Introduction of levies on electronic money transactions: Implications

The Finance Act 2022/23 introduced a levy on electronic transactions by replacing “mobile money transfer” with “electronic money” and amending the maximum range of the levy from TZS 10,000 per transaction to TZS 4,000. The introduction of the money transfer levy happened in July 2021 where it was imposed on all mobile money transfers, including withdraws. The levy introduction saw a significant decline in mobile money transactions. Following the public outrage and the significant decline in transactions, in September 2021, the government reduced the levy amount by 30%. Even then, the sector hasn’t been able to restore its previous growth rate. With recent changes, the scope to impose the levy has significantly been widened to include all electronic transactions which include all bank and mobile transactions, except:

• Use of ATM cards at authorized POS stops.
• Utility payments.
• Lipa namba; and
• transactions relating to salary transfers.

There will be an additional charge of up to TZS 4,000 for every transaction except for the above three. The levy applies on:
• Over the counter (OTC) transactions
• Money transfer including withdraws using MNOs (tigo pesa, M-pesa, EzyPesa, T-pesa, halopesa)
• Money transfers including withdraws using mobile money agents
• Money transfers including withdraws from banks (ATMs, apps, internet banking)

The levy is in addition to the already existing taxes and charges on the electronic transactions which are:

• VAT, at 18% and directly borne by the client
• Excise duty, at 10% and indirectly borne by the client

Legal compliance requirements?

• The levy continues to be governed by the National Payment Systems Act however following the recent changes, new regulations have been made under section 46A (2) to the National Payment System Act for administration purposes.
• Compliance to commence from 01 July 2022
• Levy collected to be submitted to TRA within seven days of the month following the month in which the levy relates
• Collectors to file relevant returns with TRA within seven days of the month following the month in which the levy relates
• A penalty of TZS 1 million per month to apply for any late filing of the return

Any chance for imposing levy more than once on a transaction?

There is evident risk of multiple imposition of levy in a transaction with a single source. The below
illustrates this:

What could be done? Exempting withdraw transactions as they all reflect an inward transfer or a manual deposit at a certain point.

Missed opportunity?

In a country with significant levels of financial exclusion, means to digitalize money transfers should have been encouraged. As much as companies and business owners in that space make money, the government’s target shouldn’t be just to collect on every prospering sector. Rather, the government should take measures to support the growth of financial inclusion, which would have bigger, longer-term benefits such as:
• Formal sectors operating the digital platforms (banks, MNOs, payment systems agents such as SELCOM) would also grow, leading to more employment hence improving lives and contributing to taxes and levies through PAYE, corporate taxes and others.
• As financial inclusion levels grow, it would become easier for the government to have access to data related to money circulation in the economy as well as the status of the performing
• It would be more convenient for the government, through TRA, to carry out effective audits through data and analytical trends of financial data captured through these platforms, hence
improve tax assessment.


TP&Tax Advisors Ltd
August 13, 2022
Key Contacts
Donasia Massambo
Managing Director
Evelyn Manu

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