A Tanzanian resident is taxed on worldwide income, irrespective of source. Non-residents are taxable on income with a source in Tanzania.
A company is tax resident if it is incorporated or formed under the laws of Tanzania or if the management and control of its affairs are exercised in Tanzania.
corporate tax rate
The corporate tax rate applicable to resident companies is 30%. A reduced corporate tax rate of 25% applies for three consecutive years for companies newly listed on the Dar es Salaam Stock Exchange. To qualify, at least 30% of the company's shares must be issued to the public.
Specific tax rates are applicable to some mining companies that have entered into agreements with the government but recent legislation has prohibited preferential tax treatment for companies in the natural resource wealth industry.
|capital gains tax (“CGT”)|
There is no specific CGT. Gains derived on the realisation of most assets (and liabilities), including shares, will be included (or losses deducted) as part of normal income and subject to the standard corporate tax rate of 30%.
withholding tax (“WHT”) rates
WHT rate (%)
| dividends||5% (listed companies)|
5% (at least 25% shareholder)
10 % (other dividends)
|0% (export processing zones) |
5% (listed companies)
| interest||10%||10% (bank deposits)|
0% (if paid by strategic investors to a non-resident bank)
| royalties||15%|| 15%|
| management, consulting and technical services fees||5% || 15%|
| || |
double tax agreements (“DTAs”)
DTAs are in force with Canada, Denmark, Finland, Italy, India, Norway, Sweden, South Africa and Zambia.
There is no limit on the carry forward period for tax losses. However, tax losses in the agricultural, mining and petroleum sectors are ring-fenced.
Transfer pricing rules are in place in Tanzania. If transactions between “associates” are not entered into on arm’s length terms, the Commissioner can re-characterise the source and type of any income, loss, amount or payment; or apportion and allocate expenditure based on comparative revenues of the businesses.
The definition of an associate includes the situation where an entity, whether alone or with an associate(s), controls or may benefit from 50% or more of the rights to income or capital or voting power of another entity.
Thin capitalisation rules are in place in Tanzania.
The total amount of interest that an “exempt-controlled resident entity” may deduct for a year of income shall not exceed the sum of interest equivalent to a debt-to-equity ratio of 7:3.
An exempt-controlled resident entity includes a resident entity of which 25% or more of the underlying ownership of the entity is held by a non-resident.
The income tax rates applicable to resident individuals are:
|annual chareable income of residents (TZS)||tax rate |
|up to 2 040 000|| 0%|
|2 040 001-4 320 000|| 11%|
|4 320 001-6 480 000|| 20%|
|6 480 001-8 640 000|| 25%|
|above 8 640 000|| 30%|
These rates do not, however, apply to all types of income.
Non-resident individuals are subject to tax at a rate of 15% on employment income.
The total statutory contribution is 20% of employees’ gross salaries. Employers are obliged to contribute 10% and 10% is deducted from employees’ salaries.
Expatriates may apply for exemption from contributing if an employee is contributing to a similar state scheme (any scheme run by the government of that country and which provides similar benefits).
|payroll taxes||A skills and development levy imposed under the Vocational Education and Training Act is payable by any company employing four or more employees. In both mainland Tanzania and Zanzibar, the levy is payable at the rate of 4.5%, with effect from 1 July 2016 (5% for the period immediately prior) of gross emoluments.|
|stamp duty |
Stamp duty is levied on a wide range of instruments and documents under the Stamp Duty Act. The person who makes, draws up or executes the instrument or document is liable to pay the duty.
|taxable supplies ||VAT is payable on taxable supplies of goods or services in mainland Tanzania and on the importation of goods or services from any place outside mainland Tanzania.|
A person shall, in respect of any month, be registered for VAT from the first day of that month if there are reasonable grounds to expect that the person’s turnover in the 12 months period commencing at the beginning of the previous month will be equal to or greater than the registration threshold (currently TZS100-million per annum).
|reverse VAT on imported services|
18% reverse VAT is only levied on imported services if the taxpayer has exempt supplies of 10% or more of total supplies.
The output tax is declared on the value of any taxable services received, but the same amount of tax is treated as input tax, which is recoverable subject to the normal rules. If a business is ”fully taxable”, the company is entitled to recover this input tax in full, so the net effect is nil.