What is VAT?

VAT stands for Value Added Tax.  It is a consumption tax charged on taxable goods, services immovable property of any economic activity whenever value is added at each stage of production and at the final stage of sale. VAT is charged on both locally produced goods and services and on imports. Value Added Tax is charged by persons registered for VAT only.

What is the scope of VAT?

The VAT shall be charged on any supply of goods, services and immovable property of any economic activity in Mainland Tanzania where it is a taxable supply made by a taxable person in the course of economic activity carried by him. The importation of taxable supply from any place outside Mainland Tanzania shall be charged VAT and normal Customs Laws and procedures shall apply. All supply consumed or enjoyed outside Mainland Tanzania shall be zero-rated upon proof. VAT is chargeable on the taxable supplies of goods and services. The rates are 18%   for standard rated supplies, and 0%   for exports of goods and services

Introduction:

This guide provides basic overview of Corporation Tax. It explains the meaning of “Corporation Tax”, who is liable and what is to be done when you are subject to Corporation Tax requirements. It also explains common income tax terms such as “Self-Assessment”, “Year of Income” and “Taxable Profits”. The guide also outlines how Corporate tax is calculated, what are the applicable tax rates and when to pay.

Income Tax for Individuals

1. Individuals are categorized in two groups:

• individual traders who are under presumptive tax regime
• individual trader who are not under presumptive regime.

 a) individual traders who are under presumptive tax regime

Taxation of individual under presumptive regime is based on annual turnover. In this category individual are not required to file final return with audited books of accounts unless he/she elects to. This category consists of individuals who fulfills the following requirements:

1. the individual should be a resident for the year of income,
2. the individual's income for a year of income consists exclusively of income from a business having a source in the United Republic;
3. the turnover of the business does not exceed Tshs. 100 million: and
4. the individual does not elect to dis-apply the presumptive rules

Where a resident individual meets the above requirement for a year of income the individual's income tax payable for the year of income shall be equal to the amount of presumptive income tax provided in the below schedule;

 b) individual traders who are no under presumptive tax regime

This category consists of individuals who do not fulfil the requirements of presumptive tax regime. Under this category individual pay tax basing on their taxable income for the year. The traders under this are required to keep proper records including filing of provisional returns on or before 30^th March. At the end of the year the individual under this category are required to file final return attaching the audited financial statements and submit it to TRA on or before 30 June of the following year to which the return relates.

The rates applicable under this category are as shown in the table below:

• For Tanzania Mainland

• For Zanzibar

2. Filing of tax returns and payment of tax

• The statement of estimated tax payable

The statement of estimated tax payable is a provisional return which a taxpayer is required to complete and file to the Commissioner within three months from the beginning of the year of income (which for individuals shall be calendar year).

The taxpayer is supposed to pay the estimated tax in a maximum of four installments each falling due after three months. The Due dates are as follows:

On or before 31stMarch

On or before 30thJune

On or before 30thSeptember

On or before 31stDecember

Form: ITX200.01.E – Statement of Estimated assessment - Individual

• Final returns.

A taxpayer must file a final tax return to TRA within six months after the end of each tax year. The taxpayer must file return in the period between 1st January and 30th June

Forms:  ITX201.01.E Return of Income – Individual

What records should be maintained by a taxpayer?

The Income Tax Act requires every individual who is liable to pay tax in the United Republic of Tanzania, to maintain all documents necessary to enable an accurate determination of the tax payable.

These documents shall be retained for a period of at least five years from the end of the year of income or years of income to which they are relevant, unless the Commissioner specifies otherwise by notice in writing.

Where any document is not written in an official language of the United Republic of Tanzania, the Commissioner may, by notice in writing, require the taxpayer to provide an official translation of communication or document within fourteen days, at the individual’s expense, a translation into an official language is done by a translator approved by the Commissioner in the notice.

What are the contents of return form?

The return form consists of seven pages and there are other supplementary pages for calculation of the following types of income and gains:

• Gains from realization of shares and securities in a corporation,
• Gains from realization of assets excluding shares, securities or trading stock,
• Repatriated income of an individual’s domestic permanent establishment,
• Income from general insurance business,
• Income from life insurance business
• Income from mining operations

Submitting the return

• Completing the figures in the return

Do not include cents – round down revenue figures, and round up tax credits and tax deductions to the nearest shilling.

• Submitting the return

Do not delay submitting the return to TRA, even if you do not have all the information you need. Where some of the information is missing estimate the amount and indicates which information is estimated at the time of filing that needs confirmation.

Understanding PAYE

PAYE stands for Pay-As-You-Earn. It is a withholding tax on taxable incomes of employees. Under this system, an employer is required by law to deduct income tax from an employee's taxable salary or wages.

 Employee means:

An employee means an individual who is a subject of an employment conducted by an employer. It includes a permanent employee, part time, manager, director and casual employees. Employees may be employed by one or more employers (Primary and Secondary Employment).

Employer means:

An employer means a person who conducts, has conducted or has prospect of conducting the employment of an individual.

Full time service director means:

 Means a person at a managerial position and is in full time service in a corporation.

Administration of PAYE

An employer is required to withhold income tax from salaries, wages and all other payments forming taxable income paid to an employee.

Capital Gain from Realisation of Interest in Land or Buildings

 Realisation of interest in land and Building

A person who owns an interest in land or building shall be treated as realising the asset when the person parts with ownership of such interest including when it is sold, exchanged, transferred, distributed, cancelled, redeemed, destroyed or surrendered and in the case of interest of an entity when it ceases to exist, immediately before the entity ceases to exist.

The Income Tax Act requires a person who derives a gain from the realisation of an interest in land or buildings situated in the United Republic, to pay income tax by way of single instalment.

Excise Duty

Excise Duty is a duty charged on specific goods and services manufactured locally or imported on varying rates. It is charged in both specific and ad valorem rates.

• Items charged under specific rates include:

Wine, spirits, beer, soft drinks, mineral water, fruit juices, Recorded DVD, VCD, CD and audio tapes, cigarettes, tobacco, petroleum products and Natural gas.

• Items charged under ad-valorem rates include:

Money transfer services, electronic communication services, pay to view television services, imported furniture, motor vehicles, plastic bags, specified aircrafts, firearms, specified cases, cosmetics and medicaments.

Ad-valorem rates are: 0%, 5%, 10%, 17%, 15%, 20%, 25% ,30% and 50%.

• Liability to pay excise duty.

Excise duty shall become due and payable in respect of:

1. any scheduled article imported, by the importer thereof at the time immediately before the article ceases to be subject to customs control or at such other time as may be directed by the Minister in the Gazette,
2. any scheduled article manufactured in the United Republic of Tanzania, by the manufacturer:

• upon sale of the article by him, or
• upon the article ceasing to be subject to customs control, or
• upon removal of the article from the premises where it manufactured, whichever first occurs.
• any scheduled article manufactured or imported by any person free of duty and which is subsequently sold to any other person, by the purchaser at the time of the sale of the article by him,
• C. any electronic communication service supplied by electronic communication service provider at the time when such mobile, fixed or wireless phone is in use or when payment is received for the service whichever time shall be the earliest.
• D. any pay-to-view television service provider using cable, terrestrial infrastructure, satellite or other technology when the service is supplied,
• E. charges or service fees by financial institutions and telecommunication service provider on money transfer and payment services.

Law governing tax Objections and Appeals

Objections and Appeals is governed by Tax Administration Act (2015) and Tax Revenue Appeals Act, Cap.408 as revised from time to time.

Introduction to Objection and Appeals

Tanzanian tax laws allow any person who feels aggrieved to request a formal change to an official decision regarding tax assessment made by the Commissioner General. A taxpayer who feels that the Commissioner General misapplied the law, came to an incorrect factual finding, abused his powers, was biased, considered evidence which he should not have considered or failed to consider evidence that he should have considered in making an assessment, may object against such an assessment.

Assessment of Tax 

Is an assessment of tax as determined or ascertained in each respective tax law.

Disputed Assessment

Is an assessment made by the Commissioner General and the taxpayer disagrees with such tax findings.

Tax not in dispute

Means the amount that ought to be charged where the assessments or a tax decision is amended in accordance with objections and the whole of duty or any tax assessed on import. 

Objection Procedure
A person who is aggrieved by a tax decision made by the Commission General may object the decision by filling notice of objection in a prescribed form ITX 389.01.E Notice of Objection to the Commissioner General within 30 days from the date of service of the tax decision. An objection to a tax decision shall be made in writing stating the grounds upon which it is made and such objection to a tax decision shall be accompanied by relevant document or information which the tax payer intends to rely upon to support his objection. Such objection shall not be admitted unless the taxpayer has paid amount of tax which is not in dispute or one third of the assessed tax whichever the amount is greater.

The tax not in dispute and in case customs duty of the whole of duty or any tax assessed on imports shall be payable at the time of filing the notice of objection and if the due date occurred earlier than the period of thirty days the tax not in dispute shall be payable on that due date.

Upon application by taxpayer within fifteen days from the date of the issue of the tax decision, and where the Commissioner General is satisfied that there exist good reason warranting reduction or waiver, he may waive the amount to be paid or accept the lesser amount. Where a taxpayer files an objection and makes statutory payment, the liability to the remaining assessed tax shall be suspended until the objection is finally determined.

A person who has a reasonable ground to warrant extension of time to file an objection against the tax decision may apply for an extension of time within 7 days before expiration of the time limit for lodging the notice of objection. Where the Commissioner General is satisfied by the reason started in the application made, he shall grant the extension of time and save the notice of his decision to the applicant. The extension granted shall not exceed 30 days.

Where and to whom the objection should be lodged?
To the Regional Office where the taxpayer is registered
Commissioner for Customs and excise,
Commissioner for Large Taxpayers.

Who qualifies as a returning resident?

Is a person who is his first time to arrive in Tanzania or returning citizen to Tanzania whom proper officer authorizes as bonafide changing residence from a place outside Tanzania to a place in Tanzania and therefore this person qualifies for Duty Free status. Such a person should have not neither been granted exemption or is not resided in Tanzania before his arrival other than on temporary non-resident visits.

Is there any time limit in importing baggage as a returning resident?

The exemptions will be granted to the returning resident in respect of baggage imported within ninety days from the date of arrival of the passenger or such further period not exceeding   three   hundred and sixty days from such arrival as the Commissioner may allow.   

Note:-

• The duty free allowances granted in accordance with the law shall not be allowed when imported in unaccompanied baggage
• The import duty free allowance shall be granted only to passengers who have attained the age of eighteen (18) years

What are the allowable goods?

The following goods are allowed when imported as baggage of the returning resident who has attained the age of eighteen years.

• Wearing apparel;
• Personal and house hold effects of any kind which were in his personal or house hold use in his former place of residence;
• One motor vehicle,"(excluding buses and minibuses of seating capacity of more than 13 passengers and load carrying vehicles of load carrying capacity exceeding two tones, Also the motor vehicle should not be of eight years or more from the date of manufacture and of cubic capacity not exceeding 3000)"which the passenger has personally owned and used outside Tanzania for at least twelve months (excluding the period of the voyage in the case of shipment).

Passengers’ Baggage and personal effects

(1) Goods imported by passengers arriving from places outside the partner state shall, subject to the limitations and conditions specified as follows:

The goods shall be: 

• Property of and accompanying the passenger
• For the personal or household use of the passenger in a partner state and of such kinds and in such quantities as the proper officer may allow
• One motor vehicle,"(excluding buses and minibuses of seating capacity of more than 13 passengers and load carrying vehicles of load carrying capacity exceeding two tones, Also the motor vehicle should not be of eight years or more from the date of manufacture and of cubic capacity not exceeding 3000)"which the passenger has personally owned and used outside Tanzania for at least twelve months (excluding the period of the voyage in the case of shipment).

Goods not granted exemptions under passengers Baggage and personal effects:

• Alcoholic beverage of all kinds, perfumes, spirits and Tobacco and Manufactures thereof. 
• Fabrics in pieces
• Motor vehicles, including buses and minibuses of seating capacity of more than 13 passengers and load carrying vehicles of load carrying capacity exceeding two tones. Also the motor vehicle should not be of eight years or more from the date of manufacture and of cubic capacity not exceeding 3000)"which the passenger has personally owned and used outside Tanzania for at least twelve months (excluding the period of the voyage in the case of shipment).
• Any trade goods or goods for sale or disposal to other persons 

Duty shall not be levied on the following goods imported by and in possession of the passenger

• Spirits (including liquors) or wine, not exceeding two (2) litres
• Perfumes and toilet water not exceeding in all one half litre of which not more than one quarter may be perfume
• Cigarettes, Cigars, cheroots, cigarillos, tobacco and snuff not exceeding in all 250 grammes in weight.

When duties shall be paid by a returning citizen? 

Where any person who has been granted exemption changes his residence to a place outside partner states within ninety (90) days from the date of his arrival, he shall export his household effects within thirty (30) days or further days not exceeding sixty (60) days from the date he changes his residence from a place outside the partner states, as the commissioner may allow, otherwise duty become payable from the day of importation. 

Duty Free threshold for a person who has been outside partner states for a period in excess of 24 hours.

Goods up to the value of three hundred ($300) dollars for each traveler in respect of his goods, irrespective of goods, other than goods referred to in paragraph of this item, shall be exempted when imported by the traveler in his or her accompanied baggage upon his or her person and declared by him or her to an officer, provided that the person has been outside the partner states for a period in excess of 24 hours. 

Attachments:-

• A copy of passport 
• Valued packing List
• Duly filled Customs Baggage Declaration (BD) available at Customs Offices.
• Original Bill of Lading or Air Way Bill
• Invoices to prove the duration of ownership of goods. 
• Resident permit or evidence of study abroad.

Downloadable Tax Forms

Introduction:

Motor vehicles are used by many and unspecified persons on public roads and they are given social recognition only after been inspected and registered.  Motor vehicles are also subject to deterioration and wear of both the structure and equipment and sometimes their shapes and modified.

What are the laws governing registration of motor vehicles?

The registration of motor vehicles in Tanzania Mainland is governed by:

•  The Road Traffic Act No. 30 of 1973

•  Motor Vehicles (Tax on Registration and Transfer) Act 1972

•  Traffic (Foreign Vehicles) Rules 1973

• Road Traffic (Motor Vehicles Registration) (Amendment) Regulations, 2001

The objective of this system is to monitor and control the issuance of driving licences with a view to addressing the problem of fake licences which are the cause for many road accidents. This is because the system allows everybody to obtain any licence and drive any car one prefers. However under the current system holders of driving licence of certain class will be obliged to drive only such a class upon which he was tested for and not otherwise. At the initial stage the applicant will have to undergo biometric measures and finger prints.

Who are the beneficiaries of tax incentives?

Tax incentives are granted to both local and foreign investors provided they are registered by Tanzania Investment Centre (TIC) and/or Tanzania Revenue Authority (TRA).Tax incentives are mainly in the form of enhanced capital deductions and allowances. They are structured as according to the lead and priority sectors including Agriculture, agro-based industries, mining, tourism, petroleum and gas and economic infrastructure (Road, railways, air and sea transport, port facilities, telecommunication, banking & insurance).

Please indicate your TIN and select the right GFS code whenever making electronic  Payment.  In case of any problem Accountant -Large Taxpayers Department  Tel.+255 22 2130173 or +255 22 2130185

This section consists of different types of publications.  The related publications can be accessed from specific group

The eighth edition of the Taxpayer’s Service Charter has been prepared to replace the sixth edition with a view of taking into account the changes which are currently taking place in our society and more specifically in the tax administration. 

TRA being a public institution established a Taxpayer’s Service Charter which stipulates taxpayer’s rights, obligations and service standards expected from TRA.   

TRA is implementing the Fourth Corporate Plan whose Vision is to increase domestic revenue through enhancement of voluntary tax compliance. In response to Government policies of increasing domestic revenue, TRA aims at increasing domestic revenue contribution to 70% by 2018.This will be achieved through improving efficiency in tax administration and widening the tax base in order to collect more revenue especially from specialized sector namely Mining, Oil and Gas, Telecommunications, Tourisim, Constructions, Real estate, Financial sector, High net-worth individual (HNWI) and Incomes from the informal sector.  

The Charter explains service level standards as well as the taxpayers’ rights which are covered in tax laws and reinforce the existing tripartite relationship of TRA-Public-Private Partnership which is based on mutual respect and trust. 

In the event of conflict of interpretation between this Charter and the tax laws, the proper interpretation of the law shall prevail.

What is Electronic Fiscal Device? (EFD)

Electronic Fiscal Device (EFD) means a machine designed for use in business for efficient management controls in areas of sales analysis and stock control system and which conforms to the requirements specified by the laws.

Types of Electronic Fiscal Devices (EFDs)

Electronic Tax Register (ETR)

The device is used by retail business that issue receipts manually.

Electronic Fiscal Printer (EFP)

The device is used by computerized retail outlets. It is connected to a computer network and stores every sale transactions or details made in its fiscal memory.

Electronic Signature Device (ESD)

The device is designed to authenticate by signing any personal computer (PC) produced financial document such as tax invoice. The device uses a special computer program to generate a unique number (Signature) which is appended to and printed to every invoice issued by the user’s system.

Electronic Fiscal Pump Printer (EFPP)

The device is designed for use in Petrol Stations. It is connected to a pump and printed every receipt during the sale transactions.

NOTE:

You are obliged to issue receipt or invoice on each sale and notify any changes/malfunctioning of the machine to Commissioner within 24 hours. The supplier of the machine will install, configure and attend the malfunctioning of the machine within 48 hours

EFD SECOND PHASE

Implementation of the second phase of Electronic Fiscal Devise (EFD) begun since year 2013, with the aim to expand the number of traders who shall use the EFD system to issue receipts or tax invoice in every transaction made. The second phase includes non VAT registered traders administered under The Tax Administration Act 2015,

Implementation of the second phase of EFD shall include the following groups;

i. Persons who are not VAT registered with a turnover ranging from TSHS 11 million and above per year;

ii. Traders trading in the Region’s prime areas, identified on the basis of rent payable;

iii. Traders dealing with selected business sectors such as Spare Parts, Hardware, Mini Supermarkets, Petrol stations, Mobile phone shops, Sub wholesale shops, Bar and Restaurants, Pharmaceutical Stores; Electronic Shops etc.

The system is ongoing and the Authority shall gradually be registering traders basing on traders business prosperity, experience and capacity

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