THE government is considering extending the tax holiday enjoyed by homegrown start-ups in an attempt to give a competitive advantage to local investors and entrepreneurs over their foreign counterparts.
Deputy Minister of Finance and Planning, Hamad Hassan Chande agreed with a suggestion from a Special Seats MP, Ng’wasi Damas Kamani that the investment law empowers the revenue Authorities to award a five-year tax holiday to foreign investors into the country. The same law is silent on local investors.
According to the legislator, the Financial Act of 2019 allows the Tanzania Revenue Authority (TRA) to issue a six-month tax holiday to start-ups, however implementation of the legislation remains at large.
“I suggest that the government make amendments to the investment law as well as the financial legislation to extend the tax holiday to new business to a period between 12 and 18 months,” said the legislator.
The deputy minister seconded the suggestion. “We will work on this new suggestion at the government level,” he added during the question session in the National Assembly on Tuesday in Dodoma.
Mr. Chande also directed the TRA Commissioner General, Alphayo Kidata to ensure the Financial Act of 2019 is fully implemented. “We want the Revenue Authority (TRA) to respect the legislation,” the Deputy Minister said when he was responding to concern that new business owners, especially entrepreneurs, were subjected to pay upfront tax contrary to the financial law.
The financial law allows new start-ups to enjoy a tax exemption of at least six months. Speaking in the National Assembly, legislators said new business owners were required by the local councils to produce tax clearance for them to be given business licenses.
“This tax clearance comes after the assessment is done. Entrepreneurs are however required to pay a substantial amount before the tax clearance is printed out,” Ms. Kamani said in the National Assembly.