Legal Digest – August 2015

Teachers’ Service Commission Act, 2015

A new law, the Teacher’s Commission Act of 2015 was passed by the last parliament session opening a new chapter in the regulation of the profession and improvement of teachers’ welfare. The Act will regulate the teaching service, address teachers’ grievances and prescribe teachers’ code of conduct and ethics, which will be applied to both primary and secondary school teachers.

The Act provides for an establishment of a Teachers Service Commission, an independent commission under the Ministry for Education, which shall maintain and administer teachers’ service, secure good conditions for teachers, ensure equitable deployment of teachers in local government and schools, maintain a record and register of all teachers, advise the Minister on related matters including training of teachers amongst others.

Employment and Labour Laws (Miscellaneous Amendments) Act 2015

The proposed amendment to the Employment and Labour Relations Act seeks to make it possible for an employer to obtain the consent of an employee for the forfeiture of his/her annual leave on certain conditions. This would give the employer the option to obtain services from the employee even when he/she was on leave as long as the employee compromised his/her annual leave.

This amendment also gives room for employees to choose whether to go on working or to go on leave, as opposed to taking a mandatory annual leave.

Value Added Tax (General) regulations, 2015

The VAT Regulations were issued in July 2015. A controversial regulation in the VAT Act that the Legal Digest spotted was that contained in Regulation 34, which requires a VAT registered person to submit a notification of input tax credit carried forward under the old legislation- VAT credit carried forward from 30 June 2015- within a month of the commencement of the VAT Act, which would effectively mean 31st July 2015. This is unrealistic considering most people do not have access to the VAT Regulations yet.

Over 400 legal practitioners sworn in

Over 400 lawyers were sworn in after completion of their one year mandatory training at the Law School. This brings the total number of advocates in the country to over 5,000.

New VAT Act respects MDAs, PSAs

Section 95 of the new VAT Act comes, at least for now, as a sigh of relief for mining and oil and gas companies as it grandfathers Mining Development Agreements (MDA’s) and Production Sharing Agreements (PSAs) that the Government has already entered into. Section 95(1)(b) of the VAT Act clearly states that “where the Government of the United Republic has concluded a binding agreement relating to exploration and prospecting of minerals, gas or oil with a person before the commencement of this Act, the provisions of the repealed Act relating to value added tax relief shall continue to apply to the extent provided for in the agreement”. If the ‘relief’ granted to companies under MDAs and PSAs (which agreements are covered under their respective legislation and binding on the government from a contractual point of view) would not have been captured this would have led to massive litigation.

Tribunal rules against TRA in withholding tax case

In what is perhaps the most controversial tax subject in Tanzania, that of withholding tax, the Tax Revenue Appeals Tribunal overturned a decision of the Tax Revenue Appeals Board, and ruled that services which are not rendered in Tanzania should not be liable to withholding tax. The Tribunal’s decision, which was heard by a different panel, is exactly opposite from that of the Tribunal ruled in the case of Tullow Oil. There are now two conflicting decisions at the Tribunal and the matter will ultimately have to be decided by the Court of Appeal.
The Tribunal ruled that the Income Tax Act clearly limits the application of withholding tax to services performed in Tanzania. The Judge also remarked that there was no room for reading anything more into the law. This is a welcome decision for the taxpayer but we will need to wait for the final determination at the Court of Appeal.

Board rules on business expense in Oil and Gas industry

In a welcome decision by the Tax Revenue Appeals Board, the Board allowed all expenses incurred by a tax payer that were wholly and exclusively incurred by the taxpayer in its business. TRA had sought to disallow the expenses apparently because withholding tax on such services had not been paid on the amounts. The Board also gave recognition to the fact that technical services procured by oil and gas companies externally, for the benefit of the company in Tanzania, are indeed not available or cannot be sourced in Tanzania due to the nature of the industry.

Statutory requirement to register your standard terms and conditions

The Fair Competition Commission published a long awaited notice informing the public that the contents of the Standard Form (Consumer Contracts) Regulations 2014 would come into effect in December 2015.
As is the case in other jurisdictions, especially to protect the consumer from unfair and one sided contract terms, all companies in Tanzania dealing with consumers and which have standard terms and conditions, be it in the banking, insurance or any other consumer related sector must register their standard terms and conditions with the FCC, otherwise a penalty can be imposed by the FCC.