Tanzania: Business Environment

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.

Tax Rate

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.