*Transcending Business Confidence PROVISIONAL AUDITAX TAX GUIDE 2016 / 2017 www.auditaxinternational.com
DIRECT TAXES Payroll Taxes Pay As You Earn (PAYE) Monthly Taxable Income Tax Rate Up to TZS. 170,000 0% TZS 170,001 to TZS 360,000 TZS 360,001 to TZS 540,000 TZS 540,001 to TZS 720,000 Above TZS 720,000 9% of the amount in excess of TZS 170,000 TZS 17,100 +20% of the amount in excess of TZS 360,000 TZS 53,100 + 25% of the amount in excess of TZS 540,000 TZS 98,100 + 30% of the amount in excess of TZS 720,000 *The total income of a non-resident individual is charged at the rate of 20%. *An employee who makes donation in accordance with section 12 of Education Fund Act of 2001 enjoys exemption from tax to the tune of the donation, granted upon approval by the Commissioner Benefits in kind Housing: Lower of the: Market value rental of the premises and the higher of the following: 15% of the employees total annual income and The expenditure claimed as deduction by the employer in respect of the premises Car: Motor vehicles taxable benefits are based on engine size and vehicle age on the following annual values:- Up to 5 years old (TZS) Greater than 5 years old (TZS) Up to 1000cc 250,000 125,000 Above 1001 up to 2000 cc 500,000 250,000 2001 up to 3000 cc 1,000,000 500,000 Above 3000 cc 1,500,000 750,000 *When the employer does not claim deduction in respect of the ownership, maintenance, or operation of the vehicle, the benefits are not chargeable Loans: The excess of statutory rate over actual interest rate paid by employee
Skills and Development Levy (SDL) Tanzania Mainland =>4.5% of the monthly gross emoluments Tanzania Zanzibar => 5% of the monthly gross emoluments *Employment in agricultural farming is exempted *Diplomatic missions, United Nations, Local Government, Religious and charitable institutions are also exempted Social Security (NSSF, PPF) *NSSF - Deductions from employee allowed up to 10% *PPF - up to 10% can be deducted from employee Rate 20% Workers Compensation Fund (Public Sector) same base to SDL 0.5% Workers Compensation Fund (Private Sector) same base to SDL 1% Income Tax Companies with perpetual tax loss for 3 consecutive years. Newly listed company to the Dar es Salaam stock exchange, with at least 30% of its shares issued to the public for three consecutive years from date of listing Resident Non-Resident 0.3% of 0.3% of annual annual turnover turnover computed computed from the third from the third year year 25% 25% Others 30% 30% * Individual Presumptive Tax rates (revised from July 2015) apply for turnover below TZS 20,000,000 Disposal of investment Assets Resident Non-Resident Company (Tanzanian asset) 30% 30% Individual (Tanzanian asset) 10% 20% Disposal of an overseas asset by a resident individual or company is taxed at 30% Subject to following are exemptions: a. Private residence gains of TZS 15 million or less b. Units in an approved Collective Investment Scheme (e.g. UMOJA Fund) c. Agricultural land Market value of less than TZS 10 million d. Shares: Shares held by non-resident with shareholding of less than 25% DSE shares held by a resident.
Capital Deductions Method Rates Plant and Machinery Class I Reducing balance 37.5% Class 2 Reducing balance 25% Class 3 Reducing balance 12.5% Buildings used in agriculture, livestock or fishing Straight line 20% Other buildings Straight line 5% Mining exploration and development 100% Oil & Gas prospecting, exploration and development Straight line 20% Research, improvements and development in Agriculture 100% Intangible Assets Straight line /useful life Plant and Machinery initial allowance Agriculture 100% Tourism 50% Electronic fiscal device purchased by a non VAT registered 100% trader Equipment used for prospecting and exploration of minerals or petroleum 100% Withholding Taxes Payment Resident Non-Resident Dividends to a company holding 25% or more of shares with 25% or 5% 10% more of voting power Dividends from DSE listed company 5% 5% Dividends to/from other companies 10% 10% Interest 10% 10% Interest payable to a non resident bank by a strategic investor 5% 10% Royalties 15% 15% Natural Resource Payment 10% 10% Technical Services fees (Extractive) 5% 15% Rental income for aircraft lease 5% 0% Rental Income (residential house if exceeds TZS 500,000 p.a)* 10% 15% Insurance Premium 0% 5% Service fees 5% 10% Payments for goods by corporation wholly or substantially financed 2% 0% by Government Director s fee (non-executive) 15% 15% Payments made to approved retirement funds arising from investment incomes *** *** * The TRA Commissioner General has been granted powers to determine rental income based on the minimum market value to charge withholding tax on rental income *** Rates not yet specified.expected in the Finance Act 2016
Property Taxes Specifications (Dar es Salaam Region) Residential properties Commercial properties Applicable Rate 0.15% of valuation amount 0.2% of valuation amount * The amount charged shall not be less than TShs.10, 000 * Property taxes will now be collected by Tanzania Revenue Authority effectively from 1 st July 2016 Value Added Tax (VAT) INDIRECT TAXES Goods/Supplies and Services VAT Rates Supply of taxable goods and services in Mainland Tanzania 18% Importation of taxable goods and services into Mainland Tanzania 18% Export of goods and certain services from the United Rep. of Tanzania 0% Registration threshold(turn over) TZS 100m p.a * Imposing VAT at the place of consumption for goods transferred between Zanzibar and Mainland Tanzania * Introduction of VAT on financial services * Impose of VAT on tourism services * VAT Exemption on Aviation insurance etc.
Import duty Rates Raw materials, pharmaceuticals and capital goods Hand hoes, agricultural implements 0% Semi finished goods and finished inputs. 10% Final consumer goods or finished commercial goods. 25% Equipments and supplies imported for petroleum and gas exploration 0% Equipments and supplies imported by mining operator or subcontractor up to 1 year after initial production 0% Equipment and supplies imported by mining operator or subcontractor subsequent to the 1 year of initial production Maximum of 5% Railway Development levy 1.5% Mineral royalties Mining Act 2010 Rates Uranium, Gemstones & Diamonds 5% Metallic minerals (e.g. Copper, Gold, Silver, Platinum) 4% Gems 1% Others (e.g. Building Materials, Salts and minerals in industrial minerals group) 3% NB: The royalty is charged on the gross value of minerals produced Stamp duty Rates Lease agreements 1% Transfer of shares / debentures 1% Conveyance / transfer 1%
DUE DATES, FINES, INTEREST AND PENALTIES Payroll taxes Obligation/Due dates Penalty (Monthly) Payment of PAYE & Skills and 7 days after month end Stat. rate Development Levy Payment of NSSF I month after month end 5% Payment of PPF 30 days after month end 5% Filling of PAYE & Skills and 30 days after every six Development Levy returns months period ** Income tax Payments of Instalments At the end of each Stat. rate quarter Filling of return End of first quarter ** Understatement End of first quarter Stat. rate Payment of final tax 6 months after end of Stat. rate accounting period Filling of final tax return 6 months after end of accounting period ** Withholding tax Payment Filling of return VAT Payment and return filling Interest for late payment 7 days after month of deductions 30 days after every six months period Last working day of the following month Stat. rate ** ** Stat.rate Transfer Pricing Adjustment by TRA documentation Stamp duty 30days after request from Commissioner Not less than TZS 50m and / imprisonment for not more than 6months Payment 30 days after service Up to 10 times
Note 1: Stat. Rate = The prevailing discount rate determined by the Bank of Tanzania ** = 2.5% of tax assessable less tax paid or 5 currency points(for individuals) and 15 currency points (for companies) whichever is higher. As of August 2015 1 currency point = 15,000/= Tanzanian shillings Note 2: Tanzania has taxation treaties with Sweden, South Africa, Zambia, India, Norway, Italy, Denmark, Canada and Finland For detailed information about this Guide and other services provided by AUDITAX International kindly contact: Address: PPF Tower, 7th Floor, Garden Avenue / Ohio Street P. O. Box 77949, Dar es Salaam Address: NSSF Mafao House, 2 nd Floor, P. O. Box 16272, Meru Arusha Telephone: +255 22 212 0692 Mobile: +255 71 987 8490 Email: info@auditaxinternational.com Website: www.auditaxinternational.com AUDITAX Tax Guide has relied upon the existing tax laws including the Finance Act, 2015.Although proper professional care has been taken in preparing this guide, no liability will be assumed for any errors. This Guide should not be solely relied upon for professional tax advice. Full guidance on taxation matters can be obtained through various tax legislations and from Tax Consultants. Our Tax Consultants will be more than ready to discuss and sort out any tax issues with you upon request.