Tanzania flag Tanzania: Business Environment

Tax rates in Tanzania

Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT)
Tax Rate
18%
Reduced Tax Rate
No reduced rates apply; however, many items are exempt or zero-rated.
Exempt items include agricultural, horticultural or forestry machinery for soil preparation or cultivation, except lawnmower or sports ground rollers and parts; agriculture, beekeeping and fishery implements; agriculture inputs; crop agricultural insurance; dairy equipment; medicine or pharmaceutical products not including food supplements or vitamins supplied to the government entities; articles designed for people with special needs; educational materials; health care services; transportation of persons by any means of conveyance other than taxicab, rental car or boat; petroleum products and equipment for natural gas; intermediary services; import of goods by a registered and licensed explorer or prospector for exclusive use in oil, gas or mineral exploration or prospection activities, if also relieved from customs duties; educational services; immovable property; tobacco not stemmed or stripped; preparations of a kind used in animal feeding; fertilized eggs for incubation; a motor vehicle designed for use by persons with disability; importation of an ambulance by a registered health facility; financial services for which no consideration is charged.
Exports of goods and services are subject to a zero rate of VAT. The supply of goods to a tourist or visitor by a licensed duty-free vendor who holds documentary evidence that the goods have been removed from Tanzania is also zero-rated. The supply of ancillary transport services for goods in transit through mainland Tanzania is zero-rated where the service is an integral part of the international transport service and in respect of goods stored at the port, airport or a declared customs area for not more than 30 days while awaiting onward transport.
Other Consumption Taxes
Tanzania is a member of the East African Customs Union, and as such, applies a common external tariff, and does not levy customs duties on intra-union imports. Tanzania is also a member of the Southern African Development Community Customs Union; however, tariffs are not fully harmonised between these two unions.
Excise duties are levied on a wide range of products as well as telecommunication and financial services. They are either collected at a flat rate per unit or at rates varying between 5% and 50%.
A fuel levy is charged on petroleum and diesel (TZS 413 per litre), in addition to a petroleum levy on petroleum diesel and kerosene (at TZS 100 per litre).
The cost, insurance and freight (CIF) value of all imports is subject to a 1.5% railway development levy and customs processing fee of 0.6% of the FOB value.
Gaming activities are taxed at a maximum of 25% and gaming prize winners are taxed at a maximum of 15% on the amount or value of the winnings.

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Corporate Taxes

Company Tax
30%
Tax Rate For Foreign Companies
A Tanzanian resident is taxed on worldwide income, whereas non-residents are taxable on Tanzania-source income at the standard rate.
A permanent establishment is also subject to a tax on "repatriated income", which applies at a rate of 10%
A company is considered resident for tax purposes if it is incorporated or formed under the laws of Tanzania or if the management and control of its affairs is exercised in Tanzania.
Capital Gains Taxation
Capitals gains are included in taxable income and are subject to the standard corporate rate of 30%, with an instalment payment due before title to the investment asset can be transferred (10% for residents and 20% for non-residents).
Main Allowable Deductions and Tax Credits
Revenue expenditures which incurred wholly and exclusively in the production of income are eligible for capital allowances, with some statutory exceptions. For capital expenditures, there are specific tax depreciation allowances. Depreciation allowance rates vary between 5% (buildings) and 100% (plant and machinery). Goodwill does not qualify for depreciation allowance. Start-up expenses can be deducted as long as they meet the general deduction criteria. Interest charges are deductible on an accrual basis. Bad debts can be deducted after proving that all legal steps have been taken to pursue payment. Charitable contributions to approved institutions, education funds and local government authorities (to support community development projects) are deductible up to 2% of the taxable income (same as for those to fight the COVID-19 epidemic). Fines, penalties, and taxes are not deductible. Operating losses can be carried forward indefinitely. However, losses can only be offset against profits from similar business (i.e. losses from agricultural income can only be offset against profits derived from agricultural income - losses from one mining licence area can only be offset against profits from the same mining licence area, etc.). Losses of long-term contracts can be carried back up to a year, provided that the contract is completed and a person has unrelieved losses for that period or a previous period that is attributable to the long-term contract.
Other Corporate Taxes
While there is no inheritance or estate tax, properties are subject to an annual tax at flat rates on their value. If the property is unvalued, a flat fee of TZS 12,000 (normal building) or TZS 60,000 (per storey for a storey building) is levied instead.
Companies are subject to a city service levy, which is collected by municipalities. The levy is chargeable 0.3% on the annual turnover. Regardless of their location, companies are also subject to a business license fee, which ranges between USD 15 and USD 10,000 per annum. 
Land and share transfers are subject to stamp duty.
Social security contribution amount to 20% of the gross wage, and are generally split equally between employer and employee. A 4% skills and development levy and a workers' compensation fund tariff (at 0.6% of cash sums paid) also apply.
Other Domestic Resources
Tanzania Revenue Authority
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Tanzania Sub-Saharan Africa United States Germany
Number of Payments of Taxes per Year 59.0 36.6 10.6 9.0
Time Taken For Administrative Formalities (Hours) 207.0 284.8 175.0 218.0
Total Share of Taxes (% of Profit) 43.8 47.3 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Individual income tax - Residents in Mainland Tanzania
Less than TZS 270,000 0%
TZS 270,000 - 520,000 8%
TZS 520,000 - 760,000 TZS 20,000 + 20% of the amount in excess of TZS 520,000
TZS 760,000 - 1 million TZS 68,000 + 25% of the amount in excess of TZS 760,000
TZS one million and above TZS 128,000 + 30% of the amount in excess of TZS 1 million
Individuals with business turnover not exceeding TZS 100 million per year Specific presumptive income tax rates apply
Allowable Deductions and Tax Credits
No personal allowances are available. However, a deduction is allowed for retirement contributions made to approved retirement funds.
Normally, individuals may claim a deduction for expenses incurred wholly and exclusively in the production of business or investment income.
Special Expatriate Tax Regime
Income tax is payable by individuals resident in Tanzania (other than short-term residents) on their worldwide income. "Short-term" residents and non-residents are taxable on income from a Tanzanian source, at a flat rate of 15% on employment income. Non-resident individuals generally are subject to tax at 20% on their total income from other Tanzanian sources.
An individual is resident in Tanzania if he/she: has a permanent home in Tanzania and visits the country during the year, or he/she is present in the country for either 183 days in the year or an average of 122 days per year in the relevant year and the preceding two years.
An individual is a short-term resident at the end of any income year if during the whole of one’s life one has been resident in Tanzania for not more than two years in total.
The disposal of an investment with a Tanzanian source is subject to tax at a rate of 10% if disposed by a resident and 30% if disposed by a non-resident.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of Tax Conventions signed by Tanzania
Withholding Taxes
Dividends: 5% (paid by a DSE-listed company)/10%; Interests: 10%; Royalties: 15%.

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Latest Update: November 2022

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