Dar es Salaam — TAXPAYERS have proposed tax exemptions on smart devices, noting that increased usage would have a positive impact on the country's economy.
The government aims to connect all wards to the National ICT Broadband Backbone (NICTBB) by 2026, and these exemptions are seen as a key measure to support digital inclusion and expand access to the digital economy.
As digital connectivity becomes increasingly essential for economic development, stakeholders argue that charging Value Added Tax (VAT) of 18 per cent makes access to smart devices less affordable for citizens.
Tax exemptions on these devices would reduce barriers to entry, especially in underserved areas, and empower individuals and businesses to participate in the digital economy.
Keep up with the latest headlines on WhatsApp | LinkedIn
Additionally, according to the Tanzania Mobile Network Operators Association (TAMNOA), broader adoption of smart devices would enhance access to educational resources, improve healthcare delivery and facilitate e-commerce, ultimately contributing to national growth and development.
TAMNOA member, Mr Francis Temba, said the exemption would also make broadband infrastructure investments more meaningful and accelerate their impact.
"Broadband coverage currently reaches 88 per cent for 3G and 80 per cent for 4G of the population, thanks to investments made by members of TAMNOA and the government, through UCSAF, to ensure broadband access is available everywhere," said Mr Temba, who is also the YAS Tanzania Head of Tax.
"The problem is that while we have been successful in ensuring broadband facilities are available everywhere, we have not been successful in bridging the usage gap."
TAMNOA noted that if smart devices are granted an exemption for a sustained period longer than 12 months, as was the case in 2019, it could lead to increased data usage.
This, in turn, could have significant Taxpayers propose reforms to drive growth and inclusion economic implications, including growth in the data-driven economy and increased tax revenues generated from digital usage, while also helping to curb tax avoidance.
The association recently presented its views to the Presidential Commission on Tax Reforms, chaired by Ambassador Ombeni Sefue, in Dar es Salaam.
The commission was given six months to propose reforms aimed at overhauling the country's tax structure and increasing its contribution to GDP.
Its mandate includes addressing ongoing tax challenges, enhancing the business environment, promoting voluntary tax compliance, expanding the tax base and addressing public grievances related to taxation.
TAMNOA Chairperson, Ms Hilda Bujiku, said the telecommunications sector contributes about 5.0 per cent to GDP and employs approximately 1.5 million people.
Ms Bujiku, who is also Vodacom Tanzania Chief Financial Officer (CFO), noted that the National Financial Inclusion Framework (2023- 2028) aims to increase financial inclusion to 75 per cent by 2028.
Media sector proposals
The meeting was also attended by stakeholders including the Media Owners Association of Tanzania (MOAT), which presented recommendations on improving the tax system, particularly on excise duty.
MOAT Board Member, Ms Jacqueline Lawrence, proposed reducing excise duty on subscription revenue from 5 per cent to zero.
"We propose reducing the excise duty on subscription revenue from 5 per cent to zero per cent to make PayTV services more affordable, drive market growth and increase revenue collection," she said.
"To offset potential revenue losses, we recommend encrypting FreeTo-Air (FTA) channels, except the Tanzania Broadcasting Corporation (TBC) and Zanzibar Broadcasting Corporation (ZBC), thereby bringing millions of currently non-paying viewers into the taxable subscription base."
She noted that Tanzania has over 8 million TV users, but only 20 per cent pay for subscriptions.
"Encryption will eliminate universal decoders, significantly boosting both excise duty and VAT collections," she added.
Withholding tax concerns
Ms Lawrence also proposed reducing withholding tax on foreign and local channels from 15 per cent to 5 per cent, and zero per cent on local films to encourage investment.
"High withholding tax discourages investment and growth, reducing local content production and competition," she said.
On satellite services, Ms Bujiku noted that the current 10 per cent withholding tax places a heavy financial burden on Pay-TV operators and proposed reducing it to 5 per cent.
She also raised concerns about withholding tax on royalty payments to local sports entities such as the Tanzania Football Federation (TFF), currently set at 5 per cent.
"Globally, countries like the UK, Australia and Ireland exempt such payments, recognising the importance of reinvesting in sports," she said.
She proposed exempting such payments to support the development of the sports sector.
TAWLA proposals
Representing the Tanzania Women Lawyers Association (TAWLA), Ms Madeline Kimei emphasised the need to create a friendly business environment to support the formalisation of the informal sector, particularly businesses run by women.
She proposed incentives such as a six-month tax exemption for new small-scale entrepreneurs.
Ms Kimei also suggested issuing identification cards to registered entrepreneurs and introducing minimal taxes for small businesses.
She further recommended reducing licensing fees from institutions such as the Business Registration and Licensing Agency (BRELA), National Environment Management Council (NEMC), Energy and Water Utilities Regulatory Authority (EWURA), the Fire Brigade and the Occupational Safety and Health Authority (OSHA).
She noted that such measures would encourage small businesses to formalise and expand the tax base.
TAWLA also proposed that the City Service Levy be based on profit rather than turnover.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
"Taxes should be collected based on profits rather than the current system of collecting from sales turnover," Ms Kimei said.
Ms Kimei stressed the need for increased tax education, noting that lack of awareness contributes to low compliance.
"Many people fail to meet their tax obligations due to lack of knowledge," she said.
She recommended collaboration between the Tanzania Revenue Authority (TRA) and non-governmental organisations to expand tax education.
Her views were echoed by Tanzania Media Women's Association (TAMWA) Executive Director, Dr Rose Reuben, who also highlighted the heavy tax burden faced by SMEs and the need for simplified tax systems and grace periods for new businesses.
also pointed to inadequate tax education as a major challenge affecting compliance.
The proposed reforms--including tax exemptions on smart devices, reduced excise duties and improved tax structures--aim to drive digital inclusion, enhance broadband adoption and foster economic growth.
TAMNOA emphasised the need to bridge the usage gap, while MOAT focused on increasing revenue through structural reforms in the media sector.
TAWLA and TAMWA highlighted the importance of supporting SMEs, improving tax education and creating a more inclusive tax system.
Stakeholders believe that implementing these reforms would create a more conducive business environment, improve compliance and expand access to the digital economy.
