REGISTERING AND 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 :

i. employers who make a payment that is to be included in calculating the chargeable income of an employee from the employment;

ii. persons paying investment returns (e.g. those paying dividends, interest, natural resource payment, rent or royalty);
iii. persons paying service fees and contract payments. However exceptions exist.

Investor need to register and obtain the Taxpayer Identification number (TIN) at the TRA tax centre near the business location. Taxes are paid at banks.

Obtain a Taxpayer Identification Number (TIN)

Every New company must register with Tax payer Identification Number (TIN) before starting doing business in Tanzania. In addition, all shareholders and directors must register with TIN to be able to pay taxes. TIN registration is done TRA district office near the business location. TIN can also be registered online Online TIN registration

TIN for companies

TIN for foreigners without NIDA ID

TIN for Individual with NIDA ID

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.

Registration for VAT

Declaration and payment of VAT

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

Obtain tax clearance certiticate

All businesses that are to obtain a license are required to apply for a tax clearance certificate from the respective Tax region under which the business is registered. The application for a tax clearance certificate should be in writing with proof showing compliance for all taxes by the applicant of the tax clearance certificate.

Pay stamp duty

Authenticating certain legal instruments requires the payment of stamp duty. Rates applicable and types of instruments chargeable differs.

Withholding tax

Withholding tax is the amount of tax retained by one person when making payments to another person in respect of goods supplied or services rendered by the payee. A person receiving or entitled to receive a payment from which income tax is required to be withheld is a withholdee while a person required to withhold income tax from a payment made to a withholdee is referred to as the Withholding Agent.

There are two categories of withholding Tax

1. Final withholding taxes are taxes in which the Withholdee cannot claim any tax credit when calculating the income tax payable for a year of income.

2. Non final withholding taxes: are taxes which the Withholdee is entitled for a tax credit an amount equal to the tax treated as paid for the year of income in which the amount is derived.

Property tax

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.