Tanzania Unveils 3% Tax on Digital Asset Transactions in 2024/25 Budget

Tanzania has introduced a new tax proposal for 2024/25, which includes a 3 percent tax on digital asset transactions. The Finance Bill, set to be enacted by July 1, 2024, categorizes digital assets as any intangible items of value, such as cryptocurrencies, token codes, and numbers generated and held digitally through cryptographic methods.

This comprehensive definition covers any digital representation of value that can be electronically transferred, stored, or exchanged, with or without consideration.

The legislation specifically targets non-resident individuals or entities that own platforms facilitating the exchange or transfer of digital assets. This means that operators of cryptocurrency exchanges, brokers, and similar platforms will need to register with Tanzania’s simplified tax system and withhold a 3 percent tax when making payments to Tanzanian residents from these transactions.

The Cryptocurrency Landscape in Tanzania

Despite the global cryptocurrency market being valued at $2.46 trillion, accounting for 2.2 percent of the global GDP, Tanzania does not yet have a dedicated legal framework for digital assets. The country’s stance on digital currencies has been cautious, refraining from aggressive actions against those engaging with these assets. Notably, the Bank of Tanzania banned the use and trading of cryptocurrency in 2019.

Nonetheless, reports show a notable uptake of cryptocurrencies among Tanzanians. Triple A, a Singapore-based cryptocurrency research firm, estimates that approximately 2.3 million Tanzanians own cryptocurrency.

In contrast, the 2023 financial inclusion report by the Bank of Tanzania and the Financial Sector Deepening Tanzania (FSDT) indicates that about 1.7 percent of the adult population in Tanzania, roughly 580,282 individuals, have invested in cryptocurrencies.

Source: thechanzo