HIGH TAX RATES PUT TANZANIA AT A DISADVANTAGE, WARNS PwC STUDY

Dar es Salaam. Tanzania’s tax rates are among the highest in East Africa.

The situation that puts the country at a disadvantageous position in terms of revenue payment, a new report says.

A report on Paying Taxes 2015 conducted by PricewaterhouseCoopers (PwC) — a multinational professional services network — indicates that Tanzania’s total tax rates stand at 43.3 per cent.

This is higher than Rwanda’s 33.5 per cent as well as 36.5 and 38.1 per cent for Uganda and Kenya respectively. Total taxes rate is the total amount of taxes payable by business (except for labour taxes) after accounting for deductions and exemptions as per cent of profit.

In terms of number of payments, Tanzania has 49, Kenya has 30, Uganda has 31, Burundi has 25 and Rwanda has 17.

While commending the changes in the pipeline that will help to make tax compliance easier, PwC’s David Tarimo notes in the report that Tanzania charges some of the taxes that are not applicable in other EAC member states.

“Employers in Tanzania are subject not only to employer social security contributions but also to a skills and development levy on payroll costs,” reads a statement in the report.

The report ranks Tanzania on position 148 from the 147th position in 2014.

It was done in 189 economies worldwide using a case study company and ranks them according to the ease of paying taxes.

Three components were used to determine the ranks the surveyed economies deserved.

The components are total cost of taxes borne by business (total tax rate), the time it takes to comply and the number of taxes payments made.

The African and global averages of number of payments are 36.2 and 25.9 respectively.

The number of payments was compiled through adding up the number of payments in three categories of profit tax, labour tax and other taxes.

The Citizen