- Mar 7, 2006
ISO 9001:2008 CERTIFIED
INTRODUCTION OF EXCISE DUTY ON MONEY TRANSFER THROUGH
BANKS, FINANCIAL INSTITUTIONS OR TELECOMMUNICATION COMPANIES
1.0 Introduction of the Excise Duty on Money Transfer
This is to remind the general public that with effect from 1[SUP]st[/SUP] July 2013 the Excise Duty on money transfers through a bank, a non-bank financial institution or a telecommunication company has been introduced by amending section 125 of the Excise (Management and Tariff) Act Cap 147 to the effect that the Duty imposed by the Act shall also become due and payable in respect of money transfer service by a bank, financial institutions or a telecommunication service provider. Following the amendment transfers of any amount of money exceeding shillings 30,000/- shall be charged an Excise Duty at the rate of 0.15%. Therefore, money transfers made from 1st July 2013 are subjected to this Duty. If a Bank, Financial Institution or a Telecommunication Company for one reason or another fails to comply with the law , then according to Section 56 of the Act such Duty shall be payable by the bank, financial institution or the telecommunication company and may, without prejudice to any other means of recovery, be recovered by legal proceedings. All kinds of money transfers, either for buying of goods or services, made within or outside the United Republic of Tanzania will be subjected to this tax. Since banks operate in different currencies, the referred to Shs. 30,000/- is a Tanzanian currencys equivalent at the time of transfer. 2.0 Exempted Transfers The following transfers are exempted:- § Transfers of money between Banks and non-bank financial institutions, § Transfers of Government money for its operations including money transfer for payment of taxes and duties, § Transfer of money for payment of salaries and operations of Diplomats and Diplomatic Missions, § Transfer of money for payment of interest or principal to the Bank by Bank customers on loans or any form of financial service. § Any transfers for money deposits by Bank customers § Any money transfers between Banks or one bank account to another account within the same Bank or interbank money transfers provided such transfers are made within the United Republic of Tanzania. 3.0 Money Transfers from a Customers Bank Account to the Customers Mobile Money Money transfers from a customers bank account to the same customers mobile money or bank account in another bank within the United Republic of Tanzania, and vice versa, will not be subjected to Excise Duty. However, any transfers from the customers bank account or mobile money for any kind of payment will be subjected to this Duty. 4.0 Applicability to Cheque Transactions Like any form of payment systems, money transfers through cheque transactions will attract this tax as well. However, the tax incidence should be borne by the cheque issuer or payer and not by the payee. Given the nature of cheque transactions through Electronic Clearing House System, the cheque issuer or payers bank will facilitate the settlement obligation by deducting the duty from the payer when deducting the payment from his/her account. If the customer account does not have enough money to settle the cheque, it is expected that the payment will not be made through his cheque and therefore, the obligation for payment of this duty will not arise. Excise Duty from payers through cheque system will be required to be paid once payment has been made to the payee. The question as to whether the Bank should reject or accept the cheque with no enough money is not the concern of this matter since it is within the jurisdictions of the banking policy and regulations. The determining factor for payment of Excise Duty on money transfer through cheque transaction is the settlement of the cheque and the obligation for payment of this Duty is the payers and not the payees. 5.0 Persons Liable to Pay Excise Duty on Money Transfer The duty imposed by the Act on money transfer shall become due and payable by banks, financial institutions, and telecommunication service providers. It should be noted that, these persons are only liable to pay the Duty due to the legal mandate and obligation of collecting the Duty from transferors and submitting the same to TRA. The actual tax burden lies on the transferor. 6.0 Due Date for Payment of Duty The Duty should be paid not later than the last working day of the month following the month in which the Duty falls due. Banks, financial institutions and telecommunication companies are collecting agents of the Excise Duty and are therefore required to remit the amounts so collected to TRA timely. 7.0 Submission of Returns Every money transfer service provider shall submit to the Commissioner a monthly return as required under Section 137(3) of the Act. According to Section 137(4), the returns shall be submitted not later than the last working day of the month following the month to which the return relates. 8.0 Payment The Excise Duty is payable not later than the last working day of the month following the month in which the Duty falls due. Payment will be made using the newly introduced On-line Order Form for electronic transfer of tax revenue to Bank of Tanzania under the Revenue Gateway System (RGS). The GFS Code for this tax type is 11429900. 9.0 Penalty for Failure to Submit Returns Any person who fails to make a return within the time prescribed under Section 137 (4) of the Act shall pay a penalty of one hundred thousand shillings or one per centum of the tax in respect of the period covered by the return, whichever is greater, and a further two hundred thousand shillings or two per centum of the tax payable in respect of the period covered by the return, whichever is greater, shall be payable for each month or part of the month thereafter. 10.0 Offence Any person who: a) Fails to pay tax on or before the due date, b) Refuses or fails to produce any information, document account or return required from him by or under the Act on or before the time for such production, c) Willfully does or fails to do anything with intent to avoid payment of any tax , penalty or other sum for which he is liable for under the Act, d) In any way is knowingly engaged in any fraudulent acts or evasion of the payment of any tax, e) Counterfeits or in any way falsifies any document required for the purpose of the Act; Commits an offence and upon conviction shall be liable to a fine not exceeding two hundred thousand shillings or two per centum of the evaded tax whichever is greater. Should you need further clarifications, kindly please contact us or visit any nearest TRA Office for assistance.
Together We Build Our Nation
Harry M. Kitillya