2021/2022 BUDGET

The Finance Act 2021 is enacted following the passing of the Country’s budget for the year starting from 1st July 2021 and ending of 30th June 2022. The Finance Act 2021 has amended various laws with a view to imposing and altering certain taxes, duties, levies, and fees. Further, the Act has amended other written laws relating to the collection and management of public revenues. We provide a highlight of amendments made by the Finance Act 2021 to various laws, however, it is our advice that the highlights should not be used in place of professional advice and Aloys & Associates will not be responsible for any consequences of relying to these highlights.


The Finance Act 2021 has amended the Companies Act by prohibiting the issuance of share warrants, this prohibition is effective 1st July 2021, and all holders of share warrants are required to surrender the share warrants to the issuing Company for cancellation within twelve months from the effective date. A share warrant that is not surrendered within the twelve months period will be deemed cancelled unless the Registrar of Companies allows the surrender on receiving reasonable grounds of the delay.

Upon surrender of a share warrant, the respective Company has the obligation of cancelling the share warrant, entering the names of the persons whose share warrants has been cancelled into its register of members and beneficial owners and notifying the Registrar of Companies of the changes in its register of members and beneficial owners following the cancellation.


The Finance Act 2021 has introduced what it terms as “Development levy on Airtime” at the rate ranging from Tanzania Shillings 5 to 222.70. The modality and manner in which this levy will be collected and accounted will be prescribed in regulations to be issued by the Minister responsible for Communications after consultations with the Minister responsible for Finance.


  • A duty of 10% has been introduced for importation of motorcycles above the age of three years from the date of its manufacture. This duty is charged in addition to any other rates imposed under the law. This is more of an anti-dumping and environmental protection measure.
  • An excise duty of 10% has been introduced on money transfer and payment services provided by payment systems providers licenced under the National Payment Systems Act.
  • There is an excise rate reduction of Tanzania Shillings 145 per litre on beer made from 100% locally grown barley to Tanzania Shillings 620 per litre down from Tanzania Shillings 765 per litre, which excise rate is maintained for beer made from wholly or partially imported barley.
  • There is an excise rate increase of Tanzania Shillings 90 per litre of spirits obtained by distilling grape wine or grape marc from locally produced grapes, which now stands at Tanzania Shillings 540 per litter up from Tanzania Shillings 450 per litre. The excise rate for other locally produced spirits has increased by Tanzania Shillings 663 per litre up to Tanzania Shillings 3,978 per litre from Tanzania Shillings 3,315 per litre.
  • There is an excise rate increase of Tanzania Shillings 731.01 per litre on all imported spirits which now stands at Tanzania Shillings 4,386.06 per litter up from Tanzania Shillings 3,655.05 per litre.
  • An excise duty rate of 10% has been introduced on both locally manufactured and imported Yarn (other than sewing thread) of man-made staple fibres, put up for retail sale, twine, cordage, ropes and cables.


The Finance Act 2021 requires the issuance of guarantees for and on behalf of the Government by the Minister responsible for finance to an institution or company to borrow an amount of money not exceeding the value of shares of the Government in the respective institution or company operating a strategic project to be approved by the Cabinet. 


The Finance Act 2021 has reduced the gaming tax rate on winnings to 15% down from 20%. Winnings subjected to gaming tax are not liable for income tax.

5% of the gaming tax in sports betting is allocated to the Sports Development Fund. The sports betting gaming tax rate is 25%.

The Finance Act 2021 has also introduced a gaming tax of 10% of gross gaming revenue for virtual games and other gaming products not specified or contemplated by the Gaming Act but licenced or authorized by the Gaming Board.


The imposition of retention fee or any other fee, charges, penalty, or payments on loan repayments by former beneficiary students is subject to approval by the Minister responsible for higher learning in consultation with the Minister responsible for finance.


The Finance Act has introduced a levy with a rate ranging from Tanzania Shillings 10 to 10,000 on mobile money transfers. The manner and modality under which this levy will be collected and accounted for will be prescribed in regulations to be made by Minister responsible for finance in consultation with the Minister responsible for communications.


The Finance Act 2021 has introduced a penalty of Tanzania Shillings 500,000 for each month or part of a month for failure to timely submit a return on employment of non-citizens to the Labour Commissioner.

The law requires the return on employment of no-citizens to be submitted to the Labour Commissioner on 30th June and 31st December of every year.


The Finance Act 2021 has increased the amount of money to be collected as roads and fuel tolls on petrol and diesel from a total of Tanzania Shillings 263 per litre to Tanzania Shillings 363 per litre. From this amount Tanzania Shillings 100 per litre is to be allocated to the Tanzania Rural and Urban Roads Agency (TARURA) and Tanzania Shillings 263 per litre is to be distributed between the Roads Fund and TARURA in the manner prescribed by regulations made by the Minister responsible for finance in consultation with the Minister responsible for local government.

The collection of Tanzania Shillings 50 per litre for each litre of petrol and diesel to be deposited into the National Water Investment Fund is maintained.

The toll at fuel filing stations has also been increased by Tanzania Shillings 100 per litre from Tanzania Shillings 313 per litre to Tanzania Shillings 413 per litre.


The Finance Act 2021 has amended the Tax Revenue Appeals Act to give room to parties to an appeal before the Tax Revenue Appeals Board or the Tax Revenue Appeals Tribunal to apply to the Board or Tribunal for the appeal to be settled amicably through mediation. This mediation is to be conducted outside the Board or Tribunal and the outcome reported to the Board or Tribunal for issuance of a final order.


The Finance Act has amended the Vocational Education and Training Act by increasing the employee threshold for skills and development levy from 4 employees to 10 employees.

This means that employers with 10 or more employees are required to pay skills and development levy at the rate of 6% of the total gross monthly emoluments payable by the employer to all his employees in respect of that month.


  • The Finance Act 2021 has amended Section 3 of the Value Added Tax to harmonize VAT treatment between Mainland Tanzania and Tanzania Zanzibar where each has its own VAT law. Effective 1st July 2021 a person who pays VAT for a taxable supply of goods in Tanzania Zanzibar at the same rate applicable in Mainland Tanzania will not be required to pay VAT on its transfer to Mainland Tanzania. Where the rate applicable in Tanzania Zanzibar is lower than that applicable in Mainland Tanzania, then the Tanzania Revenue Authority will collect the difference. Where a taxable supply is made by a taxable person in Mainland Tanzania directly to a taxable person in Tanzania Zanzibar, the Tanzania Revenue Authority will collect the value added tax and remit it to the Zanzibar Revenue Board. The Minister responsible for finance is tasked with the making of regulations prescribing the manner of remission of VAT collected for goods  supplied to a registered taxable person in Tanzania Zanzibar.
  • The powers to grant VAT exemptions is now vested in the Commissioner General of the Tanzania Revenue Authority. The Commissioner General may exercise the powers on application by a local manufacturer of long lasting mosquito nets having a performance agreement with the Government of the United republic of Tanzania, a Government entity, a local Government authority, a non-governmental organization or an entity having an agreement with the Government of the United republic of Tanzania for operating or executing a strategic project.
  • The deferral of value added tax on imported capital goods is now limited to goods classifiable under Chapters 84, 85 and 90 of Annex 1 to the Protocol on the Establishment of the East African Community Customs Union.
  • The zero rating of supply of locally manufactured goods by local manufacturers to a taxable person registered under the Value Added Tax law administered in Tanzania Zanzibar has been removed.
  • A supply of transportation and incidental services to an international pipeline is zero rated for VAT. An international pipeline has been defined to mean a cross boarder pipeline for transportation of crude oil from a foreign country to a port facility in the United Republic in which such crude oil is exported to another foreign country.
  • Cans and ends for beverages have been removed from list of implements exempted from VAT and replaced with Aluminium and Stainless-Steel Milk Cans. Livestock Farming Insurance is also added to services exempted from VAT.
  • Crude Oil has been added to petroleum products exempted from VAT.
  • Solar lights have been removed from list of items exempted from VAT, whilst the supply and importation of smart phones, tablets and modems are now VAT exempted.
  • The following imports are exempted from VAT;
  • An import of precious minerals, tin, tungsten, tantalum, mineral concentrates and loaded carbon by any person for processing, smelting, refining for sale in the Mineral and Gem Houses or buying stations designated by the Mining Commission.
  • Import of contactless smart cards and consumables by the National Identification Authority.
  • Import of cold rooms by a person engaged in horticulture.
  • Import of artificial grass for football pitches located in city or municipal council approved by the National Sports Council of Tanzania.


The requirement to apply for Taxpayer Identification Number has been amended to include persons who become potentially liable to tax by reason of employment.

The Act has been amended to allow the office of the Tax Ombudsman Service  to review and address complaints by any person, not only taxpayers. There are also changes into the powers and the manner in which the Tax Ombudsman Service  can handle complaints.

With effect 1st July 2022 i.e., twelve months from 1st July 2021, every taxable or liable person who maintains documents in electronic form will be required to maintain a primary data server for storage of documents in electronic form with the Country. This server is required to be accessible to the Commissioner General for tax administration purposes as required under the Tax Administration Act.

The Tax Administration Act is amended to allow the collection of Property Rate at the time of paying for electricity for rateable properties connected to electricity, for those properties not connected to electricity then the traditional means of connection will continue to apply.

The Minister’s powers to make regulations prescribing eligibility, duration, and procedure for accessing remission have been removed. Now the Commissioner General can exercise his powers to remit interest or penalty without limitations.

A penalty of 100% of tax fall has been added to a person liable for entering controlled transactions or series of controlled transactions and fails to determine the income and expenditure resulting from the transaction in a manner that is inconsistent with arm’s length principle.

The offence of impending tax administration has been widened to include the failure to produce official translation of communication or document which is in a language other than the official language and the failure to maintain a primary data server in the United Republic of Tanzania.


The Finance Act 2021 has amended the Stamp Duty Act by substituting the list of instruments to which stamp duty applies and also changed the stamp duty rates for the instruments.


The Finance Act 2021 has made amendments to several areas of the Income Tax Act as follows:

Permanent establishment

The definition of permanent establishment has been qualified to cover more circumstances that will cause a person to be deemed to have a permanent establishment in the United Republic of Tanzania while acting through an Agent. The circumstances include among others where an Agents exercises authority to conclude contracts and issue invoices on behalf of that person, an Agent maintains stock of goods or merchandize for delivery on behalf of that person or secures orders for that other person.

International Pipeline

The Finance Act 2021 has added assets owned and employed on international pipeline into depreciable assets.

Agricultural, Livestock and fisheries

Payments made to a resident person for the supply of agricultural, livestock and fisheries products to a resident corporation in the course of conducting business are now subjected to a withholding income tax. This requirement does not apply to payments made by agricultural marketing cooperative societies and cooperative unions.

Withholding Tax Statement

The period within which a withholding agent is required to file withholding tax statement has been shortened to within 7 days of the month following the month to which the tax relates. Before this change a withholding agent was required to file the withholding tax statement within 30 days after the end of each six month calendar period. The filing is now to be done monthly unlike before where it was done biannually.

Income Tax for a Resident Individual

The tax rates for resident individuals have been amended, with the maximum annual income that will not be taxed raised to Tanzania Shillings 3,240,000. The applicable tax rate for the second ban has also been reduced to 8% of the amount in excess of Tanzania Shillings 3,240,000 and the ceiling for the band extended to an annual income of Tanzania Shillings 6,240,000. The third, fourth and fifth bands have also been amended accordingly.

Government Bonds

Interest earned by a person from government bonds of less than three years issued and listed on the Dar es Salaam Stock Exchange from 1st July 2021 is exempt from income tax.


The definition of rateable properties in District Councils has been amended so as to cover all buildings in actual occupation in a plot including improvements in, on or under such buildings. Before the amendment, rateable properties in District Council in a plot with more than one building covered one building with the highest rate in that plot.

The rates applicable to rateable properties in city council, municipal council, town council and district council areas have been revised upwards and uniformized.