Tax Services in Tanzania

Tanzania is a country located in East Africa, in the region of the African Great Lakes. Because of the country's strategic location and abundant source of minerals and resources, many investors are interested in opening up business opportunities in Tanzania. Consequently, the taxation system in Tanzania is considered to be one of the best in the regions. The country’s transparent and efficient tax systems are aiding towards the attraction of foreign investors to Tanzania.

In Tanzania, there is a three-tier structure of tax administration, which are Central Government Tax, Local Governments Tax Administration and Tax administration in Zanzibar. The Tanzania Revenue Authority (TRA) takes care of the Central Government Tax, the Zanzibar Revenue Board (ZRB) takes care of the domestic taxes and the local government board takes care of the local taxes and duties.

The tax system in Tanzania is structured in a view to establishing a fair, simple, efficient and taxpayer friendly regime. The tax structure of Tanzania consists of 30% direct taxes, that include Corporate and Income tax, and 70% indirect taxes that include VAT (Value Added Tax), Excise Tax, import duties and various other taxes. All of these taxes can be paid online or can be paid at either the TZA or the ZRB.

Types of Taxes in Tanzania

There are five types of taxes that people pay in Tanzania. They are:

• Corporate Tax
• Income Tax
• Value Added Tax (VAT)
• Import Duty
• Excise Tax

Corporate Tax

A company is considered to be a Tanzanian company if the company qualifies under the guidelines of the Tanzania Revenue Authority. A corporate tax in Tanzania is only applicable to the companies that generate revenue within the country and is chargeable on entities such as limited companies, organisations or institutions such as co-operatives, clubs, societies, associations and other such incorporated bodies. Taxable income from corporates also include:

• Profits generated from undertaking businesses
• Profits made from conducting any investment
• Profits generated from companies with repeatedly occurring losses for three consecutive years

The above tax is to be paid by any company that is located in Tanzania inclusive of profits generated worldwide, subject to companies that are in international treaty reliefs. The current corporate tax in Tanzania stands at 30% for both resident and non-resident companies, with the repatriated income of any foreign branch will add 5% to the total tax liability.

Income Tax

Income tax in Tanzania applies to a citizen who resides in the country, and earns income from any source, be it from a local company or worldwide source. For a non-resident who works in Tanzania, he is subjected to pay tax for the income only generated from a Tanzanian source. Individuals who start a business in Tanzania are requested to register their company with the TRA and obtain a Tax ID. In Tanzania, there are two ways in which an individual is taxed on, Annual Income Tax (AIT) and Pay as You Earn (PAYE). Majority of these taxes are collected via PAYE scheme. Here are the income tax slabs for individuals residing in both mainland and Zanzibar regions.

Tanzania Mainland Region

Zanzibar Region

 For individuals who start their own business, they are subjected to presumptive tax, which is not over 20%, if the company has an annual turnover of 20 Million TZS or more.

Value Added Tax (VAT)

The VAT in Tanzania is subjected to the goods and services sold in the country. This type of tax is charged on any goods or immovable property of any economic activity that is happening in the country. The standard VAT rate in Tanzania is 15% for all types of sale of goods and services, 18% on taxable goods imported to Tanzania, and 0% for export of goods from the country.

Import Duty

Import of any goods is subjected to a duty fee to be paid by the importer, to the Tanzania customs. The standard Import duty applicable on goods imported to Tanzania ranges from 0% for raw materials to 10% on goods used for industrial purposes and 25% for finished commercial goods or consumer goods

Excise Duty

Excise duty is a charge that is levied on locally produced goods and services in Tanzania. This duty is charged in both specific and ad-valorem rates. Ad- valorem rates in Tanzania are 0%, 10%, 17%, 20%, 25% and 50%, depending upon the goods prescribed by the Tanzania Revenue Authority (TRA).

Property Tax

Property tax in Tanzania is to be paid by any property located within the mainland. The property tax rates are levied flat on the value of the property, be it residential or commercial. For the Dar-es-Salaam region, the property tax rate is at 0.15% for residential properties and 0.2% on commercial properties.

On top of that, there are various Special Economic Zones (SEZ) and Export Processing Zones (EPZ), in which the government of Tanzania provides exclusive tax benefits such as 0% property tax, income tax, corporate tax and reduced VAT rates. Furthermore, there are some specific licences that you need to acquire to trade within the country.

Why Business Setup?

We at Business Setup Worldwide do provide services for companies interested in outsourcing tax services in Tanzania. Some of our tax services include

• Tax filing and structuring
• Tax planning
• Tax compliance
• Tax issues handling
• Tax due diligence

Feel free to contact us for any query as we provide expert business solutions!