DTA's and Tax Matters in Tanzania

Welcome MessageI take this opportunity to encourage Investors wherever they are to take advantage of the conducive investment environment in the country to bring their Capital, Technology, and Management Skills to Tanzania.Assuredly, Tanzania is poised to be one of the major destinations for investments in the next millenium in Africa.On behalf of the People of Tanzania, I extend a warm Welcome! Our Nation has much to offer, beginning with an abundance of Natural Resources for Visitors and Investors alike..."Jayaka Mrisho KikwetePresident Of United Republic Of Tanzania

Taxation Income tax in Tanzania is administered under the Income Tax Act 1973 ("the Tax Act") by the Commissioner of Income Tax in Dar es Salaam, plus another nineteen regional offices including Zanzibar. The Tax Act applies to income derived by individuals, corporations and partnerships. The two key elements that give rise to a liability to Tanzanian tax are residence and source. Thus, the assessable income of a resident of Tanzania includes income derived from all sources whether in or out of Tanzania, whilst the assessable income of a non-resident of Tanzania includes income derived from all sources within Tanzania. Income tax is imposed on an annual basis with the year of income being 1 January to 31 December. Tax returns are paid in Tanzanian Shillings. In general, the Tanzania Revenue authority (TRA) is unwilling to give advance rulings on proposed transactions. A foreign investor introducing a major project that is of particular importance to the Tanzanian economy may qualify for specific tax concessions, but these would be negotiated with the Minister of Finance through the Tanzania Investment Centre.
Double Taxation Treaties The operation of the Tax Act for both residents and non-residents is subject to the provisions of the various double taxation agreements that Tanzania has entered into with other countries that provide relief from double taxation. Such agreements often contain their own rules for determining the source of different types of income.
Double taxation agreements have been signed with Canada, Denmark, Finland, India, Italy, United Kingdom, Norway, Sweden, and Zambia. Tanzania is also in the process of negotiating treaties with several other countries including Belgium, Burundi, Iran, Lebanon, Malaysia, Mauritius, Pakistan, Rwanda, and Uganda. Indirect Taxes A number of indirect taxes apply in Tanzania. The main indirect taxes include:
Housing Levies
Withholding Tax
Import Duties
Sales Tax
Stamp Duty
Entertainment Tax
Value Added Tax (VAT) VAT came into operation in Tanzania on 1 July 1998. It is charged at the rate of 20% on any supply of goods or services in mainland Tanzania where it is a taxable supply made by a taxable person in the course of or in furtherance of any business carried on by him. The VAT on taxable supply of goods or services is payable at the end of a prescribed accounting period or at any time which the Commissioner may prescribe. VAT on importation of taxable goods or services from any place outside mainland Tanzania is charged and payable in accordance with the Act and the procedures applicable under the Customs Laws for imported goods is applied in respect of VAT imports. Any person whose taxable turnover exceeds, or the person has reason to believe will exceed, 20 million Tanzania shillings per annum must apply to register.
Investment Incentives The Government of Tanzania has recognised the importance of effective incentives for mobilising appropriate foreign and local investment. Accordingly, Tanzania offers a well balanced package of incentives to investors whose projects are awarded a Certificate of Incentives as issued by the Tanzania Investment Centre (TIC) under the Tanzania Investment Act, 1997. The incentive package already in place as provided under the Tanzania Investment Act, 1997 includes: Reduced rates of import duties and sales tax on all capital goods necessarily required for an approved enterprise and imported for use solely and exclusively in such approved enterprises; Reduced rate of Withholding Tax on Dividends; Unconditional transferability in freely convertible currency of net profits, foreign loans, royalties, fees, charges in respect of foreign technology, remittance of proceeds and payment of emoluments and other benefits to foreign employees working in Tanzania; Entitlement to an initial automatic immigrant quota of up to five persons during the start-up period; Accessibility to credit facilities from domestic financial institutions up to the limit established by the Bank of Tanzania;

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