Why I humbly pledge for the Minister of Finance to re-evaluate his proposal to tax retained earnings for companies operating in URT. The decision to tax companies that prudently decide to retain earnings (already taxed) for business growth is clearly a wrong tax policy and a bad policy strategy.
Stakeholders of a company are made up of shareholders and other stakeholders are government, customers, suppliers, employees, etc. A company (legal person) is put in the hands of directors who are to serve it for the best interest of the company – these are interests of all stakeholders of the company, not only interests of shareholders. When a company makes profit, the company pays 30% of the profit to the government (one key stakeholder) and it remains with 70% of the profit to decide what to do with it for the other stakeholders. The directors would often recommend dividend to shareholders, another class of stakeholders who are the owners of the company. While 30% payable to government is mandated by law and therefore little leeway for directors to meddle with it, when recommending to pay dividend, directors consider other factors such as: statutory obligations of the company, business growth and expansion needs, capitalization of the company, etc. Having considered all these factors, directors would then determine how much of the 70% should be paid to shareholders of the company, usually, not all the 70% of profit is paid as dividend; most companies have dividend policies that guide directors on the factors to consider before dividend is recommended for payment. When dividend is finally paid in Tanzania, there is a WHT applicable to individual shareholders and it is deemed final tax to the shareholders with respect to the income.
After the dividend is paid out, the remainder of the earnings is retained within the company and stand to benefit the company along with all its stakeholders (govt, shareholders, employees, etc) . Retained earnings is not a benefit to shareholders only but to the company; when reinvested, it is good for the government for better future taxes, employment, etc and to shareholders potential bigger dividends in the future. It appears to me that retaining the earnings in the company is being misconstrued by our policy makers as a avoiding tax by shareholders…it is not, as the income was already taxed and also the factor that, retained earnings does not lie in the hands of shareholders but rather directors of the company.
The reversal of the decision is important bse:
https://t.co/qN7asCLdKr is undoubtedly double taxation
https://t.co/KEdkKNqnA3 discourages investment and growth
3. It creates potential cashflow problems
https://t.co/kUMgFD7hQg certainly distorts business predictability
https://t.co/52iGBqrI1C does not align with good tax principles, how:
https://t.co/JP4F6qVggU discourages reinvestment and therefore not investment wise efficient
https://t.co/TQoSkEs85a would distort dividend vs reinvestment decisions and therefore not neutral
https://t.co/Nk9TN53glC would be hard to administer, and therefore administratively costly
https://t.co/LxcfxuNhdM would penalize companies for acting prudently therefore unfai
Frankly speaking, we need a reduced corporate tax rate (30% down to 20%, or even lower?), not this disguised tax increase … taxing, the taxed is double tax! The more we tax corporates, the less we promote investments! I hope that Mr Minister of finance is considerably listening carefully.
Mr @mwigulunchemba1 Finance Minister, this is WRONG. It is a double taxation on the same income.
When the company makes profit, the government charges a corporate rate of 30% and company retains 70% of the declared profit. Then the latter can either pay it to the shareholders as DIVIDEND or retain within the company (retained earnings). Taxing the retained earning, is double taxation. It has huge consequences on capitalizing the companies.
Please SCRAP this proposal
On 2nd March 2023, the World Food Programme (WFP) in Tanzania presented to the Tanzania Railway Corporation (TRC) a feasibility study on the use of rail cold chain to transport horticultural products along the Tanzania Central Railway Line.
UNICEF invites all interested and eligible suppliers and service providers, including manufacturers, dealers, wholesalers, retailers, research institutions, management, and other consulting firms, to submit their EOI if they wish to do business with UN agencies based in Tanzania.
We are delighted to invite job applications from self-motivated and performance-driven individuals interested in a career in data analytics and systems audit.
For more details and to apply, please follow the provided link: https://t.co/DrOtixl5Dm
We're so thankful to have had the opportunity to meet and network with many wonderful people on the first day of the Accountants' Annual Conference 2022 at the APC Hotel & Conference Centre, Bunju.
Please come by and say hello; we'll be here until December 2nd.
Considering the initiative aimed to establish scheduled rail cold chain transport services from horticulture aggregation stations in production areas to retail market stations in Dar es Salaam and Dodoma railway stations.