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Taxes

Tax Structure and Administration
Tanzania has a stable and predictable fiscal regime, providing a soft landing to all investors. It recognizes that investors need to recover their investment costs first before paying corporate tax.
 
The administration of various tax laws is entrusted to the Tanzania Revenue Authority (TRA), a semi autonomous government agency created by Act No.11 of Parliament in 1995. It is responsible for Central Government taxes and several non–tax revenues. Revenue departments under TRA include (a) Domestic Revenue Department (b)Customs and Excise Department (c) Large TaxpayerDepartment, and (d) Tax Investigations Department.
 
Registration with Domestic Revenue
Registration which can be undertaken by TIC on behalf of the investor requires the following documents:-
(i)    Memorandum and Articles of Association
(ii)   Certificate of Registration or Certificate of Incorporation
(iii)   Investment Feasibility Study
(iv)   Certificate of Incentives in the case of  projects approved by TIC
(v)    Partnership Agreement (deed), in the case of a partnership
(vi)   Lease Agreement,
(vii)   Photographs of directors.
 
Forms to be filled include:
(a) Business Inquiry Forms    
(b) IT 21 forms for companies
(c) IT 20 forms forindividuals,
(d) TIN form.
 
Taxes under the domestic revenue department include:
  • Corporate tax (30% for both resident and non resident)
  • Withholding tax (for dividend payments, pension, insurance premium, royalties, transport and disposal of assets)
  • Income tax rates for individuals (the marginal rate ranges from 18.5% to 30%);
  • Income tax rate for non-resident individuals (a flat rate of 20% applies)
  • Taxable value of employment benefits (generally all benefits are taxable)
  • Capital gains tax (the gain/loss upon sale realization is included in business income  and taxed at the general rate)
  • Skills and development levy (6% of the gross emoluments paid to employees)
  • Gaming tax (as prescribed in the Pools and Lotteries Act, 1967).
When a loss is incurred, such a loss is an allowable deduction in ascertaining the total income of that person; thus a loss is carried forward indefinitely. A number of capital deductions are entitled under the Income Tax Act 2004, including wear and tear granted to a person who owns machinery. The law allows a 50% allowance in the first year of use for plant and machinery used in manufacturing processes and fixed in a factory, fish farming, and providing services to tourists and fixed in a hotel. Thereafter, different wear and tear rates apply.
Value Added Tax (VAT).
 
VAT is consumption tax charged at a single rate of 20%. Registration is compulsory for any business, which has a turnover of more than 40mn TZS per anum. Applicants for VAT registration should complete form No. VAT 101. A taxpayer is required to submit a monthly VAT return along with the payments to the nearest regional VAT office by the last working day of the month following the month of business.
VAT Deferment: Capital goods and deemed capital goods for investment do not attract VAT up front as the VAT is deferred to allow investor relief of tax up front. VAT deferment on any capital goods is open to all VAT registered and non-registered traders.
 
VAT Refunds: VAT refunds are made either within 30 days or 6 months from the due date depending on the type of taxpayer. Regular repayment traders like exporters can claim their refunds within 30 days while other traders can get their refunds after six (6)months.
 
There are various goods and services that are either zero rated, such as exports or VAT exempt, such as health supplies and tourists services. The TRA desk at TIC will provide the list of goods and services falling under these categories as well as those with special relief.
 
Taxes on international trade:The Customs and Excise Department administers all taxes and duties on international trade including import duty, excise duty on imports, and VAT on imports.
Import duty: The EAC members have adopted Common External Tariff from 1st Jan. 2005 with a structure of 0%, 10%, and 25%. It is levied at an advalorem rate on the CIF value of goods imported into the country.
Agreement on Customs Value (ACV): Tanzania is implementing the WTO article VII’s ACV. It prohibits the use of arbitrary or fictitious customs values.
 
Excise duty: Is charged on specific or advalorem tax rate on certain imported and locally manufactured consumer goods. Currently there are three advalorem rates 10%, 15% and 30%. Most of the locally manufactured goods are charged excise duty.
 
Stamp duty: Stamp duty is charged on certain legal instruments, affidavits, conveyances & lease agreements. The rate applicable is 1% and 500 TZS for conveyance and agricultural land respectively. The maximum stamp duty rate for registration of property for security or mortgage is 10,000 TZS.
 
Motor vehicle: Transfer of motor vehicle costs 50,000 TZS. The motor vehicle registration and annual license fees vary depending on the engine cubic capacity of the cars.
Import procedures:All transactions on imports, exports and transits are handled through the Customs Service Centre (CSC)
Chart: Import procedures/lodgment procedures at the CSC
TISCAN Classification; valuation; inspection; control number;
 
 Direct Trader Input (DTI) Data input; self assessment; print out
 Bank Payment of taxes/ processing fee; receipt
 Clearance office Signed print out customs declaration(i.e. TANSAD);attachment docs; release order
TISCAN: Is a private company contracted by TRA to provide destination inspection (DI)
services.