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Confederation of Tanzania Industries (CTI) 2024/25 Budget Analysis: Praises and Concerns

Tanzania CTI Budget Analysis 2024-2025

The Confederation of Tanzania Industries (CTI), the foremost organization representing the industrial sector in Tanzania, presented its response and analysis of key highlights from the Budget Speech for the fiscal year 2024/2025 at a press conference held in Dar es Salaam on 18th June 2024.

The main aim of CTI is to ensure that there is a conducive legal, financial and economic environment in Tanzania within which industry can operate effectively, prosper and contribute to national wealth and development. 

CTI’s analysis follows the presentation of the national budget by the Minister for Finance, Hon. Dr. Mwigulu Nchemba (MP), in his speech to the Tanzanian Assembly on 13th June 2024.

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CTI is highly encouraged by the budget speech which shows the Government’s dedication towards driving economic growth and enhancing the business environment in Tanzania. This commitment is clearly reflected in the budget, with tangible investments and new initiatives aimed at fostering industrial growth, infrastructure development, and job creation

A key highlight of this year’s budget is the government’s reforms in the tax structure, fees, levies, and amendment of laws and regulations to improve the business environment. The reforms that have been proposed relating to the industrial sector are in the VAT, excise duty, fees and charges of agencies as well as import duty.

CTI applauds the measures that the Government has come forth with while highlighting areas in the 2024/25 budget that risk having a negative impact on industrial development.

Some of the positive measures include: the introduction of an industrial development levy on imported goods intended to protect local manufacturing, spur investments, and increase exports; the reduction of fees and charges imposed by regulatory bodies to reduce production costs; the reduction of import duty on industrial raw materials and production input to enhance competitiveness of domestic industries; and zero-rating VAT on textile products made using locally grown cotton to stimulate investment in the local textile industry.

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The proposed tax measures are intended to assist domestic industries in lowering production costs, encouraging the use of local materials, boosting competitiveness, and driving economic growth.

The full list of tax proposals presented by CTI and approved/recommended is available here: https://www.tanzaniainvest.com/wp-content/uploads/2024/06/APPROVED-CTI-TAX-PROPOSALS-14-JUNE-2024-Appendix-1.pdf

However, other measures risk having a negative impact on industrial development, such as the increase of the Railway Development Levy (RDL) from 1.5% to 2.0% of the CIF value and the introduction of excise duty at a rate of Tshs. 7,000 per litre on imported Un-denatured Ethyl Alcohol and Tshs. 5,000 on locally produced Un-denatured Ethyl Alcohol of an alcoholic strength by volume of 80% or higher (Ethanol) with HS Code 2207.10.00.

This is effectively double taxation as such it should be offset by excise payments made every month. Also, to continue and to continue granting stay of application of 50% and applying 35% on imported Kanga and Kitenge as well as a valuation from USD cent 40 to 80 per meter, will have a huge negative impact on these industries.

This is why CTI requests the Government of Tanzania to reconsider these measures.

Furthermore, CTI submitted tax proposals to the government for the 2024/2025 fiscal year, which have not been included in the budget speech, and respectfully requests that the government reconsider those proposals for the growth of the industrial sector and the country’s economy. The tax additional proposals include:

  • Mining Act (Cap 123) with Regulation 2022 GN No. 574 of date 23 September 2022 which requires a free carried interest of 16% in the shareholding of the cement, fertilizers, salt, and lime manufacturing companies. CTI’s proposal is to exempt these industries from the provision of this Act and regulations.
  • The steel sector proposed to increase import duty on finished iron and steel products from 25% to 35% or USD 250/MT to 350/MT whichever is higher and also to introduce a minimum import price of USD 1500/MT. However, the Government has retained the import duty at 25% and increased the specific rate from USD 250 to 300/MT. This measure would not protect the domestic iron and steel producers who have invested heavily in the country making them less competitive.
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CTI’s full list of tax measures that could have a negative impact on industrial development is available here: https://www.tanzaniainvest.com/wp-content/uploads/2024/06/APPROVED-CTI-TAX-PROPOSALS-14-JUNE-2024-Appendix-2.pdf

All in all, CTI believes if the 2024/25 budget is executed properly the Government will enhance its domestic revenue collection, sustain economic growth, and improve infrastructure and public services, ultimately realizing overall economic growth.

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