The taxation system in Tanzania consists of several types of direct and indirect taxes, including income tax, import duty, corporate tax, value-added tax, excise duty, and stamp duty.
Tanzania generally applies the self-assessment approach to file a tax return at the end of every year. It is based on a quarterly basis. Withholding tax payment applies to individuals who are getting their income solely from employment and also from non-resident taxpayers who have a source of income in the country. Here are some taxes administered under the taxation policy of Tanzania.
Shikana Group provides tax and regulatory services in Tanzania. They have expert lawyers who have been in the field for several years and have valuable experience to help you with your issues related to business investment and taxation.
The income tax base in Tanzania is still not fair to all extent. Taxes on employment are much higher and heavier as compared to business taxation, which is compromised by exemption or evasion. Residents are supposed to pay taxes based on a worldwide basis, whereas non-residents only pay from their source of income in the country. However, people living in Tanzania for more than six months are considered residents for income tax purposes. Companies that are incorporated with Tanzania are also considered residents and are liable for corporate taxes.
There are many types of indirect taxes, including VAT, excise duty, and customs duty. For VAT, there are two regimes in Tanzania, one is for Mainland Tanzania, and the second is for Zanzibar. It is charged at 18 percent of the rate. At the same time, excise duty applies to the products being produced or imported. There is a common law regarding customs duty within the EAC member countries. According to the January 2010 policy, the EAC countries are not inclined to pay taxes for importing goods within the region.
People living in Tanzania during any part of the year having a permanent place are inclined to pay these taxes. Gains from the employment include amounts paid by the employer or his associate, like wages, salary, bonus, commission, etc. Other payments made in respect of jobs are generally taxed at a higher cost or fair market value.
These taxes include property tax and tax on payroll. Other taxes are charged by the government on revenue generated from businesses in respective municipalities.
Going to the tax office to pay taxes was the reality for many people a few years ago as they had to travel to their local government tax office to pay their taxes. Depending on where they lived, the process was more hectic and troublesome because they had to travel hundreds of kilometers for a task they had to perform every month.
However, things have changed, and now they can pay their taxes while sitting at their homes and don’t have to travel anywhere. They can now conveniently pay taxes to someone close to them. The local government employee collects the payment from them.
This method is mainly performed by the people who live in the same villages, and this convenience has motivated more people to pay taxes regularly. Since they don’t need to travel to any place anymore, they have fewer reasons not to pay taxes, which has improved the tax policy of Tanzania as more people have become regular taxpayers.
Revenues from local taxes and markets give municipalities more financial freedom to invest in education, health, and water supply. Around 40 percent of the payment is now used for these purposes.
If you are seeking guidance with tax and regulatory services in Tanzania, reach out to Shikana Group, and their professional team of advisors will help you to the best of their abilities.