Business Environment

flag Tanzania Tanzania: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The year of income for tax purposes is the calendar year; however, a company may apply to use its own accounting period consisting of 12 months.
Accounting Standards
International Financial Reporting Standards (IFRS) are required for both domestic and foreign public interest entities. These include: Listed companies, banks and financial institutions, insurance companies, pension funds, utility companies, commercial government agencies, mutual funds, savings and credit cooperative organisations, cooperative societies, and securities brokers. Companies with less than 100 employees and capital investment of less than TZS 800,000,000 can choose between full IFRS Standards and IFRS for SMEs Standards. Government business entities meeting these two conditions are required to use International Public Sector Accounting Standards (IPSASs).
Accounting Regulation Bodies
NBAA
Accounting Reports

The presentation and preparation of financial statements should be performed in accordance with the Companies Act of 2002. Financial statements must include:

  •     Statement of Financial Position
  •     Statement of Profit or Loss and Other Comprehensive Income
  •     Statement of Distribution
  •     Statement of Cash Flows
  •     Statement of Changes in Shareholder’s Funds
  •     Notes to Financial Statements
Publication Requirements
Pursuant to the Companies Act of 2002, all companies are required to publish financial statements, in English or Swahili. Statements have to comply with regulations prescribed by the Ministry of Finance and Planning of Tanzania or the National Board of Accountants and Auditors (NBAA).
Professional Accountancy Bodies
NBAA , National Board of Accountants and Auditors
Certification and Auditing
According to the Companies Act of 2002, all companies must undergo an annual audit. The audit needs to be conducted by a qualified Certified Public Accountant (CPA) whereas the Auditors and Accountants (Registration) Act No. 33 of 1972 further stipulates that audits must be conducted by a member of the National Board of Accountants and Auditors (NBAA) who holds the qualification of CPA in Public Practice (CPA—PP).
Accounting News
IFAC Tanzania Accounting News
NBAA Tanzania Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT)
Tax Rate
18%
Reduced Tax Rate
No reduced rates; 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.
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 313 per litre), in addition to a petroleum levy on petroleum diesel and kerosene (at TZS 50 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.
A gaming tax of up to 20% applies on the 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 10,000 (normal building) or TZS 50,000 (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 4.5% skills and development levy and a workers' compensation fund tariff (at 1% or 0.5% 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 9%
TZS 520,000 - 760,000 TZS 22,500 + 20% of the amount in excess of TZS 520,000
TZS 760,000 - 1 million TZS 70,500 + 25% of the amount in excess of TZS 760,000
TZS one million and above TZS 1300,500 + 30% of the amount in excess of TZS 1 million
Individual income tax - Residents in Zanzibar Progressive rates from 0 to 30%
Less than TZS 180,000 0%
TZS 170,000 - 360,000 9%
TZS 360,001 - 540,000 TZS 17,100 + 20% of the amount in excess of TZS 360,000
TZS 540,001 - 720,000 TZS 53,100+ 25% of the amount in excess of TZS 540,000
TZS 720,000 and above TZS 98,100 + 30% of the amount in excess of TZS 720,000
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.
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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Sources of Fiscal Information

Tax Authorities
Overview of Tanzania's tax measures in response to Covid-19
Other Domestic Resources
Tanzanian Investment Center

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Learn more about Taxes and Accounting in Tanzania on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organisations
Business Registrations and Licensing Agency (BRELA)
Regional Organisations
Tanzania is a member of the African Regional Intellectual Property Organization (ARIPO) and the World Intellectual Property Organization (WIPO).

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Legal Framework

Independence of Justice
The independence of the judiciary is guaranteed by the Article 107 of the Tanzanian Constitution. As such, courts have freedom and are required "only to observe the provisions of the Constitution and those of the laws of the land". The Tanzanian judiciary has been ranked relatively free by the World Economic Forum (Judicial Independence Index). It is ranked 68th out of 137 countries (World Economic Forum Global Competitiveness Index 2017-2018).
Equal Treatment of Nationals and Foreigners
Equality before the law and the right to fair trial are guaranteed by the Article 13 of the Tanzanian Constitution.
The Language of Justice
Court rulings are made in English (Despite the fact that the official language of Tanzania is Swahili).
Recourse to an Interpreter
Court interpreting services are available in Tanzania (mainly in Swahili and English).
Sources of the Law and Legal Similarities
The Tanzanian legal system is based on the English Common Law, which derives from its British colonial legacy. However, unlike the unwritten British constitutional system, Tanzania has a written constitution, which is the first source of law. The Statutes or Acts of Parliament are the second source of law. Case law is the third source, followed by Received Laws, customary and Islamic law (that is applicable to Muslims).
Checking National Laws Online
Library of Congress - Tanzania Legal Guide
Law Reform Commission of Tanzania - Court of Appeal Judgments

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Standards

National Standards Organisations
TBS, Tanzania Bureau of Standards
Integration in the International Standards Network
The Tanzania Bureau of Standards (TBS) is a full member of the International Standards Organisation (ISO) and the African Organisation for Standardisation (ARSO).
Classification of Standards
Tanzania's standards regime consists of compulsory and voluntary standards. As of 2018, Tanzania has 633 compulsory standards that are applicable to various commodities and food items. The full list can be consulted here.
Online Consultation of Standards
The list of compulsory, voluntary and draft standards can be consulted here.
Certification Organisations
TBS Tanzania Bureau of Standards

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Business Practices

General Information
Opening Hours and Days
The work week is Monday to Friday and office hours are generally between 08:00 and 17:00. Government offices tend to close earlier, at 15:30. In Zanzibar, business and government are closed Friday afternoons.
 

Public Holidays

New Year's Day 1 January
Zanzibar Revolution Day 12 January
Good Friday Last Friday before Easter
Easter End of March - April
Easter Monday First Monday after Easter
Karume Day 7 April
Union Day 26 April
Labour Day 1 May
Eid El Fitr/End of Ramadan Varies according to the lunar calendar
Saba Saba Day 7 July
Nane Nane (Farmer's) Day 8 August
Eid El Haj Varies according to the lunar calendar
Mwalimu Nyerere Day 14 October
Maulid Day Varies according to the lunar calendar
Independence Day 9 December
Christmas Day 25 December
Boxing Day 26 December
 
Holiday Compensation
Public holidays falling on Saturday or Sunday are not compensated.
 

Periods When Companies Usually Close

Easter Holiday End of March - April
Christmas End of December
 

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Latest Update: April 2022