Local Small Businesses - Tax Break Provision!

[Quemu]

Hivi kuna Tax Break Provision for a start-up small business nchini kwetu? Supposedly, a start-up small business is based on importing foreign products, is there any tax provision that gives it an exemption on customs and VAT during first few imports?

I know there is a provision that gives Tax Holiday for foreign big businesses (ref. Buzwagi saga) and/or foreign investors. What about local businesses and investors? Any tax favorable provisions for small businesses?

 

[Kamundu]

No.

Tanzania should abolish Income tax because of the tax system is missing enforcement mechanism. For this main reason most people are cheating and few who pay taxes are deep in disadvantage in the market. Solution is simple Tanzania should impose a consumption tax just like VAT and it should be one tax rate to everybody on consumption. In this way everybody is going to pay the tax. The government should have a tax free for necessities like water, milk, and children food. This is only way to fix our fiscal policy, otherwise we are going to increase the size of TRA , corruption practices and also the cost to good business citizens who want to pay tax fairly. The theory is simple the more you buy the more you pay.

 

[Quemu]

Tanzania should abolish Income tax because of the tax system is missing enforcement mechanism. For this main reason most people are cheating and few who pay taxes are deep in disadvantage in the market.

I don't think killing Income Tax is the best idea for any of the developing countries. Our GDP depends highly on tax collection. We just need to act on our senses. The maximum punishment for two or three tax fraud criminals should send a serious message to the entire society.

Solution is simple Tanzania should impose a consumption tax just like VAT and it should be one tax rate to everybody on consumption. In this way everybody is going to pay the tax.

Don't we have both already?

Kama ulivyosema, tatizo kubwa lipo kwenye enforcement mechanism. Huko mitaani ni mwendo wa kuambiwa uchaguwe no receipt no tax OR receipt with tax. Sasa hebu niambie mlalahoi unafikiri atachagua mkono upi? Halafu hatakama unachagua mkono wa receipt with tax, sidhani kama hiyo portion ya tax inakabidhiwa kwa TRA.

The government should have a tax free for necessities like water, milk, and children food. This is only way to fix our fiscal policy, otherwise we are going to increase the size of TRA , corruption practices and also the cost to good business citizens who want to pay tax fairly. The theory is simple the more you buy the more you pay.

I agree...
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However, my concern is how the Gov't can implement different ways to encourage citizens to become successful entrepreneurs. One of the ways is to set a tax provision (if not already set) that provides a tax break for start-up small businesses for a certain period of time...

And that's where my question lies - for a start-up small business (owned by a citizen) that is dealing in importing certain goods, is there any tax provision that excuses (merely for encouragement) it from paying Customs and VAT for its first few imports.....let's say, first three imports?

 

[Kamundu]

Killing income tax is the solution!!. We are going to depend on sales tax or consumption tax. In this case everybody is going to pay tax, but the only thing is that sales tax is going to be higher than now and enfocement is going to be very easy. Income tax on individual should be eliminated period. This also gong to make people buying when is necessary and not spend all the time drinking beer and not paying taxes because "so called poor".

 

[Quemu]

Killing income tax is the solution!!. We are going to depend on sales tax or consumption tax. In this case everybody is going to pay tax, but the only thing is that sales tax is going to be higher than now and enfocement is going to be very easy. Income tax on individual should be eliminated period. This also gong to make people buying when is necessary and not spend all the time drinking beer and not paying taxes because "so called poor".

Kamundu,
On your proposed approach, where would imported goods fall? What about gifts & winnings (lottery and the like)?

Two important keys on your suggested approach
1) Higher sales tax - how are you going to impose a higher tax in a country where most of its citizen live below poverty line. Bear in mind, we are standing at per capita income of around $320
2)Enforcement - you claimed your proposed approach would make enforcement easy. How? We already have Value Added Tax system in place for over a decade now. But guess what?...we have failed it miserably. So what makes you think consumption tax would prevail?

Without working on proper enforcement measures, none of the tax approaches will ever work in our country. And that's why I suggest to throw a VERY harsh punishment to notorious tax fraud criminals. If murderer are deemed for execution, so should be tax fraud criminals. We strongly prosecute one, the rest will straighten up immediately...

 

[Kamundu]

1.We are going to have coperate tax on profit
2.No personal Income tax but consumption taxes.
We are poor country and that is the reason enough not to tax people on their income instead tax them on what they buy, If you are too poor then you are not going to buy too much. 25% in Tanzania use cellular phone; we even have a bigger percentage spend money on alcohol, cigarette and gambling. One of the biggest companies in Tanzania are beer industries and cigarette industries. So if people are so poor then they are going to cut down their expenditures, moreover on necessities like raw food we are going to impose a smaller tax rate.
The problem of much country they want to copy system from developed country and in Tanzania is not fair because the system is too complex to enforce because of too many taxes. The best bet for a business in Tanzania is to have an accountant because otherwise the complex system and corruption TRA may end up over tax business easily. The tax system must reflect the reality and the reality is you cannot enforce the current system. One of the reason Tanzania economy is growing is because most small business are not paying tax , that is the only reason they survive, but if all companies are paying taxes which we have at the moment all small business are going to run out of business within a year or so. Tanzania small business may not have capital but the reality is they survive because of tax evasion practices. Tax system should be simple, broad, enforceable and fair.
Introduction on Consumption tax is very important because the government is going to deal only with business and all business must have tax Identification otherwise they are going to be closed. Business also are going to operate under simple tax rate which everybody is going to understand how much they need to pay. Tanzania import most of the staff and the products which are Tanzania industrial product are easily identified, so its possible to track all non agriculture products.
As a economist and Financial analyst I rest my case

 

[Mahesabu]

AND IT SHOULD ALSO BE SET CLEAR THAT THE TAX HOLIDAYTHAT RICHMONDERS ENJOY SHOULD ALSO BE APPLIED TO THE WALALAHOIS.......!

 

[TechMaro]

Duh, I have been reading the debate, ending up saying thank yous...mwishowe nikaona ntakaukiwa mate mdomoni bure...

I think there is a point in what each of you is saying... ila kuna kupishana kidogo.

Mfano, consumption tax works the same as VAT, tax falls ultimately on end users (consumers) but not on producers (value adders).

Ila, the government should try to make the tax system to be fair, as Kamundu has pointed. How come you give a big multinational company with the support of the parent company and all the credit facilities available to back it, a tax break, exemptions and even over 100% capital allowances, while you leave a small enterpreneur to suffocate without any incentive???

They will tell u because, the big company has invested a lot, the industry sijui is capital intensive, but this things are relative and proportional.

For a small entrepreneur, to raise just 5m Tshs for a second hand car to start a taxi business is as difficult as Barrick to invest 5trilion Tshs to develop Buzwagi....

So the tax regime should be fair to all the players