Q&A – 22 April 2013

Bad debt written off, why pay

I was offered an overdraft facility to the tune of Tshs 100 Million for a period of twelve months. I provided personal guarantee and in addition mortgaged my landed Plot in Mbezi area Dar es Salaam. Following business troubles that were beyond my control and which the bank knows about, I failed to service the loan and eventually the bank wrote off my loan account which now reads zero balance. Surprisingly, the Bank’s lawyer has recently sent me a demand notice claiming for the outstanding principal sum and the accrued interest. Is this proper? I thought the loan was already written off and the bank understood my position that although I did not pay back the loan, it was unintentional. This is very unfair. Please advice.
KU, Dar

Your loan has been written off by the bank in line with BOT guidelines, regulations and best practice principles of banking. This does not mean that the loan is not to be repaid. The writing off is an accounting entry in the banks books so that the banks true financial position can be determined.

If by writing off bank debts the borrower is absolved of his liability to pay, banks would be out of business by now and everyone would become a defaulter. Not only is your thinking totally wrong but your mortgaged plot is at risk of being sold.

Also remember that when you default, the longer you wait to clear your debt the more you will end up paying in interest, as penal interest kicks in for defaulters. Your lawyers can guide you further.

Wife says no to me

My wife is refusing to have sexual intercourse with me despite me having tried very hard. She does not give reasons. Can the Courts help me with this? How can I get the assistance of the laws in Tanzania? Is this not breach of the contract of marriage?
MJ, Dar

We are not sure what you want the laws of Tanzania to help you with. The laws provide for grounds for divorce and if your wife is refusing to cohabit with you, then that is a ground you can use amongst others.

If your question is asking whether the Courts can grant you an order that your wife should start cohabiting with you, the answer is a straight no. You will be stretching the law too far and whilst it is true that she is in breach of her contract of marriage, no Court can order for specific performance as you seem to be hinting.

You can also contact a marriage counselor who may be able to guide further.

Exemption on stamp duty

I executed a lease agreement in London for my flat in Dar. Is stamp duty payable and by whom? What is the deadline for payment of such stamp duty and what if TRA delays the assessment of stamp duty if it is applicable? Can stamp duty be exempted in Tanzania?
TE, Dar

Since the agreement is for a flat ie property situated in Tanzania, it does not matter where you execute it, stamp duty will still apply. According to the Stamp Duty Act, unless otherwise agreed upon by the parties, it is the tenant who is supposed to pay the stamp duty which is 1% of the annual rent.

As for when stamp duty is to be paid, the Act says that all chargeable instruments executed by any person in Tanzania Mainland shall be stamped within thirty days of execution:
Provided that– (a) where any such instrument is brought to a proper officer for adjudication under section 42 of this Act within such thirty days, the period from the presentation of the instrument to the proper officer until the notification to the person who presented it of the decision of the proper officer, shall be excluded in computing the said period of thirty days; and (b) every receipt, acknowledgement of a debt, promissory note and bill of exchange shall be stamped on the date of execution or the date of the instrument, whichever shall be the earlier date.

From the above, if TRA delays in assessing stamp duty, and so long as you have filed for assessment within 30 days of execution, the time that TRA take in assessing is not to be calculated. In short, you must file for assessment within 30 days of execution otherwise you will be liable to a penalty.

As for exemptions, the stamp duty act has a provision for the Minister to exempt stamp duty. The said provision states that the Minister may, by notice in the Gazette, exempt any chargeable instrument, or any category, class or description of such instruments, from stamp duty. The provision also allows for retrospective stamp duty exemption by stating that where an order under subsection (1) is expressed to have retrospective effect, any instrument specified in the order or, as the case may be, any instrument of the category, class or description specified in the order, and given, issued or executed on or after the date specified in the order shall be deemed not to have been a chargeable instrument.

In your case, unless there are solid reasons why stamp duty should be exempt, it is unlikely that you will get an exemption. Also remember that the stamp duty exemption must be gazette fror it to have the force of law. Your tax consultant can guide you further.

Overtime in Banks

I was a branch manager with a bank in Tanzania. Recently I was fired and wish to make a claim for all the many hours I spent working beyond official hours. Do I have a valid claim?
OH, Dar

The Employment and Labour Relations Act generally states that an employer shall not require or permit an employee to work more than 12 hours in any day and that the maximum number of ordinary days or hours that an employee may be permitted or required to work are (a) six days in any week; (b) 45 hours in any week; and (c) nine hours in any day.

However the same Act further goes and disapplies the above provisions to employees who manage other employees on behalf of the employer and who report directly to a senior management employee.

Hence in your case, it is unlikely that the overtime is claimable- your lawyers can guide you further.