26 banks pay out 3.9trn/- corporate taxes in 3 yrs

By Henry Mwangonde , The Guardian
Published at 05:37 AM Jun 21 2024
Theobald Sabi, the NBC Bank managing director and TBA chairman
Photo: Guardian Correspondent
Theobald Sabi, the NBC Bank managing director and TBA chairman

COMMERCIAL banks grouped in the Tanzania Bankers Association (TBA) contributed 3.9trn/- to the economy in taxes in the past three years, an 18 percent share of total corporate tax revenues.

Theobald Sabi, the NBC Bank managing director and TBA chairman, unveiled the report covering January 2021 to December 2023, noting that TBA was confident that the report will be a valuable resource for informed policy dialogue.

This will help in shaping future policies that support the continued growth and development of the Tanzania banking sector, he said, elaborating that the study provides valuable resources on the banking sector for the government and other stakeholders such as employees and investors.

‘It facilitates the banking sector to demonstrate by quantifying its contribution to public finances in taxes, analysing the contribution trend over time,” he said, intimating that it further serves the government to assess contribution from the sector as it changes over time “to inform policy discussions over bank taxation.”

TBA prepared an inaugural report, ‘Contribution beyond profits,’ launched yesterday in the presence of Sauda Msemo, the Bank of Tanzania (BoT) deputy governor for financial stability and financial deepening.

She said that the central bank was satisfied with the performance of the banks, affirming that the government intends to maintain a conducive environment for financial sector development.

Thabi said the report provides an in-depth analysis of contributions of the 26 TBA member banks to the national economy through various tax channels, showing that corporate tax was the most significant component of the contribution, accounting for 18 percent of overall corporate tax countrywide.

Corporate tax revenues increased dramatically in the period, reaching 537bn/- in 2022 and rising to 718bn/- in 2023, the report indicates, pointing out that VAT and excise duty charged on financial services were also on the rise.

It showed a significant increase to 313bn/- in 2022 and 375bn/- in 2023 while banks’ Pay As You Earn (PAYE) contribution from 2021-2023 amounted to 673bn/-, being 8.4 percent of total PAYE collections, while TBA members’ employment taxes, comprising the Skills and Development Levy (SDL) and the Workers Compensation Fund, amounted to 121.1bn/-, aside from employer social security contributions, the report affirms.

Other taxes cited are service levy, stamp duty, property tax and customs duty, where the 26 TBA member banks paid service levy totalling 23.3bn/-, stamp duty reaching 2.48bn/-, property tax at 0.77bn/-, and customs duty 0.4bn/-, the report indicates.

“This demonstrates the sector’s participation in broadening the tax base and supporting indirect tax revenues,” it stated. “TBA remains committed to fostering a conducive environment for the banking sector to thrive and enhance its contribution to economic prosperity,’ it added.