Tax

Which taxes and mandatory contributions does an entrepreneur have to pay? How much?

The taxes commonly applicable for entrepreneurs are

Corporate Income Tax (CIT) – 25% to 30%

Also known as a business tax, is a tax imposed on businesses incorporated in Tanzania and which derive income from within Tanzania. The CIT rate in Tanzania is 30%.

Companies that have issued at least 30% of their shares to the public are subject to a CIT rate of 25%

Value Added Tax (VAT) – 18%

VAT is an indirect tax on the consumption of goods and services. A person that is registered for VAT is called vendor. VAT must be included in the selling price of every taxable supply of goods or services made by a vendor. The current standard VAT rate in Tanzania is 18%.

The VAT is a multistage tax levied at each stage of production and distribution up to the retail stage
All traders are obliged to apply for VAT registration to the respective Commissioners in their respective Tax Authority. They are also required by law to keep records and books of accounts of their business.

Excise Tax

Excise duty is levied on certain specified imported goods like wines, spirits, cigarettes, petroleum products and non-utility cars. It is also levied on specified local produced goods and services. The duty is charged at specific or ad-valorem rates.

Withholding Tax – 18.5 to 30%

Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration. The tax rate varies from the lowest marginal rate of 18.5% to the top marginal rate of 30%.

Capital Gains – 30%

Capital gains from capital are taxed e.g. building held for business, factory or office and shares of companies

Stamp duty – 1%

Stamp duty is a tax that is levied on legal documents. The rate of duty varies according to the nature of the document. E.g. for the sale of shares, a rate of 1% of the value of the shares will be charged. Agreements for the sale of shares, for example, attract stamp. Stamp duty on rental agreements is 1% of annual rent.

Other taxes

Employer tax (Skills & Development Levy) is levied at a rate of 6% of gross cash remuneration, except for farm workers.
A “service levy” of up to 0.3% is charged by local authorities on the total turnover of enterprises based within their territorial boundaries (payable either monthly or quarterly depending on the requirements of each local authority).
Excise duty is payable on a range of goods and services such as tobacco, alcohol, petroleum products, motor vehicles, carbonated drinks, mobile phone airtime and satellite television services.

How do I pay for my tax?

Please click here for a guidance on how to pay your taxes which is provided by the Tanzania Revenue Authority.

When to pay taxes? (source: EY)

Corporate tax payments are due on the last working day of March, June, September and December. Taxpayers that are obliged to prepare financial statements in order to determine the taxable income need to pay their taxes six months after the end of the financial year.

Starting or running a business?

Tax