The National Fiscal Stabilisation Levy ("NFSL") Act,
2013 (Act 862) which was gazetted on 15 July 2013, requires certain
entities to pay 5% of their profit before tax as a NFSL levy on a
The first payment of NFSL became due by 30 September 2013.
Potential waiver for handset import tax
In terms of the Customs and Excise (Duties and Other Taxes)
Amendment Act, gazetted in September 2013, a 20% import duty is to
be levied on telephone sets, including mobile, cellular and
Following widespread criticism from dealers and manufacturers of
handsets, the Minister of Communications, Dr Edward Omane Boamah
has recently indicated that the Ministry would be ready to discuss
the potential waiving of such import duty based on viable proposals
from handset dealers and manufacturers.
VAT exemption for fresh milk
Since the implementation of the Kenya VAT Act at the beginning
of September, the price of packeted milk has increased
significantly. Traders blame the price increase on the
introduction of 16% VAT.
However, the Kenya Revenue Authority has confirmed that packeted
fresh milk is exempt from VAT as it is not a "processed
item" which would attract VAT. For purposes of the VAT
Act, the term "unprocessed milk", which is exempt from
VAT, includes milk that has undergone heat treatment to eradicate
harmful bacteria but to which no significant value has been
It was also confirmed that "ordinary bread", which is
exempt from VAT, is bread that is sold for general consumption
including white and brown bread, but does not include crisp and
ginger breads primarily used in the catering industry.
Compliance notice to taxpayers
In a press release published by the Ministry of Finance on 20
September 2013, taxpayers not in good standing with the Receiver of
Revenue are warned to settle their tax accounts within a period of
Failure to comply with this notice may result in the seizure of
goods, recovery of tax from third parties, civil judgment and
recovery of outstanding taxes and the appointment of an agent to
recover taxes due.
A similar notice was issued in April 2013 and an estimated 3 000
taxpayers that did not settle their tax accounts had their import
VAT accounts suspended. Consequently, VAT payable on imports
could not be suspended and became payable at the point of entry
before goods were released into the country.
Business license requirements
In a General Public Notice of July 2013 the Ministry of Trade
and Industry announced that all business licenses in Tanzania have
to be renewed prior to 31 December 2013 in terms of the Business
Licensing Act No 25 of 1972.
Businesses not complying with these provisions will be liable for
penalties and interest from January 2014.
The annual business license fee introduced in 2011 was not
implemented previously due to a lack of efficient collection
procedures. Going forward the business licenses must be
renewed on an annual basis.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The tax implications of assuming contingent liabilities as part of a sale of business present uncertainties for both sellers and purchasers.
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