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Parliament to be dissolved in July 2015

The President shall be addressing the National Assembly on 9 July 2015 after which parliament business will come to an end and parliament will be dissolved. On the 12 July 2015, it is expected that the ruling party, CCM, will announce its candidate for President for the October elections. CCM members who are vying for nomination in their constituencies will also be picking their forms mid-July which will be followed by campaigns for nomination.

Budget

This years budget focus was on election financing, rural electrification, water supply, completing ongoing strategic projects as well as investing in human resources. The budget aims at attaining single digit inflation, a stable currency, and an increase in revenue collection. The current budget intends to control Government spending, control money supply, and attract larger investments.

The Government budget for 2015/2016 is TZS 22,495.5 billion with tax and non-tax revenues amounting to TZS 13,475.6 billion equivalent to 14.3% of GDP. Out of this amount, tax revenues are expected to be TZS 12,363 billion and non-tax revenues of TZS 1,112.7 billion. Revenue to be collected by the local councils are expected to be TZS 521.9 billion equivalent to 0.6% of GDP.

Proposed changes in law

Income Tax Act, Cap 332 Remove tax exemptions on government projects that are financed using non

concessional loans, except for those projects that had such exemptions in place prior to 1 July 2015. These projects shall continue enjoying such exemptions.

Reduction in PAYE for the lower bracket from 12% to 11%. Reduction in the income tax rate for small businesses to promote voluntary tax

compliance.

Value Added Tax (VAT) The new law on Value Added Tax (VAT) will take effect from 1 July 2015.

As of 30 June 2015 regulations under this new VAT Act had not been issued. The government has waived taxes on essential goods such as inputs, agricultural

tools, fishing tools, medical devices as well as all of the capital goods.

May 2015

Gay marriage declared legal across the US Same-sex marriages are now legal across the entirety of the United States after a historic Supreme Court ruling that declared attempts by conservative states to ban them unconstitutional.

In what may prove the most important civil rights case in a generation, five of the nine court justices determined that the right to marriage equality was enshrined under the equal protection clause of the 14th amendment.

Obamacare upheld by US Supreme CourtBarack Obama celebrated a decisive victory for his healthcare reforms after the US Supreme Court threw out a Republican-led legal challenge that could have gutted the legislation and stripped millions of Americans of their health insurance.

South Africa to review membership of world court after Bashir rowSouth Africa will review its membership of the international criminal court, a cabinet minister has said, after a dispute over Pretorias failure to arrest the Sudanese president, Omar al-Bashir.

The row erupted on 15 June when Bashir left South Africa as world powers and activists urged the government to arrest him under an ICC warrant on charges of masterminding genocide in Sudans Darfur region.

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Vocational, Education and Training Act, Cap 82 Reintroduce exemption to the VETA fund by those in the agricultural sector.

Tanzania Investment Act, Cap 38 To attract large investors who may require specific tax exemptions, a new

category of Special Strategic Investment projects will be introduced with the following criteria: (1) investment of at least USD 300M; (2) local insurance being utilised; (3) the project being able to directly employ at least 1,500 people including top management and (4) project being able to generate foreign exchange by either exports or reducing dependence on items that are currently being imported.

Cancellation of exemption provided by TIC on trailers so as to encourage local trailer manufacturing.

The Road and Fuel Tolls Act, Cap 220 Increase in fuel levy for both diesel and petrol from TZS 263 to TZS 313 per litre.

The additional funds from these two products are to be utilised in the Rural Electrification project.

Petroleum Act 2015 A Petroleum Act that combines the Petroleum (Exploration and Production) Act 1980, the Petroleum Act 2008 and the Gas Bill sailed through parliament. The Act combines upstream, midstream and downstream operations of the oil and gas sectors. The Act has come under increasing criticism for not having been circulated on time and not having had any stakeholder consultation.

Contribution to Workers Compensation fund

Beginning 1 July 2015, employers in Tanzania are subject to the Workers Compensation Fund. The details are now as below:

1. Employers should remit contributions to the fund through either NMB Bank or CRDB Bank.

2. There is a new form to be filled out- Form no. WCP-1 to support the remitted contributions.

3. Monthly contributions shall be 1% of employers monthly cash sums paid to employees in the private sector and 0.5% of employers monthly wage bill for employers in the public sector.

4. It is important to observe that all employers are statutorily required to contribute to the Fund. These contributions form part of employers cost and not be deducted from salaries of employees.

May 2015

Rwandan spy chief arrested in LondonRwandan spy chief Lieutenant-Gener-al Emmanuel Karenzi Karake, head of the countrys notorious National Intelligence and Security Services, was arrested while trying to depart from Londons Heathrow airport. He is currently out on bail awaiting extradition hearings.

Saudi Supreme Court upholds verdict against bloggerSaudi Arabias Supreme Court has upheld a sentence of 10 years in prison and 1,000 lashes against the blogger Raif Badawi on charges of insulting Islam, according to his wife. The judgment came despite worldwide outrage over his case and criticism from the United Nations, United States, the European Union, Canada and others.

Ivory Coast to Slash Taxes on TechThe Government of the Ivory Coast has announced that it is to drastically cut taxes on computers and mobile phones. Value-added tax and customs duties will either be substantially reduced or removed. Previously, imported computers had been subject to a combined tax rate of 27 percent while imported phones and tablets had been subject to a rate of 32 percent. The territory is to legislate to introduce a low single-digit rate on these items.

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The Oil and Gas Revenues Management Act, 2015

This legislation provides for the establishment and management of the Oil and Gas Fund, to provide for the framework for fiscal rules and management of oil and gas revenues and to provide for other related matters.

Under this legislation, the TRA will continue with its role taxing the oil and gas companies, but all non tax oil and gas revenues will be collected and accounted for by the National Oil Company.

The Petroleum Upstream Regulatory Authority, as is expected to be formed vide the Petroleum Act, will be responsible for auditing cost recovery to ensure that the government is getting its share as per legislation and production sharing agreements. The legislation forms the Oil and Gas Fund, whose objectives shall be to ensure that: (a) Fiscal and macroeconomic stability is maintained (b) the financing of investment in oil and gas is guaranteed (c) Social and economic development is enhanced, and (d) Resources for future generations are safeguarded.

Tanzania Extractive Industries (Transparency and Accountability) Act 2015

The Tanzania Extractive Industries (Transparency and Accountability) Act 2015 was passed by parliament in the first week of July. This Act covers both mining and the oil and gas sector.

The purpose of the Act is to ensure transparency and accountability in the extractive industries and to better regulate and reconcile payments between such companies to statutory bodies in Tanzania. The Act establishes a Committee that shall be an independent Government entity which shall be an oversight body for promoting and enhancing transparency and accountability in the extractive industry. The Chairperson of the committee shall be appointed by the President.

Mining and oil and gas companies will be required under this Act to file further returns and provide more information to the committee on their financial affairs including spending on corporate social responsibility.

The finer details on how the committee will operate will be published by way of rules and regulations, whose drafting we are informed is yet to be completed.

May 2015

China to miss Tax Revenue Target in 2015It appears unlikely that China will meet its budgetary target of a five percent increase in tax revenues this year, according to its Finance Minister Lou Jiwei, in comments alongside the presentation of a report on the Central Governments fiscal accounts to the State Council. The Central Governments revenue in the five-month period to end-May 2015 reached only RMB2.95 trillion (USD402bn), an increase of only two percent over the same period last year.

KFC sues Chinese firms over rumoursKentucky Fried Chicken has filed a lawsuit against three companies in China whose social media accounts spread false claims about its food, including that its chickens have eight legs. The case comes as the Beijing government intensifies a campaign to clean up rumours on social media. Internet marketers have been convicted of trying to manipulate online sentiment on behalf of clients by posting false information about competitors or deleting critical posts.

China Exempts Oil, Gas Industry from Land Use TaxChinas Ministry of Finance has announced that the temporary use of land by the oil and gas sector (including shale gas and coal-bed methane) was made exempt from urban land use tax (ULUT) with effect from July 1, 2015.

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Act to protect graft whistle blowers

Individuals exposing corruption and abuse of office will now be protected and rewarded under a new law, The Whistleblower and Witness Protection Act, which aims to insulate the whistleblowers from victimisation. The Act puts in place a mechanism for the protection, rewarding and compensating of whistleblowers and witnesses.

Under the Act, whistleblowers are allowed to disclose the wrongdoing in writing, sign language or orally and in case their life, property or jobs are endangered, the government will protect them against such threats.

If any person divulges any information relating to the identity of the whistleblower, the Act says they commit an offence and shall be liable to at least three-year impris-onment or a minimum fine of TZS 5 million or both. And for the authority that will ignore the information disclosed, the Act states: Any competent authority who fails to take an action in relation to the wrongdoing reported by a whistleblower and as a result of that failure he occasions loss to a public institution, commits an offence and shall, upon conviction, be liable to imprisonment for a term of not less than 18 months or to a fine of not less than TZS 3 million or to both.

Those qualifying for protection are whistleblowers who give information in good faith with a reasonable cause to believe that the information they give or allegation of wrongdoing they level is substantially valid.

May 2015

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LEGAL DIGESTJuly 2015