Paying tax

Tanzania Revenue Authority (TRA) is responsible for collecting most taxes in Tanzania. Local government authorities also have mandate to collect some taxes and charges. Taxes are made up of direct and indirect taxes. Direct taxes mainly refer to taxes on income while indirect taxes are on consumption and international trade.

Tax payment methods are withholding, installment and assessment. Generally, every person is required to pay tax on installment and on assessment.

The withholding method is only available to those who are required to withhold tax. These are :

employers who make a payment that is to be included in calculating the chargeable income of an employee from the employment;
persons paying investment returns (e.g. those paying dividends, interest, natural resource payment, rent or royalty);
persons paying service fees and contract payments. However exceptions exist.

Tax registration are done at the TRA tax centre nearest business location. Taxes are paid at banks. For a list of TRA regional offices click here .

Obtain taxpayer Identification Number (TIN)

Every taxpayer must register for Tax payer Identification Number (TIN) before starting doing business in Tanzania.

Value Added Tax (VAT)

All businesses with annual turnover of 100 million Shillings and above must register for Value Added Tax (VAT). It is mandatory for taxpayers to purchase Electronic Fiscal Device before they obtain the VAT certificate. Companies collect VAT on behalf of TRA when they sell goods and or services. Companies are required to submit monthly returns showing the total sales and purchases of the business.

The returns shall be lodged by the last working day of the month after the end of the prescribed accounting period.

Pay as you earn is an individual tax deducted by the employer from monthly salaries of employees. Employers are required to submit monthly deductions to Tanzania Revenue Authority. In addition they are required to submit bi-annual tax returns (declaration) showing details of deduction during the six months period.

Income tax is a tax that varies with the income or profits of the taxpayer. TRA categorizes individuals into two groups ie. Small individual traders who are under the presumptive tax system and medium individual traders whose tax are based on their annual profit determined by their audited accounts.

Presumptive tax system is a tax system where individuals are taxed based on their annual turnover and are not obliged to maintain audited accounts. However, individuals may opt not to apply the system and prepare audited accounts and pay tax based on profits.

For conditions and rates on presumptive tax systems click here.

Individuals who prepare audited accounts is a group of taxpayers whose annual turnover is above TSHS 20,000,000. Taxpayers under this group are taxed based on their annual profits

The following categories are required to withhold tax:
- persons paying investment returns (e.g. those paying dividends, interest, natural resource payment, rent or royalty)
- persons paying service fees and contract payments. However exceptions exist.

For a list of withholding tax rates, click here. For employers paying PAYE (another form of withholding tax) click here

A corporation includes, for income tax purposes, any company or body corporate established, incorporated or registered under any law in force in Tanzania or elsewhere, and any unincorporated association or other body of persons, but excludes a partnership or trust.

A corporation may have income from business and income from investment. The total income of the corporation is taxed at 30%.

Authenticating certain legal instruments requires the payment of stamp duty. Rates applicable and types of instruments chargeable are available on Stamp Duty Act 2006 from page 43.

Property tax is levied at a flat rate on the property value by municipal or city councils. Applicable rate varies according to size, use and location of the property.