Tanzania Looks to Amend Income Tax Act to Tax Crypto Trades

CryptoNews.com · 2024-06-17T23:51:12+00:00

Tanzania's Finance Minister proposed amending the Income Tax Act to include a 3% withholding tax on income from crypto transactions in a recent National Assembly meeting. Additionally, digital platform owners, facilitators of digital asset transfers, and exchanges will be withholding agents to enhance government revenue collection by 465 million shillings. Similarly, the government is planning to tax digital content creation at a 5% withholding tax rate, aiming to enhance the tax base.

CryptoNews.com

2024-06-17 23:51:12

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Sujha Sundararajan

Last updated:

June 18, 2024 03:51 EDT | 1 min read

Tanzania has released a proposal to amend the Income Tax Act in a move to include a 3% withholding tax on income derived from crypto transactions.

The nation’s Finance Minister Hon. Dr. Mwigulu Lameck Nchemba Madelu laid the proposal during a recent National Assembly meeting. The minister presented Tanzania’s revenue and expenditure for the year 2024/25, a local report noted.

The speech also included several proposed enhancements to improve Tanzania’s revenue targets.

Tanzania Proposes 3% Tax on Income From Crypto Transactions

The proposal includes a 3% withholding tax on income from digital asset trades, the report noted.

Additionally, digital platform owners, facilitators of digital asset transfers and exchange will be considered as withholding agents. “[They] shall remit the withheld tax to the Commissioner General of the Tanzania Revenue Authority,” the proposal added.

Foreigners, who operate digital platform to facilitate crypto transactions, should be registered by Tanzania Revenue Authority under the Simplified Tax Regime.

“This measure is expected to enhance government revenue collection by 465 million shillings (~$174,000).”

The government of Tanzania is additionally planning to improve its reserves by taxing digital content creation, which was outlined in the budget speech. The tax on income derived from the business of digital content creation would be at the rate of 5% Withholding Tax, which is done by resident business entities.

“The purpose of this measure is to enhance the tax base and adherence to equitable tax principles,” said the budget speech “This measure is expected to enhance government revenue collection by 968 million shillings.”

The crypto tax considerations come at a time when the Bank of Tanzania (BoT) is deep-diving into central bank digital currency (CBDC) research.

The Governance and Economic Policy Centre (GEPC) released a study, highlighting the need for Tanzania and other East African nations to regulate cryptos in order to manage risks and adapt to future monetary trends. The new study aims to learn from other countries’ CBDC experiences.

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