Tanzania legal and accounting and tax considerations in 2024

1. Resident companies not registered in SEZ suffer a corporate tax rate of 30% on worldwide income;
2. The standard VAT rate on goods is 18% and must be filed on a monthly basis. This excludes export goods, which are 100% VAT exempt;
3. A company with tax losses for three consecutive years suffers an alternative minimum tax at 0.3% on turnover;
4. Withholding taxes of up to 15% are levied on i) dividends ii) interests and iii) royalties;
5. Companies in Special Economic Zones are exempt from income tax and withholding tax on dividends, interest and rent for the first 10 years;
6. Tax returns must be filed within six months from the end of the tax year;
7. Resident companies face a reduced corporate tax rate of 25% for three years if i) they issue at least 30% of share capital to the Tanzanian public and ii) are listed on Tanzania stock exchange;
8. Foreign branches pay additional remittance tax of 10% on net profits;
9. For local staff, foreign employers must i) contribute an extra 10% to the employee’s social security and ii) pay a Skills and Development Levy of 6% on all cash payments to employees and iii) pay workers’ compensation insurance or a private insurance scheme;
10. Tanzania’s tax on capital gains from business/investment income is 30%. However, capital gains from disposal of immovable assets face 10% tax rate;
11. Import customs duty may be charged up to 25% depending on the nature of the good. Raw materials and production-related machinery are exempt from customs duty;
12. Personal income tax is levied up to 30%;
13. Tanzania has double taxation and bilateral investment treaties with 23 different countries including Canada, Germany, Italy, The United Kingdom and Switzerland;
14. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

Healy Consultants Compliance Department guides our Clients through the process of fulfilling all annual legal and tax obligations.

1. A private LLC must appoint at least two directors and two shareholders;
2. All firms with an annual gross turnover greater than US$12,320 are required to submit audited financial statements;
3. Financial statements must be filed within seven months from the end of the tax year for public LLCs and within ten months for private LLCs;
4. All Tanzania resident companies must hold at least one annual general meeting (AGM) each year; the first AGM should be within eighteen months after incorporation;
5. A Tax Identification Number application must be filled for the company and one for individual shareholder/director;
6. A shareholder who wishes to dispose of his/her shares must notify existing shareholders of the decision via a formal letter before offering the shares to other parties;
7. Businesses with capital investment above US$61,600 must apply for an industrial license;
8. Anti-trust laws prevent Tanzania resident companies from entering into contracts which form cartels or monopolies. Permission from the Fair Competition Commission needs to be obtained by firms on M&A matters;
9. Firms must adhere to Know Your Customer (KYC) and anti-money laundering (AML) laws which outline customer due diligence when dealing with foreign Clients;
10. Labor laws in Tanzania prohibit child labor forced labor and discrimination on the grounds of nationality, sex, pregnancy or HIV/AIDS status;
11. Companies must provide insurance to all its full-time employees by either registering for workers’ compensation insurance or by opting for a private insurance scheme;
12. Employers are required to contribute to 10% of the employee’s social security scheme;
13. Standard working time is 45 hours a week. Overtime pay is 1.5 times the employee’s standard pay for normal working days and 2 times for Sunday and Public Holidays;
14. A defined labor litigation process is in place, which involves unions, a commissioner for labor, an industrial court, the high court and the court of appeal;
15. Investors who wish to register with the Tanzania Investment Center to benefit from tax incentives must report on the project progress every six months and complete the project within two years;
16. Investors for the Zanzibar province must pay additional taxes including a hotel levy, restaurant levy, fuel duty and tour operators’ levy.