Worldwide Tax Summaries
Income tax is payable by individuals resident in Tanzania (other than short-term residents) on their worldwide income. ‘Short-term residents’ and non-residents are taxable on income from a Tanzanian source.
Personal services have a Tanzanian source if (i) performed in Tanzania or (ii) performed outside Tanzania but where the payer is the government of Tanzania.
The top marginal rate of tax for resident individuals is 30% (see tax table below).
Non-resident individuals are subject to tax at a flat rate of 15% on employment income, which is final tax in Tanzania.
For individuals with business turnover not exceeding 100 million Tanzanian shillings (TZS) per annum, specific presumptive income tax rates apply, as set out in the table under Business income in the Income determination section.
Where the income from investment represents a ‘final withholding payment’, the tax rate applicable is the relevant WHT rate. The disposal of an investment with a Tanzanian source is subject to tax at a rate of 10% if disposed by a resident and 30% if disposed by a non-resident. The disposal by a resident of an investment with an overseas source is subject to tax at a rate of 30%.
| Taxable income (TZS) - monthly | Tax on column 1 (TZS) | Tax on excess (%) | |
| Over (column 1) | Not over | ||
| 0 | 270,000 | - | 0 |
| 270,000 | 520,000 | - | 8 |
| 520,000 | 760,000 | 20,000 | 20 |
| 760,000 | 1,000,000 | 68,000 | 25 |
| 1,000,000 | And above | 128,000 | 30 |
An individual is resident in Tanzania in any tax year if one (i) has a permanent home in Tanzania and visits Tanzania in the year or (ii) has no permanent home but is present in the country for either 183 days in the year or an average of 122 days per year in the relevant year and the preceding two years.
An individual is a short-term resident at the end of any income year if during the whole of one’s life one has been resident in Tanzania for not more than two years in total.
There is a state social security scheme known as the National Social Security Fund (NSSF), which every employer in the private sector must contribute to. The employer’s contribution is 20% of the employee’s remuneration; however, the employer is entitled to recover up to half of this from the employee.
Similar contribution rates (20%) apply to the Public Service Social Security Fund (PSSSF) scheme, which is a special fund for the employer and employees in the public sector, however the employer is entitled to recover up to 5% from the employee.
The standard rate of VAT is 18%, but the export of goods and certain services is eligible for zero rating. See the Other taxes section in the Corporate tax summary for more information.
There are no net wealth/worth taxes in Tanzania.
There are no inheritance, estate, or gift taxes in Tanzania.
SDL is a tax on the employer calculated as 3.5% of gross cash emoluments of employees. It is not a tax on the individual but is a cost that needs to be borne in mind when considering the overall cost of employment of employees. It is only applicable to employers who have a minimum of 10 employees.
The following institutions are exempted from SDL: (i) nursery, primary, and secondary schools; (ii) vocational, educational, and training schools; (iii) universities and higher learning institutions; and (iv) religious health institutions.
Employers are subject to the workers compensation fund tariff. The tariff is payable on a monthly basis and is calculated as a percentage of cash sums paid to employees at 0.5%. Employers are also required to file a monthly return form.
The property tax rates for valued properties vary depending on the value and location of the property. For unvalued properties, property tax is charged at TZS 18,000 for a normal building and TZS 90,000 per storey for a storey building.
Income from employment includes cash emoluments and the value of benefits in kind (generally the market value). There are special rules for taxing the provision of residential accommodation, motor vehicles, and preferential loans, as set out below.
Housing benefit is the lower of:
Car benefit is taxed on the following annual values:
| Engine size | Vehicle less than 5 years old (TZS) | Vehicle more than 5 years old (TZS) |
| Not exceeding 1000cc | 250,000 | 125,000 |
| Above 1000cc but not exceeding 2000cc | 500,000 | 250,000 |
| Above 2000cc but not exceeding 3000cc | 1,000,000 | 500,000 |
| Above 3000cc | 1,500,000 | 750,000 |
No benefit is assessable in respect of the car where the employer does not claim a deduction in respect of the ownership, maintenance, or operation of the vehicle.
The statutory interest rate is determined by the prevailing rate as provided by the Central Bank. This is the rate to consider in assessing any taxable benefit in relation to preferential loans.
For individuals with annual turnover exceeding TZS 100 million, refer to Taxes on corporate income in the Corporate tax summary for calculation of tax on income from business. For those with annual turnover of TZS 100 million or less, specific presumptive rates apply (refer to the tables below).
| Turnover (TZS) | Tax liability (TZS) | |
| Section 35 of the TAA 2015 is not complied with (i.e. taxpayer does not maintain records) | Section 35 of the TAA 2015 is complied with (i.e. taxpayer maintains records) | |
| Less than 4 million | 0 | 0 |
| 4 million to 7 million | 100,000 | 3% of amount in excess of 4 million |
| 7 million to 11 million | 250,000 | 90,000 plus 3% of amount in excess of 7 million |
| 11 million to 100 million | 3.5% of turnover | |
| Class A: Passenger services vehicles | ||
| S/N | Number of passengers | Tax payable (TZS) |
| 1 | Up to 15 | 250,000 |
| 2 | 16 to 30 | 650,000 |
| 3 | 31 to 45 | 1,100,000 |
| 4 | 46 to 65 | 1,600,000 |
| 5 | Above 65 | 2,200,000 |
| Class B: Tour service vehicles | ||
| 1 | Up to 15 | 650,000 |
| 2 | 16 to 25 | 900,000 |
| 3 | 26 to 45 | 1,300,000 |
| 4 | 46 to 65 | 1,800,000 |
| 5 | Above 65 | 2,400,000 |
| Class C : Goods carrying vehicles | ||
| 1 | Less than 1 | 250,000 |
| 2 | 1 to 5 | 500,000 |
| 3 | 6 to 10 | 750,000 |
| 4 | 11 to 15 | 1,100,000 |
| 5 | 16 to 20 | 1,300,000 |
| 6 | 21 to 25 | 1,650,000 |
| 7 | 26 to 30 | 1,900,000 |
| 8 | More than 30 | 2,200,000 |
| Class D: Private hire services vehicles | ||
| 1 | Motorcycle | 65,000 |
| 2 | Tricycle | 120,000 |
| 3 | Taxi | 180,000 |
| 4 | Ride hailing | 350,000 |
| 5 | Ride Sharing | 450,000 |
| 6 | Special Hire | 750,000 |
To reduce the administrative burden for sole traders and improve voluntary compliance, an annual turnover threshold of at least TZS 100 million is required for a taxpayer to submit audited financial statements with the revenue authority.
The realisation of an investment asset (e.g. shares and securities, land, buildings) is a taxable event for income tax purposes. Where there is a disposal of an investment, then in arriving at the taxable ‘net gains’ a deduction can be claimed in relation to various costs, including costs in relation to acquisition, improvement, and disposal.
Relevant exemptions include:
The date of realisation of an interest in land, petroleum or mineral rights, buildings, shares or securities, and licence or concessional right on reserved land is the earlier of the date of:
The compliance requirements relating to the above realisation include:
Resident individuals who do not have records of the costs of assets will, on realisation of interest in land or buildings, pay tax at the rate of 3% of the higher of the incomings from the realisation or the approved asset value (instead of 10% on the profits).
Dividend income is subject to tax by way of WHT, which is a final tax. The normal rate is 10%, but a reduced 5% rate applies to dividends paid by listed companies.
Dividend income from non-resident companies is subject to tax at a rate of 10% if paid to a resident individual (and not in the nature of business income). A tax credit can be claimed for foreign income tax on the dividend.
Interest paid to an individual (unless the interest is in the nature of business income to the individual) is treated as a ‘final withholding payment’, whereby the WHT is a final tax.
Rent on land and buildings paid to a resident individual (unless the rent is received in the course of conducting a business) is treated as a ‘final withholding payment’, whereby the WHT is a final tax.
The only amount deductible from employment income is the employee’s statutory social security contribution (e.g. to the NSSF).
There are no personal allowances in Tanzania.
Subject to certain exceptions, an individual may claim a deduction for expenses incurred wholly and exclusively in the production of income from business or investment.
A tax credit is available to a resident individual for any income tax paid in another country in respect of income sourced from that other country. Such credit cannot exceed the Tanzanian tax rate applicable to that income. Any unrelieved amount of foreign tax credit can be carried forward. An election can also be made to claim relief as an expense instead of as a credit.
Where the income arises in a country with which a double tax treaty (DTT) is in force, the treaty governs relief.
DTTs are in force with Canada, Denmark, Finland, India, Italy, Norway, South Africa, Sweden, and Zambia. An East African DTT has been signed but not yet ratified.
There are no other significant tax credits or incentives for individuals in Tanzania.
The tax year runs from 1 January to 31 December. Tax years not coinciding with the calendar year in relation to income from any source other than employment or services rendered are permitted, subject to approval from the Commissioner.
Tax on employment income is accounted for by the employer WHT at source under the pay-as-you-earn (PAYE) scheme.
Tax on final withholding payments is deducted by the payer at source.
Registration of title on the transfer of land and buildings situated in Tanzania, or of a transfer of shares in a locally incorporate company, or realisation of licence or concessional right on a reserved land requires a certificate from the Commissioner confirming that payment of tax (‘single instalment tax’) has been made.
There is also a reporting requirement to the Commissioner within 14 days from the date of realisation of the interest. The respective single instalment tax shall be paid within 30 days or such other period determined by the Commissioner from the date of realisation of an interest.
An individual is not required to file a tax return if the only taxable income is employment income derived from a resident employer or income subject to tax by way of single instalment tax. Where an individual has taxable income other than this, then there is a requirement to file an individual tax return, a statement of estimated tax payable, and a final tax return, and make instalment tax payments and a final tax payment as appropriate.
The statement of estimated tax payable contains an estimate of the chargeable income for the year of income and is due for filing within three months of the beginning of the year of income (calendar year or accounting period).
A final tax return contains a statement of chargeable income for the year of income and is due for filing within six months of the end of the year of income.
Estimated tax is payable in four quarterly instalments (at the end of the third, sixth, ninth, and twelfth months of the year of income). Any final tax payable is due by the deadline for filing the final tax return.
Interest on late payment is charged at the Bank of Tanzania discount rate on a compounding basis.
Tax withheld monthly should be remitted online. The Revenue Gateway System generates a withholding certificate for taxpayers registered by the Tanzania Revenue Authority (TRA). The online certificate is used to claim credit against income tax. Non-resident taxpayers apply to the commissioner for a paper certificate as they are not registered with the TRA.
|
|
|