TR A

TANZANIA REVENUE AUTHORITY

ISO 9001:2008 CERTIFIED

TAXES AND DUTIES AT A GLANCE 2010/2011

Prepared by: Taxpayer Services and Education Department August, 2010

Tenth Edition

A. DIRECT TAXES
N o . TAX SOURCE
1. Corporate Tax: Companies with perpetual tax loss for 3 consecutive years as a result of tax incentives on investment. For 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. Total income of a domestic permanent establishment Repatriated income of branch 2. Withholding tax on:
(i) (ii) Dividends to company controlling 25% of shares or more. Dividends from DSE listed company

RATES
RESIDENT N O N - R E S I D E N T
30% 0.3% of annual turnover 25% 30% 0.3% of annual turnover 25%

N/A N/A 0% 5% 10% 15% 10% 15% 5% N/A 10% 10% 0% 15% N/A 2% of gross payment

30% 10% 10% 5% 10% 15% 10% 15% 15% 5% 15% 15% 5% 15% 15% 15% of gross payment

(iii) Dividends from other Companies (iv) Other withholding payments (v) Interest

(vi) Royalties (vii) Technical Services fees (Mining) (viii) Transport (Non resident operator/chatterer without permanent establishment). (ix) Rental Income (residential house if exceeds sh. 500,000/- p.a) Other (any amount) (x ) Insurance Premium (xi) Natural Resource Payment (xii) Service fees (xiii) Payment for goods or services made by a Corparation to persons other than holders of TIN

No. TAX SOURCE

3.

RESIDENT NON-RESIDENT
20% 30%

Disposal of Investment Assets (Capital gains) Individual asset 10% Company Exemption on disposal of investments: a. Private residence gains of sh. 15 million or less. 30%

b. Agricultural land Market value of less than 10 million c. Shares: 1. DSE shares held by a person with shareholding less than 25% 2. Shares held by a resident company with shareholding of 25% or more 4. Single Instalment tax on: 1. Sale of land and property (lump sum) 2.Transport across borders 10% 20% 5%

Due date remittance of withholding tax: (i) Payment within 7days after month of deduction.

5.

Individual Income Tax Monthly Income Where total income does not exceed sh. 135,000/Where total income exceeds sh. 135,000/= but does not exceed sh. 360,000/Where total income exceeds sh. 360,000/but does not exceed sh. 540,000./Where total income exceeds sh. 540,000/but does not exceed sh. 720,000/Where total income exceeds sh. 720,000/Threshold per annum: Income Shs. 1,620,000/Note: 1.For non-resident employees of a resident employer the income is subject to withholding tax at the rate of 15%. However the total income of a non-resident individual is charged at the rate of 20%. 2. An employee who makes donation as per section 12 of Education Fund Act, such donation is exempted from tax. But such exemption is upon approval by the Commissioner. Benefit in kind a. Housing: Lower of the:- Market value rental of the premises and the higher of the following:i. 15% of the employees total annual income and ii. The expenditure claimed as deduction by the employer in respect of the premises Tax Rate NIL

14% of the amount in excess of Shs. 135,000/Shs. 31,500/- plus 20% of the amount in excess of Shs. 360,000/Shs. 67,500/- plus 25% of the amount in excess of Shs. 540,000/Shs. 112,500/- plus 30% of the amount in excess of Shs. 720,000/-

6.

b motor vehicle E n g in e S iz e Not exceeding 1000cc Above 1000 not exceeding 2000 cc Above 2000 not exceeding 3000 cc Above 3000 cc E n g i n e up t o 5 years old Tshs. 250,000/500,000/1,000,000/1,500,000/Greater than 5 years old Tshs. 125,000/250,000/500,000/750,000/-

Note: Not chargeable where the employer does not claim deduction in respect of the ownership, maintenance, or operation of the vehicle. 7. The Individual Presumptive Tax Assessment Tu r n o v e r Ta x P a y a b l e where Incomplete records are kept (i) Where turnover does not exceed sh. 3,000,000/(ii) Where turnover is between 3,000,000/and 7,000,000/Sh. 35,000/-

Tax Payable where records are kept 1.1% of the annual turnover Sh. 33,000/- plus 1.3% of the turnover in excess of Sh. 3,000,000/Sh. 85,000/- plus 2.5% of the turnover in excess of Sh. 7,000,000/Sh. 260,000/- plus 3.3% of the turnover in excess of Sh. 14,000,000/-

Sh. 95,000/-

(iii) Where turnover is between 7,000,000/and Sh. 14,000,000/-

Sh. 291,000/-

(iv) Where turnover is between shs. 14,000,000/- Sh. 520,000/and shs 20,000,000/-

Note: Where turnover exceeds Tshs 20,000,000/- the taxpayer is obliged to prepare audited financial statements in respect of his/her business.

8. a Submission of returns and payment of tax for accounts based on calendar year i. On or before 31st March ii. On or before 30th June iii. On or before 30th September iv. On or before 31st December * Payments for the other accounting dates are made at the end of every quarter, depending on one's accounting period.

b. Final returns and payment of tax Within six months from the end of the accounting period. c. Late payment of tax:- Shall be charged interest at the prevailing statutory rate plus 5% per annum. d. Issuance of receipt:- Any person who receives any payment of Tsh 5000/ or more in respect of goods or services must issue a receipt and retain it for not less than 5 years 9. Skills and Development Levy: (i) Tanzania Mainland: Rate is 6% of the monthly gross emoluments. (ii) Tanzania Zanzibar Rate is 5% of the monthly gross emoluments. Note: The gross emoluments include wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, gratuity, bonuses any subsistence, traveling or entertainment allowances 10. Depreciable assets, allowances and the applicable rates Class 1* Depreciable assets Computers and data handling equipment together with peripheral devices, automobiles, buses and minibuses with a sitting capacity of less than 30 passengers, goods vehicles with a seating capacity of less than 7 tones, Buses with a seating capacity of 30 or more passengers, heavy general purpose or specialized trucks, trailers and trailer mounted containers, railroad cars, locomotives, and Rate 37.5%

2*

25%

transportation equipment, aircraft other self propelling vehicles, plant and machinery used in manufacturing or mining operations, specialized public utility plant and equipment, and machinery or other irrigation installations and equipment. 3* 4** Office furniture, fixtures and equipment, any asset not Natural resource exploration and production rights and assets in respect of natural resource prospecting, Buildings, structures, dams, water reservoirs, fences, and similar works of a permanent nature used in agriculture, Buildings, structures, and similar works of permanent nature other than those mentioned in class 5. Intangible assets other than those in class 4. Plant and machinery (including windmills, electric generators and distribution equipment) used in 12.5% 20%

5**

20%

6** 7** 8**

5% Over useful life of the asset 100%

Note 1 * Pools of depreciable assets calculated basing on diminishing value balance method. Note 2 ** Pools of assets calculated basing on straight line method.

B. INDIRECT TAXES
11. Value Added Tax (VAT) VAT registration threshold: Taxable turnover exceeding sh. 40 million per annum, or taxable turnover exceeding 10 million attained during three consecutive months. Description of goods/supplies and services Supply of taxable goods and services in Mainland Tanzania Importation of taxable goods and services into Mainland Tanzania VAT Rates 18% 18%

Export of goods and certain services from the United Rep. of Tanzania 0%

Supply of taxable goods and services to relieved persons are not subjected to VAT The Government and its Institutions are not relieved from VAT
Goods and services under a technical aid or donor funded projects, voluntary and charitable organization under existing laws, and special agreements are relieved from VAT

VAT on capital goods to any person is relieved VAT Returns and payments: Local Supplies : Last working day of the month following month of business Imports: At the time customs duty is due and payable in accordance with the customs laws. i. VAT refund on genuine claim: Within 30 days after submission of an authorized Auditors Certificate of Genuineness. ii. Regular repayment: Business in a constant refund position may apply for authorization to lodge claims on a monthly basis.

12. Stamp Duty Description i. Conveyance ii. Conveyance for agricultural land iii. Legal and commercial instruments Rates 1% of consideration Tshs. 500/The duty is chargeable at Specific rates e.g. Mortgage deed under article 39 rate is 1% of the amount of instrument with a maximum of 10,000/= of stamp duty payable.

Due dates is within 30 days from the date an instrument was signed.

13. Import Duty Items (i). Raw materials, pharmaceuticals and capital goods, Hand hoes, agricultural implements (ii). Semi-finished goods. (iii). Final consumer goods or finished commercial goods. Duty Rates 0% 10% 25%

(iv) Some senstive items are charged at a higher than 25% rate with the intention of protecting local industries: e.g. Yoghurt Milk and Cream containing sweetening matter. Cane or beet sugar and chemically pure sucrose in solid form Sacks and bags of a kind used for the packing of goods. Worn clothing and other worn articles (mitumba). 14. Excise Duty A. (i) Specific Rates on: Wine, spirits, beer, soft drinks, cigarettes, tobacco and petroleum products. (ii) Ad-valorem rates are: 7%, 10%, 20% , 30%and 120% ( 120% imposed on shopping plastic bags.) B. Imports of non-utility vehicles: such vehicles of ten years of age or more , counted from the date of manufacture, are chargeable excise duty at the rate of 20% C. Excise duty on Motor vehicles Description of Vehicle i) Of cylinder capacity exceeding 1000 cc but not exceeding 2000 cc ii) Of cylinder capacity exceeding 2000 cc Applicable Rate 5%

10%

15. Fuel Levy

Sh. 200 per litre of petrol or diesel

16. Airport Service Charges Inter national Travel Loc al travel ( res ident) 17. Port charges Res ident traveler Non res ident traveler 18. Motor Vehicle Registration M otor vehic le regis tration f ees Motor cycle registration fees Sh. 1 5 0 ,0 0 0 / Sh. 45,000/Sh. 5 0 0 / USD 5 USD 3 0 Sh. 5 0 0 0 / -

19. Motor Vehicle Annual fee Engine Capacity Up to 500 cc 501 - 1,500 cc 1,500 - 2,500 cc Annual Fee 50,000/- per annum 100,000/- per annum 150,000/- per annum

Above 2500 cc

200,000/- per annum

Tractors used for agricultural purposes 20. Motor Vehicle transfer tax Motor vehicle transfer fees Motor cycle transfer fee Fee for a new registration card

Exempted

Sh. 50,000/Sh. 15,000/Sh. 10,000/-

21.

Export Tax: 20% of the value of hides and skins A levy of 15% chargeable on raw cashew nuts, computed on FOB value or USD 160 / MT whichever is higher.

22.

23. 24.

Duty drawback: Import duty is refunded on imported inputs used for producing goods for export and goods sold to foreign institutions operating in Tanzania. Prohibited goods: Narcotic drugs, tear gas substances, seditious, obscene materials or literature.
Restricted goods: Live animals, plants, firearms, ammunitions, etc. These require permit from relevant authorities

25.

Destination Inspection All imported goods regardless of their value are required to be inspected in the country. A fee of 1.2% on FOB value is chargeable. Exempted goods are enshrined in the law ASYCUDA++: Under the system documents processing fee is USD 10

26.

27.

Temporary importation: Temporary importations are restricted for 3 months; in case of extension a person have a chance to apply for two periods of 3 months. Thereafter import duty must be paid and registration made in the case of motor vehicle. Imports from East African Community member states: Goods within member states are chargeable at the rate of 0% except some of the goods from the Republic of Kenya imported into Tanzania whose rates will reduce progressively to 0% over a period of 5 years ending on 31st December 2010.

28.

10

29.

Property rates: Dar es Salaam region: A. Segmentation of properties and applicable rates are as follows: S p e c ific a tio n (i) Residential properties (ii) Commercial properties A p p lic a b le R a te 0.15% of rateable value as per valuation roll 0.2% of rateable value as per valuation roll

Provided that the amount chargeable shall not be less than 10,000/= B. For properties not included in Valuation roll , rates are provided in the first schedule to the By laws of the respective Local Authority (Temeke, Ilala and Kinondoni Municipalities) C. The property rates for other regions will continue to be collected by the respective Local Authorities.

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Note:

This booklet is not a substitute for the respective tax laws. The tax laws prevail in case of any inadvertent conflict.

Together we build our Nation

For more information please contact: The nearest TRA office or The Director, Taxpayer Services and Education Department, Tanzania Revenue Authority, P.O. Box 11491, Dar-es-Salaam, Tanzania Tel: 022-2119343 or 2119591-4 Fax: 022-2128593 Toll Free 0713 800333 / 0786 800000 Email: info@tra.go.tz Website: www.tra.go.tz

WATCH OUT!! TRA does not condone corruption. Both involved parties will be prosecuted.

TRA - TSED 400 Taxes and Duties 2010