On 20th September 2022, Tanzania eliminated the levies on certain electronic money transfers. These changes will be effective from 1st October 2022. The levy was first introduced in July 2021.
Legislation to clarify the details is still pending, but it appears that levies will continue to be applied on mobile money (MM) transfers.
What are the amendments?
In brief, the announcement (published in Kiswahili) proposes the following changes:
- The levy will be scrapped for money transfers from a bank to an MM network (both sides), transfers within the same bank (both sides), and transfers from one bank to another bank (both sides). The announcement therefore seems to imply that the levy will still apply to transactions within MM networks.
- The transaction levy on cash withdrawals through bank agents and ATMs will also be waived for transactions falling below TZS 30,000 (USD 12.81). Again, it appears the levy remains in place for cash withdrawals via MM agents.
- The government announced a 10% to 50% reduction in MM transaction levies. This suggests a reduction of the maximum levy to TZS 2,000 (USD 0.86) as of 1st October 2022.
What are the existing and previous tax rules?
Since 2013, Tanzania has enacted several laws that affect money transfers, especially those within the MM network. In July 2021, a new levy on electronic MM transfers and withdrawals was introduced. Over the last 15 months, Tanzania made significant changes to the levy. The July 2021 law was last revised in July 2022 following the National Payment Systems Regulations 2022. The relevant changes are summarised below:
- July 2013: Excise duty introduced on money transfers through banks, financial institutions, or telcos at the rate of 0.15% of the amount transferred for the amount exceeding TZS 30,000 (USD here and elsewhere) (revoked by the Finance Act 2014)
- July 2021: Electronic MM transfer and withdrawal levy introduced at a rate between TZS 10 and 10,000
- September 2021: Electronic MM transfer and withdrawal levy amended to specifically include MM to MM, MM to bank, and bank to bank, and rate reduced to between TZS 7 to 7,000 (revoked by the National Payment Systems Regulations 2022)
- July 2022: Electronic Money Transaction Levy amended to apply to electronic transfers (MM to MM, MM to bank, bank to MM, and bank to bank) and cash withdrawals (from MM account or bank account at a collector, collector’s agent or ATM), and rate reduced to between TZS 10 and TZS 4,000
- 20th September 2022, to be effective 1st October 2022: Announced: Proposed amendment to the Electronic Money Transfer Levy to apply to MM to MM only, and an exemption for bank agent and ATM cash withdrawals of a value less than TZS 30,000
A machine-translated version of the full 20th September announcement can be found here. The DIGITAX Research Programme will continue to monitor and report on the unfolding changes.
Acknowledgement: The author would like to thank Philip Mader and Chris Wales for their valuable suggestions. This news post was edited by Njeri Okono.