget 2017
Particulars
TZS
Millions
TZS
Millions
Revenue
A. Domestic Revenue 19,289,695
(i) Tax Revenue 17,106,336
(ii) Non Tax Revenue 2,183,359
B. Local Government Revenue Collection 687,306
C. External Concessional Loans and Grants 3,971,103
(i) General Budget Support 941,258
(ii) Projects Loans and Grants 2,473,770
(iii) Basket Loans and Grants 556,075
D. Domestic loans and Concessional 7,763,882
(i) External Non Concessional Borrowings 1,594,985
(ii) Domestic Non Concessional Borrowings (1.0 of GDP) 1,220,668
(iii) Domestic Non Concessional Borrowings (Loans –
Rollover) 4,948,229
Total Revenue (A+B+C+D) 31,711,986
Expenditure
E Recurrent Expenditure
(i) National Debt Services 9,461,433
- Domestic Interest 1,025,546
- Domestic Amortization (Rollover) 4,948,229
- External Amortization 1,182,651
- External Interest 673,492
- Government Contribution to Pension Funds 1,195,882
- Other Expenditure under CFS 435,633
(ii) Wages and Salaries 7,205,768
(iii) Other Charges 3,045,193
- Protected expenditure 1,985,245
- LGAs expenditure 274,922
- MDAs operational costs 785,025
Total Recurrent Expenditure 19,712,394
F. Development Expenditure
(i) Domestic Financing
8,969,747
o/w LGAs Expenditure 412,384
(ii) Foreign Financing
3,029,845
Total Development Expenditure 11,999,592
Total Expenditure (E+F) 31,711,986
BUDGET DEFICIT 3.8 % of GDP
Source: Ministry of Finance and Planning
11
Highlights of Tanzanian Budget 2017
0
5,000,000
10,000,000
15,000,000
20,000,000
DomesticRevenue
LocalGovernment
RevenueCollection
ExternalLoans and
Grants
Domesticloans and
Concessional
19
,28
9,6
95
68
7,3
06
3,9
71
,10
3
7,7
63
,88
2
TOTAL REVENUE (in Million TZS)
19,712,394; 62%
11,999,592; 38%
TOTAL EXPENDITURE (in Million TZS)
Recurrent Expenditure Development Expenditure
12
Our Review highlights the main aspects of the Budget, read by the Cabinet Secretary on 8th June 2017. The information contained in this review has been compiled from the Budget speech read on 8th June 2017 and the economic review. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Grant Thornton accepts no responsibility for any errors oromissions it contains whether caused by negligence or otherwise. The review contains generalinformation only and is neither intended to be a comprehensive publication nor provide specific advice
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