Tanzania Seeks to Amend Income Tax Law to Raise Revenue by Taxing Income from Crypto Transactions – BitKE

Tanzania has outlined a proposal to amend the Income Tax Law to allow taxes to be collected from cryptocurrency transactions in the country.

This was stated in a speech by the Minister of Finance, the Hon. Dr. Mwigulu Lameck Nchemba Madelu (MP), at the National Assembly on 13 June 2024, presenting estimates of government revenue and expenditure for 2024/25.

The speech includes several proposed improvements to improve the country’s revenue targets. This includes an amendment to the Income Tax Law to introduce a 3% withholding tax on income from “digital asset” transactions, as highlighted below:

• Introduce withholding tax at the rate of 3% on income arising from the transfer of digital assets. The changes go hand in hand with the interpretation of the following word, “digital assets.”

• Furthermore, the owner of the digital platform, or any person who facilitates transfers or exchange of digital assets, will become a withholding agent and remit withholding tax to the Commissioner General of the Tanzania Tax Authority.

• A foreign national who operates a digital platform that facilitates transfers or exchange of digital assets, must be registered by the Tanzania Revenue Authority under the simplified tax regime. This measure is expected to improve government revenue collection by 465 million shillings (~$174,000).

The Tanzanian government also plans to strengthen its coffers through taxation on digital content creation, as outlined in the budget statement.

“Introduce a withholding tax at the rate of 5% on income arising from the digital content creation activity carried out by resident commercial entities. The aim of this measure is to improve the tax base and compliance with fair tax principles. This measure is expected to improve government revenue collection by Sh968 million,” the statement read.

In 2022, the Minister of Finance and Planning revealed that the Bank of Tanzania is “finalizing preparations of a business case for the establishment of a CBDC in Tanzania and the valuation of cryptocurrencies having recorded significant progress” in the formalization of digital financial services.

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