Tanzania Plans to Revise Income Tax Act to Impose Taxes on Crypto Transactions
In a recent development, Tanzania has put forward a proposal to amend the Income Tax Act, introducing a 3% withholding tax on earnings from cryptocurrency trades.
The proposal was presented by the nation’s Finance Minister, Hon. Dr. Mwigulu Lameck Nchemba Madelu, during a recent session of the National Assembly where Tanzania’s financial plans for the upcoming year 2024/25 were discussed.
As per a local report, the proposal also includes various measures aimed at enhancing Tanzania’s revenue targets.
Under the proposed amendment, a 3% withholding tax will be imposed on profits generated from digital asset transactions. Moreover, owners of digital platforms, as well as those facilitating the transfer and exchange of digital assets, will be designated as withholding agents responsible for remitting the tax to the Commissioner General of the Tanzania Revenue Authority.
Furthermore, foreigners operating digital platforms to facilitate crypto transactions must register with the Tanzania Revenue Authority under the Simplified Tax Regime.
In addition to taxing crypto transactions, the government of Tanzania is also considering levying taxes on digital content creation, as outlined in the budget speech. The proposed tax rate for income derived from digital content creation by resident businesses is set at 5% Withholding Tax.
The objective of these measures, as stated in the budget speech document, is to broaden the tax base and ensure adherence to fair tax principles, with an anticipated increase in government revenue collection by 968 million shillings.
These proposed crypto tax regulations coincide with the Bank of Tanzania’s (BoT) exploration into central bank digital currency (CBDC) research. A study conducted by the Governance and Economic Policy Centre (GEPC) has emphasized the importance of regulating cryptocurrencies in Tanzania and other East African countries to effectively manage risks and adapt to evolving monetary trends. The study aims to draw insights from the experiences of other countries in implementing CBDCs.
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