The Income Tax Act R.E.

2019 – PKF TZ (internal version as at 14 July 2023)

THE UNITED REPUBLIC OF TANZANIA

CHAPTER 332

THE INCOME TAX ACT [PRINCIPAL LEGISLATION] REVISED EDITION 2019

AMENDED VERSION UP TO 14 JULY 2023 (for guidance only)

 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

This Edition includes other amendments as provided below and is for internal guidance only.

S/N Law Version used ITA VAT TAA VETA

& Gazette date
1 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
21/02/2020
   
AMENDMENTS) ACT, 2020
2 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
17/06/2020
   
AMENDMENTS) (No. 2) ACT,
2020
3 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
17/06/2020
   
AMENDMENTS) (NO.3) ACT,
2020
4 THE FINANCE ACT, 2020 ACT
17/06/2020
✓ ✓ ✓ ✓
5 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
30/04/2021
   
AMENDMENTS) ACT, 2021
6 THE FINANCE ACT, 2021 ACT
30/06/2021
✓ ✓ ✓ ✓
7 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
14/07/2021
   
AMENDMENTS) ACT (No. 2),
2021
8 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
11/10/2021
   
AMENDMENTS) (NO.3) ACT,
2021
9 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
11/10/2021
   ✓
AMENDMENTS) (NO.4) ACT,
2021
10 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
11/10/2021
   
AMENDMENTS) (NO.5) ACT,
2021
11 THE WRITTEN
(MISCELLANEOUS
LAWS BILL
SUPPLEMENT
✓ ✓ ✓ 
AMENDMENTS) (NO.6) ACT, (to be received)
2021
12 THE WRITTEN
(MISCELLANEOUS
LAWS BILL
SUPPLEMENT
   
AMENDMENTS) (NO. 7) ACT, (to be received)
2021
13 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
8/03/2022
   
AMENDMENTS) ACT, 2022
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

S/N Law Version used ITA VAT TAA VETA

& Gazette date
14 THE FINANCE ACT, 2022 ACT
30/06/2022
✓ ✓ ✓ ✓
15 THE INTERPRETATION OF ORDER
LAWS (THE RECTIFICATION 4/07/2022
   
OF PRINTING ERRORS) (THE
FINANCE ACT,2022) ORDER,
2022
16 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
7/10/2022
   
AMENDMENTS) ACT (No. 2),
2022
17 THE WRITTEN
(FINANCIAL
LAWS ACT
PROVISIONS) 7/10/2022
✓ ✓  
(AMENDMENT) ACT, 2022
18 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
2/12/2022
   
AMENDMENTS) ACT (No. 3),
2022
19 THE FINANCE ACT, 2023 ACT
30/06/2023
✓ ✓ ✓ ✓
20 THE WRITTEN
(MISCELLANEOUS
LAWS ACT
14/07/2023
 ✓  
AMENDMENTS) ACT, 2023
21 THE LAWS
(MISCELLANEOUS
REVISION ACT
14/07/2023
✓   
AMENDMENTS) ACT, 2023
22 THE WRITTEN
(MISCELLANEOUS
LAWS BILL (FIRST
READING AS
   
AMENDMENTS) ACT (No. 2) , AT 04 AUG 23
2023 YET TO BE
PASSED)
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

CHAPTER 332

THE INCOME TAX ACT

[PRINCIPAL LEGISLATION]

ARRANGEMENT OF SECTIONS

Section Title

PART I
PRELIMINARY PROVISIONS

1. Short title.
2. Application.
3. Interpretation.

PART II
IMPOSITION OF INCOME TAX

4. Charge of tax.

PART III
INCOME TAX BASE

Division I: Calculating the Income Tax Base Subdivision

A: Total Income

5. Total Income.

Subdivision B: Chargeable Income

6. Chargeable income.
7. Income from employment.
8. Income from business.
9. Income from investment.
Subdivision C: Exemption From Tax

10. Minister may exempt income from tax.

10A. Limitation for exemption. (Repealed by F.A. 2018 but in the RE 2019 version
was mentioned, so this has been corrected in this version)

Subdivision D: Deductions

11. General principles of deductions.

 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

12. Interest.
13. Trading stock.
14. Repair and maintenance expenditure.
15. Agriculture, research development and environmental expenditure.
16. Gifts to public, charitable and religious institutions.
17. Depreciation allowances for depreciable assets.
18. Losses on realisation of business assets and liabilities.
19. Losses from business or investment.

Division II: Rules Governing Amounts Used in Calculating Income Tax Base

Subdivision A: Tax Accounting and Timing

20. Year of income.
21. Basis of accounting for income tax purposes.
22. Cash basis accounting.
23. Accrual basis accounting.
24. Claim of right.
25. Reverse of amounts including bad debts.
26. Long-term contracts.

Subdivision B: Quantification, Allocation and Characterisation of Amounts

27. Quantification according to market value.

28. Quantification in shillings.
29. Indirect payments.
30. Jointly owned investment.
31. Compensation and recovery payments.
32. Annuities, instalment sales and finance leases.
33. Transfer pricing and other arrangements between associates.
34. Income splitting.
35. [Repealed.]

Division III: Assets and Liabilities Subdivision

A: Central Concepts

36. Calculation of gains and losses.

37. Cost of asset.
38. Incomings for an asset.
39. Realisation.
40. Application of this division to liabilities.
41. Reverse, quantification and compensation for costs and incomings.

Subdivision B: Special Rules

42. Realisation with retention of asset.

43. Transfer of asset to spouse or former spouse.
44. Transfer of asset to an associate or for no consideration.
45. Involuntary realisation of asset with replacement.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

46. Realisation by separation.

47. Apportionment of costs and incomings.

PART IV
RULES APPLICABLE TO PARTICULAR TYPES OF PERSONS

Division I: In General

Subdivision A: Partnerships

48. Principles of taxation.

49. Partnership income or loss.
50. Taxation of partners.
51. Cost and incomings of partner’s membership interest in partnership.

Subdivision B: Trusts

52. Taxation of trusts.

Subdivision C: Corporations

53. Taxation of corporations.

54. Taxation of shareholders.

Division II: General Provisions Applicable to Entities

55. Asset dealings between entity and members.

56. Change in control.
57. Income or dividend stripping.

PART V
SPECIAL INDUSTRIES

Division I: Insurance Business

58. General insurance business.

59. Life insurance business.
60. Proceeds from insurance.

Division II: Retirement Savings

61. Retirement contributions to approved retirement fund.

62. Taxation of retirement funds.
63. Retirement payments.

Division III: Charitable Organisations, Clubs and Trade Associations

64. Charitable organisations.

65. Clubs and trade associations.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Division IV: Minerals

Subdivision A: Prospecting and Mining

65A. Application of subdivision.

65B. Principles of taxation.
65C. Separate mining operations.
65D. Income from mining operations.
65E. Deductions for mining operations.
65F. Losses from mining operations.
65G. Bonus payments.
65H. Realisation of mineral rights.
65I. Rehabilitation fund.

Subdivision B: Processing, smelling and refining

65J. Licensee conducting processing, smelting or refining.

Division V: Petroleum

Subdivision A: Petroleum Operations

65K. Principles of taxation.

65L. Separate petroleum rights.
65M. Income from petroleum rights.
65N. Deductions for petroleum rights.
65O. Losses from petroleum rights.
65P. Bonus payments.
65Q. Realisation of petroleum rights.
65R. Decommissioning funds.

Subdivision: B Mid stream and downstream activities

65S. Midstream and downstream activities

Division VI: Transportation

65T. Persons engaged in transportation of passengers or goods (inserted by F.A.

2022) (Repealed by F.A. 2023)

PART VI
INTERNATIONAL

Division I: Residence and Source

66. Resident persons.

67. Source of income and loss.
68. Source of directly included and deducted amounts.
69. Source of payments.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

69A. Income accruing or arising in United Republic (Inserted by F.A. 2020)

Division II: Permanent Establishments

70. Principles of taxation.

71. Calculating the income of a permanent establishment.
72. Repatriated Income of Domestic Permanent Establishment.

Division III: Controlled Foreign Trusts and Corporations

73. Principles of taxation.

74. Unallocated income of controlled foreign trust or corporation.
75. Taxation of members of controlled foreign trusts and corporations.
76. Cost and incomings of member's interest in controlled foreign trust or
corporation.

Division IV: Foreign Tax Relief

77. Foreign Tax Relief.

77A. Tax credit for business or investment operating in both Mainland
Tanzania and Tanzania Zanzibar (Inserted by F.A. 2022)

PART VII
TAX PAYMENT PROCEDURE

Division I: General Obligations

78. Types of tax and methods of payment.

79. Time for payment of tax.
80. Repealed. 80A. Repealed.

Division II: Income Tax Payable by Withholding

Subdivision A: Withholding Obligations

81. Withholding by employers.

82. Withholding from investment returns.
83. Withholding from service fees.
83A. Withholding of income tax for goods.
83B. Repealed.
83B. Withholding from agricultural, livestock and fisheries products (Inserted
by F.A. 2021) (repealed by Misc. Amendments No. 6 of 2021)

Subdivision B: Procedure Applicable to Withholding

84. Statements and Payments of Tax Withheld or Treated as Withheld.

85. Withholding Certificates.
86. Final Withholding Payments.
87. Credit for Non-Final Withholding Tax.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Division III: Income Tax Payable by Instalment

88. Payment of income tax by quarterly instalment.

89. Statement of estimated tax payable.
90. Single instalment at time of realisation or receipt.
90A. Tax payment on income realised through digital market place (inserted
by F.A. 2022)

Division IV: Income Tax Payable on Assessment

Subdivision A: Returns

91. Returns of income.

92. Return of income not required.
93. Repealed.

Subdivision B: Assessments

94. Self-assessment. 95.-126 Repealed.

PART X
ADMINISTRATION
Division I: The Commissioner and Other Officers

127. Repealed.
128. International agreement.
129. Regulations. 130-140 Repealed.

PART XI
TRANSITIONAL

141. Repeal of Act No.33 of 1973.

142. Transition.
143. Agreements and Certificates for fiscal stability.
144. Assets and liabilities.
145. Repealed.

SCHEDULES
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Short title 1. This Act may be cited as the Tax Administration Act.

Application 2. This Act shall apply to Mainland Tanzania as well as to

Tanzania Zanzibar in respect of tax laws which apply to both parts of the
United Republic of Tanzania

Interpretation 3. In this Act, unless the context requires otherwise-

"adjusted assessment" means an assessment adjusted in accordance with

section 48 of the Tax Administration Act;

“agent of a non-resident person or of a beneficial owner” includes any person

in the United Republic-
(a) who is employed by or on behalf of a non-resident person or a
beneficial owner;
(b) who has any business connection with a non-resident person or a
beneficial owner;
(c) from or through whom a non-resident person or a beneficial owner is
in receipt of any income, whether directly or indirectly; or
(d) who is a trustee of a non-resident person, and includes any other
person who, whether a resident or non-resident, has acquired by
means of a transfer, a capital asset situated in the United Republic;
(Inserted by F.A. 2020)

“alternative financing arrangement” means any financial arrangement

approved by the Bank of Tanzania other than conventional financial
arrangements (Inserted by F.A. 2022)

"amount derived" means a payment received by a person or that the person is

entitled to receive;
“an entity of a public character” means an entity established and functions
solely for a public purpose and which operates in such a way that:
(e) its membership is open to the general public or an identifiable
group of a community with common interests;
(f) it operates for purposes other than deriving profit or gain;
(g) it does not allow any distribution or deemed distribution of profit
generated out of its charitable business; and
(h) its profit is ploughed back and used solely for improving or
expansion of the original charitable purpose or function;
“approved retirement fund” means a resident retirement fund having a ruling
under section 11 of the Tax administration Act;
“arrangement” includes an action, agreement, course of conduct, dealing,
promise, transaction, understanding or undertaking, whether express or
implied, whether or not enforceable by legal proceedings and whether
unilateral or involving more than one person;
"assessment" means an assessment made in terms of sections 94 of this Act or
sections 46, 47, 48 or 81 of the Tax Administration Act;
“asset" means a tangible or intangible asset and includes currency,
goodwill, know-how, property, a right to income or future income and a
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

part of an asset;

"associate" in relation to a person, means another person where the

relationship between the two is-
(a) that of an individual and a relative of the individual, unless the
Commissioner is satisfied that it is not reasonable to expect that
either individual will act in accordance with the intentions of the
other;
(b) that of partners in the same partnership, unless the
Commissioner is satisfied that it is not reasonable to expect that
either person will act in accordance with the intentions of the other;
(c) that of an entity and-
(i) a person who-
(aa) either alone or together with an associate or
associates under another application of this definition;
and
(bb) whether directly or through one or more interposed
entities,
controls or may benefit from fifty percent or more of the rights to
income or capital or voting power of the entity (deleted by F.A. 2020)
controls or may benefit from 25 percent or more of the rights to income or
capital or voting power of the entity, except that the Commissioner may,
upon consideration of the nature of business or investment of a person,
determine the prescribed minimum percentage (substituted by F.A. 2020);
or
(ii) under another application of this definition, is an associate
of a person to whom subparagraph (i) applies; or
(d) in any case not covered by paragraphs (a) to (c), such that one may
reasonably be expected to act, other than as employee, in accordance
with the intentions of the other whether or not they are in a business
relationship and whether such intentions are communicated or not
(inserted by F.A. 2020);

"banking business" means business of a financial institution approved under

the Banking and Financial Institutions Act;

“beneficial owner” means a natural person-

(a) who directly or indirectly ultimately owns or exercises substantial
control over an entity or an arrangement;
(b) who has a substantial economic interest in or receives substantial
economic benefit from an entity or an arrangement directly or
indirectly whether acting alone or together with other persons;
(c) on whose behalf a transaction or arrangement is conducted; or
(d) who exercises significant control or influence over a person or
arrangement through a formal or informal agreement; (inserted F.A.
2020)

"business" includes-
(a) a trade, concern in the nature of trade, manufacture, profession,
vocation or isolated arrangement with a business character; and
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(b) a transaction or activity carried out through the internet or an

electronic means including an electronic service or transaction
conducted in the digital market place regardless of the manner in
which such transaction is carried out; (inserted by F.A. 2022)
(c) a past, present or prospective business, but excludes
employment;

"business asset" means an asset to the extent to which it is employed in a

business and includes a membership interest of a partner in a
partnership but excludes-
(a) trading stock or a depreciable asset;
(b) an interest in land held by an individual that has a market value of
less than ten million shillings at the time it is realised and that
has been used for agricultural purposes for at least two of the
three years prior to realisation;
(c) the beneficial interest of a beneficiary in a resident trust;
(d) shares in a corporation where receipt of a dividend in respect of
the shares is exempt in the hands of the shareholder under
section 54(2); and
(e) shares and securities listed on the Dar es Salaam Stock Exchange
that are owned by a resident person or by a non-resident
person who either alone or with other associates controls less
than twenty five percent of the controlling shares of the issuer
company;

“business connection” includes any business activity carried out through a

person who, acting on behalf of the non-resident person or a beneficial
owner-
(a) has and habitually exercises in the United Republic, an authority to
conclude contracts on behalf of the non-resident person or a
beneficial owner;
(b) habitually concludes contracts or plays the principal role leading to
conclusion of contracts by that non-resident person or a beneficial
owner, and the contracts are-
(i) whether or not in the name of the non-resident person or the
beneficial owner;
(ii) for the transfer of the ownership of, or for the granting of
the right to use property owned by that non-resident
person, or that non-resident person has the right to use;
or
(iii) for the provision of services by the non-resident person or
the beneficial owner;
(c) has no such authority but habitually maintains in the United Republic a stock
of goods or merchandise from which he regularly delivers goods or
merchandise on behalf of the non-resident person or the beneficial owner;
(d) habitually secures orders in the United Republic, mainly or wholly for the
non-resident person or for that non-resident person and other non-
resident persons controlling, controlled by, or subject to the same
common control as that non-resident person, or for the beneficial owner;
or
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(e) carries out any business or investment in the United Republic through an
entity or an arrangement for economic benefit of a non-resident person or
beneficial owner, whether directly or indirectly;” (inserted F.A. 2020)

"capitalisation of profits" by an entity, includes a capitalisation by way of

issuing bonus, membership interests or increasing the amount paid
upon membership interests in the entity or otherwise crediting profits to
a capital or premium account of the entity;
"certified public accountant in public practice" has the meaning ascribed to
it by the Accountants and Auditors (Registration) Act;
"chargeable income" has the meaning ascribed to it by section 6;
"charitable organisation" has the meaning ascribed to it by section 64;
"Class of depreciable assets” means a class determined in accordance with
the provisions of paragraph 1 of the Third Schedule;
"Commission" means the Commission of Minerals established under section
the Mining Act;

"Commissioner" means the Commissioner General appointed under the

Tanzania Revenue Authority Act;

"commuted pension" means a payment received by n individual on retirement

of the individual for the surrender of at least half of the individual's
pension rights in respect of a retirement fund;
"corporation" means any company or body corporate established, incorporated
or registered under any law in force in the United Republic or
elsewhere, an unincorporated association or other body of persons, a
Government, a political subdivision of a Government, a public
authority, public institution international organisation and a unit trust
but does not include partnership;
“consumption expenditure” has the meaning ascribed to it by section 11;
"controlled foreign trust" and "controlled foreign corporation" means a non-
resident trust or corporation in which a resident person owns a
membership interest, whether directly or indirectly through one or
more interposed non-resident entities, and where-
(a) the person is associated with the trust or corporation; or
(b) there exist between one and four other resident persons which, if
associated with the person, would cause the person to be associated
with the trust or corporation;

"cost of an asset” has the meaning ascribed to it by section 37;

"debt claim" means an asset representing a right of one person to receive a
payment from another person and includes a deposit with a financial
institution, account receivable, note, bill of exchange or bond;
"decommissioning fund" with respect to petroleum operations means a
fund established under the Petroleum Act;
"debt obligation" means the obligation corresponding to a debt claim;
"dependant of an individual” with respect to a year of income, means a
relative of the individual who has total income that does not exceed
two hundred fifty thousand shillings and receives substantial support
from the individual during the whole year of income for the necessities
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

of life;
"depreciable asset" means an asset employed wholly and exclusively in
the production of income from a business, and which is likely to lose
value because of wear and tear, obsolescence or the passage of time but
excludes goodwill, mineral or petroleum rights and
other interest in land, a membership interest in an entity and trading stock;
"depreciation basis" at the end of a year of income with respect to a pool
of depreciable assets, has the meaning ascribed to it by paragraph 3 of the
Third Schedule;
"development area" has the meaning ascribed to it under the Petroleum Act;
"development licence" has the meaning ascribed to it under the Petroleum
Act;
"development operations" has the meaning ascribed to it under the Petroleum
Act;
“digital market place” means a platform which enables direct interaction
between buyers and sellers of electronic services (Inserted by F.A. 2022)
“distribution” by an entity:
(a) means-
(i) a payment made by the entity to any of its members, in any
capacity to the extent that the amount of the payment
exceeds the amount of any payment made by the member
to the entity in return for the entity's payment; or
(ii) any re-investment of dividends which enhances the value of
shares;
(iii) any capitalisation of profits;
(b) includes a payment made by the entity to one of its members on
cancellation, redemption or surrender of a membership interest in the
entity, including as a result of liquidation of the entity or as a result of
the entity purchasing a membership interest in itself;
(c) excludes a payment of the type referred to in paragraph (a) (i) or (b)-
(i) to the extent to which the payment is directly included in
calculating the member's income or in calculating a final
withholding payment, other than by reason of being a
distribution; and
(ii) without limiting any amount treated as a distribution by
paragraph (a)(ii), that consists of the issue of further
membership interests in the entity to the entity's members
in approximate proportion to the members' existing rights
to share in dividends of the entity; and
(d) in the case of a controlled foreign trust or corporation, is interpreted in
accordance with section 75;
“dividend of an entity” means a distribution by the entity to the extent that it is
not a repayment of capital;
"domestic asset" means-
(a) an asset owned by a resident person (other than foreign land or
buildings or an asset held by a foreign permanent establishment
of the person) or held by a domestic permanent establishment;
(b) an interest in land or a building situated in the United Republic;
and
(c) shares in a resident corporation whether the owner of the shares
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

together with associates controls or within the previous five years

controlled, either directly or indirectly, twenty five percent or
more of the voting power in the corporation;
"domestic liability" means a liability owed by a resident person (other
than a liability attributable to a foreign permanent establishment of the
person) or attributable to a domestic permanent establishment;
"domestic permanent establishment" means all permanent establishments of
a non-resident individual, partnership, trust or corporation situated in
the United Republic;
"downstream activities" has the meaning ascribed to it under the Petroleum
Act;
“electronic service” has the meaning ascribed to it under section 51 of the
Value Added Tax Act (Inserted by F.A. 2022)
"employee" means an individual who is the subject of an employment
conducted by an employer;
"employer" means a person who conducts, has conducted or has the prospect
of conducting the employment of an individual;
"employment" means-
(a) a position of an individual in the employment of another person;
(b) a position of an individual as manager of an entity other than as
partner of a partnership;
(c) a position of an individual entitling the individual to a periodic
remuneration in respect of services performed; or
(d) a public office held by an individual, and includes a past, present
and prospective employment;
"entity" means a partnership, trust or corporation;
“entity of a public character” means an entity established and functions solely
for a public purpose and which operates in such a way that:
(a) its membership is open to the general public or an identifiable
group of a community with common interests;
(b) it operates for purposes other than deriving profit or gain;
(c) it does not allow any distribution or deemed distribution of profit
generated out of its charitable business; and
(d) its profit is ploughed back and used solely for improving or
expansion of the original charitable purposes or function;
“excluded expenditure” has the meaning ascribed to it by section 11;
"exempt amount" means an amount exempt from income tax by reason of
section 10, 52, 60 or 63;
"exploration area" has the meaning ascribed to it under the Petroleum Act;
"exploration licence" has the meaning ascribed to it under the Petroleum Act;
"exploration operations" has the meaning ascribed to it under the Petroleum
Act;
"farm-out arrangement" with respect to a mineral right or a petroleum right
includes an arrangement for the transfer of part of the right in return for
consideration that includes in whole or in part an obligation on the part of
the transferee to meet a disproportionate amount of future expenditure
with respect to mineral operations or petroleum operations
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

conducted with respect to the right, as the case requires;

"financial cost" means any amount payable under a financial instrument or a
loss from the realisation of a financial instrument, includes the
payment of interest but excludes a distribution by an entity;
“final withholding payment” has the meaning ascribed to it by section 86;
“financial institution” means a bank or financial institution approved under
the Bank of Tanzania Act or the Banking and Financial Institutions
Act;
"foreign currency debt claim" means a debt claim that is denominated in a
currency other than Tanzanian shillings;

"foreign income tax ” means income tax imposed by a foreign country and
includes a final withholding tax or branch profits tax imposed by a
foreign country;
"foreign permanent establishment" means all permanent establishments of
an individual, partnership, trust or corporation that are situated in any
one country that is not the country in which the individual,
partnership, trust or corporation is resident but excludes a domestic
permanent establishment;

"foreign source" means an amount that is not treated as having a source

in the United Republic by section 67, 68 or 69, as the case requires;

“full time service director" means a person at a managerial position and is in

full time service in a corporation;

"gain" from the realisation of an asset or liability has the meaning ascribed
to it by section 36;

“general insurance business” means any insurance that is not life insurance;

"gift" means a payment without consideration or a payment with consideration

to the extent that the market value of the payment exceeds the market
value of the consideration;

"incapacitated individual" means a minor or any individual who is

substantially blind or physically crippled or substantially mentally
retarded or who is adjudged under any law, whether of the United
Republic or of any other country, to be of unsound mind;

"income" -
(a) from an employment, business or investment has the meaning
ascribed in sections 7, 8 or 9, as the case requires;
(b) when used without a reference to employment, business or
investment, means a person's income from any employment, business
or investment and an aggregation of such income as calculated in
accordance with this Act, as the case requires; and
(c) in the case of corporation with unrelieved losses referred to under
section 4(1)(a), the turnover of that corporation for the year of
income;
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

"income tax" has the meaning ascribed to it by section 4; "incomings for an

asset” has the meaning ascribed to it by section 38;
"individual" means a natural person;

“insurance business" means the business of an insurer in effecting, issuing

and carrying out insurance;
“interest” means a payment for the use of money and includes a payment
made or accrued under a debt obligation that is not a repayment of
capital, any gain realised by way of a discount, premium, swap payment
or similar payment, amounts treated as interest under section 32,
amounts recognised as interest under section 71(6) (b)(ii) and interest
imposed under Part X of the Tax Administration Act;

"investment" means the owning of one or more assets of a similar nature or

that are used in an integrated fashion, on similar terms and subject to
similar conditions, including as to location and includes a past,
present and prospective investment, but does not include a business,
employment and the owning of assets, other than investment assets, for
personal use by the owner;

"investment asset" means shares and securities in a corporation, a beneficial

interest in a non-resident (deleted by F.A. 2020) trust and an interest in
land and buildings but does not include-
(a) business assets, depreciable assets and trading stock;
(b) a private residence of an individual that has been
owned continuously for three years or more and
lived in by the individual continuously or
intermittently for a total of three years or more,
other than a private residence that is realised for a gain
in excess of fifteen million shillings;
(c) an interest in land held by an individual that has a
market value of less than ten million shillings at the
time it is realised and that has been used for
agricultural purposes for at least two of the three
years prior to realisation; and
(d) shares or securities listed on the Dar es Salaam
Stock Exchange that are owned by a resident person
or a non-resident person who either alone or with other
associate controls less than twenty five percent of the
controlling shares of the issuer company;
"lease" means an arrangement providing a person with a temporary right
in respect of an asset of another person, other than money, and
includes a licence, profit-a-prendre, option, rental agreement, royalty
agreement and tenancy;

"licence area"-
(a) with respect to mining operations, means the area covered by
the mineral right in question; and
(b) with respect to petroleum operations, means the exploration or
development area with respect to which the operations are
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

conducted;

“licenced dealer” has a meaning ascribed to it in the Mining Act;

"life insurance" means insurance of any of the following classes:

(a) insurance where the specified event is the death of an
individual who is the insured or an associate of the insured;
(b) insurance where-
(i) the specified event is an individual who is the insured
or an associate of the insured sustaining personal injury
or becoming incapacitated; and
(ii) the insurance agreement is expressed to be in effect for
at least five years or without limit of time and is not
terminable by the insurer before the expiry of five
years except in circumstances prescribed by the
regulations;
(c) insurance under which an amount or series of amounts is to
become payable to the insured in the future; and
(d) re-insurance of insurance referred to under p aragraphs (a) to (c);

"life insurance business" means the business of an insurer in effecting, issuing

and carrying out life insurance;
"loss from any business or investment” has the meaning ascribed to it by
section 19 and from the realisation of an asset or liability, has the
meaning ascribed to it by section 36;
"manager" in relation to an entity-
(a) means any councillor, director, manager, member,
officer or other person who participates or may
participate, whether alone or jointly with other
persons, in making senior management decisions
on behalf of the entity; and
(b) includes a partner of a partnership, a trustee of a
trust and a person in accordance with whose
directions and instructions the entity or a person
described in paragraph (a) is required or
accustomed to act;
"market value" means a market value determined under section 27;

“member” in relation to an entity, means any person who owns a

membership interest in the entity;
"membership interest" in an entity means a right, including a contingent right
and whether of a legal or equitable nature, to participate in any
income or capital of the entity and includes the interest of a partner in
a partnership, the interest of a beneficiary in a trust and shares in a
corporation;
"midstream activities” has the meaning ascribed to it under the Petroleum
Act;
"mineral" has the meaning ascribed to it under the Mining Act;
"mineral rights" has the meaning ascribed to it under the Mining Act;
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

"mining” means intentionally winning minerals and every method or

process by which mineral is won;
"mining licence" means special mining licence, mining licence or primary
mining licence defined as such under the Mining Act;
"mining operations" means prospecting, mining or operations connected
with prospecting or mining carried out pursuant to mineral rights
granted under the Mining Act;
"minor" with respect to a year of income means an individual under the age of
eighteen years at the end of the year of income;
“money transfer agent” means any person rendering money transfer service
on behalf of the money transfer service provider;
“money transfer commission” means a payment in respect of money transfer
service paid or payable to a money transfer agent;
"National Oil Company" has the meaning ascribed to it under the Petroleum
Act;
"natural resource" means minerals, petroleum, water or any other non-living
or living resource that may be taken from land or the sea;
"natural resource payment" means any payment, including a premium or like
amount, for the right to take natural resources from land or the sea or
calculated in whole or part by reference to the quantity or value of
natural resources taken from land or the sea;
“net cost” for an asset or liability to a particular time means -
(a) in the case of a depreciable asset, its share of the written down
value of the pool to which it belongs at that time apportioned
according to the market value of all the assets in the pool; and
(b) in the case of any other asset or a liability, the amount by which
cumulative costs for the asset or liability exceed cumulative
incomings for the asset or liability to the time;
"net gains" from the realisation of investment assets of an investment of a
person for a year of income has the meaning ascribed to it by section
36;
"parastatal organisation" means -
(a) a local authority of the United Republic;
(b) a body corporate established by or under any Act or Ordinance of
the United Republic other than the Companies Act, and any
company registered under the Companies Act where -
(i) in the case of a company limited by shares, not less than fifty
percent of the issued share capital of the company is owned
by the Government or an organisation which is a parastatal
organisation under this definition; or
(ii) in the case of a company limited by guarantee-
(aa) the members of the company include the Government
or an organisation which is a parastatal organisation
under this definition; and
(bb) such members have undertaken to contribute not less
than fifty percent of the amount to be contributed by
members in the event of the company being wound
up;
"partnership" means any association of individuals or bodies corporate
carrying on business jointly, irrespective of whether the association is
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

recorded in writing;
"payment" includes the transfer of assets or money, the transfer or decrease of a
liability, the provision of services, the use or availability for use of money
or an asset and the creation of an asset in another person;
"permanent establishment" means a place where a person carries on
business and includes -
(a) a place where a person is carrying on business
through an agent, other than a general agent of
independent status acting in the ordinary course of
business as such;
Provided that, where an agent other than an
independent agent is acting on behalf of another
person, that other person shall be deemed to
have a permanent establishment if-

(i) the agent other than independent agent has

and habitually exercises authority to

(ii) conclude contracts or issues invoice on

behalf of that other person, unless his activities
are limited to the purchase of goods or
merchandise for that other person;

(iii) the agent other than independent agent has

no authority to conclude contracts, but habitually
maintains stock of goods or merchandise from
which he regularly delivers goods or merchandise
on behalf of that other person; or

(iv) the agent other than independent agent

habitually secures orders, wholly or almost
wholly for that other person or for the enterprise
and other enterprises controlling, controlled by,
or subject to the same common control, as that of
that other person.
(Inserted by F.A. 2021)

(b) a place where a person has used or installed, or is

using or installing substantial equipment or
substantial machinery; and
(c) a place where a person is engaged in a
construction, assembly or installation project for
six months or more, including a place where a
person is conducting supervisory activities in
relation to such a project;
“perpetual loss corporation rules" means those rules set up by the definition
of "income" in section 3 and sections 4(1)(a) and 6(1)(c) and
paragraph 3(3) of the First Schedule;
"person" means an individual or an entity;
“petroleum” has the meaning ascribed to it under Petroleum Act;
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

"petroleum operations" has the meaning ascribed to it under the Petroleum

Act;
"petroleum right" means an exploration licence or a development licence
granted under the Petroleum Act and includes-
(a) separately, the interest of a contractor under a
Production Sharing Agreement with respect to each
exploration licence granted with respect to the
contract area;
(b) separately, the interest of a contractor under a
Production Sharing Agreement with respect to each
development licence granted with respect to the
contract area; and
(c) data or information pertaining to petroleum
operations;
"production operations” has the meaning ascribed to it under the Petroleum Act;

"Production Sharing Agreement" means-

(a) an agreement concluded under section 47 of the Petroleum Act
between the Government of the United Republic, the National Oil
Company and another person "the contractor"; and
(b) a tripartite agreement between the Government of the United
Republic, the National Oil Company and a contractor under which
the National Oil Company engages the contractor to carry out on its
behalf petroleum operations in an exploration or development area
with respect to an exploration or development licence held by the
National Oil Company;
"prospecting" with respect to mineral right means prospecting operations as
provided for under section 4 of the Mining Act and includes retention
under retention licence;
"pool of depreciable assets of a person for a year of income” has the meaning
ascribed to it by paragraph 1 of the Third Schedule;
"realisation" of an asset has the meaning ascribed to it by section 39, and of
liability has the meaning ascribed to it under section 40;
"rehabilitation" with respect to a mineral operations or with respect to
processing, smelting or refining minerals means abandonment
activities and includes reclamation, rehabilitation, restoration and
closure of the operation as required by law or under the terms of the
relevant mineral right or development agreement;
"rehabilitation fund" with respect to mining operations or with respectto
processing, smelting or refining minerals means a fund-
(a) required by law, a mineral right or under a development
agreement and approved for that purpose by the Minister
responsible for mining;
(b) which is established to meet expenses to be incurred in the
course of rehabilitation of the operations including expenses under
an approved mine closure plan; and
(c) where contributions to the fund are placed beyond the control of the
person conducting the operations;
"rehabilitation bond" with respect of mining operation has the meaning
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

ascribed to it by the Mining Act;

"relative" means the individual’s child, spouse, parent, grandparent,
grandchild, sibling, aunt, uncle, nephew, niece or first cousin, including
by way of marriage or adoption;
“religious organisation” means a resident entity of a public character
established for the advancement religion that has been issued with ruling
by the Commissioner under section 131 currently in force stating that, it
is a religious organisation;
"rent" means any payment made by the lessee under a lease of a tangible
asset including any premium and any other payment for the granting
of the lease but excludes a natural resource payment and a royalty;
"repatriated income" has the meaning ascribed to it under section 72;
“representative assessee” means an agent of a non-resident person or of a
beneficial owner (Inserted by F.A. 2020);
“residence” or “resident” with respect to a person has the meaning ascribed to it
under section 66;
"retention licence" has the meaning ascribed to it under the Mining Act;
"retirement contribution" means a payment made to a retirement fund for
the provision or future provision of retirement payments;
"retirement fund" means any entity established and maintained solely for
the purposes of accepting and investing retirement contributions in
order to provide retirement payments to individuals who are
beneficiaries of the entity;
"retirement payment" means a payment, by way of a lump sum, pension or
commuted pension, made by a person to -
(a) an individual in the event of the individual's retirement; or
(b) a relative of an individual in the event of the individual's death;
"return of income" has the meaning ascribed to it by section 91;
"royalty" means any payment made by the lessee under a lease of an
intangible asset and includes payments for -
(a) the use of, or the right to use, a copyright, patent, design, model,
plan, secret formula or process or trademark;
(b) the supply of know-how including information concerning
industrial, commercial or scientific equipment or experience;
(c) the use of, or right to use, a cinematography film, videotape, sound
recording or any other like medium;
(d) the use of, or right to use, industrial, commercial or scientific
equipment;
(e) the supply of assistance ancillary to a matter referred to in
paragraphs (a) to (d); or
(f) a total or partial forbearance with respect to a matter referred to
in paragraphs (a) to (e),
but excludes a natural resource payment;
"separate mining operation" has the meaning ascribed to it under section
65C;
"separate petroleum operation" has the meaning ascribed to it under section
65L;
“service” has the meaning ascribed to it under sections 32 and 33 of the Tax
Administration Act;
"service fee" means a payment to the extent to which, based on market
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

values, it is reasonably attributable to services rendered by a person

through a business of that person or a business of any other person and
includes a payment for any theatrical or musical performance, sports
or acrobatic exhibition or any other entertainment performed,
conducted, held or given;
"service rendered" means transmitting or delivering of service in the United
Republic of Tanzania irrespective of the place of performance of service;
"special mining licence" has the meaning ascribed to it under the Mining Act;
"shareholder" means a person who is a member of a corporation;
"source" has the meaning ascribed to it under sections 67, 68 or 69, as the case
requires;
"statutory rate" in relation to calendar year means the prevailing discount
rate determined by the Bank of Tanzania;
"strategic investor” means an investor who has been determined as such
under the Tanzania Investment Act;
"tax" has the meaning ascribed to it under section 78; "technical service" in
respect of mining or petroleum
operations, means services in respect of earthmoving, engineering and
construction and includes geological, geotechnical and metallurgical
services, seismic survey, data interpretation, drilling or any such
services;
"total income" has the meaning ascribed to it under section 5;

"trading stock" means assets owned by a person that are sold or intended to be
sold in the ordinary course of a business of the person, work in
progress on such assets and inventories of materials to be incorporated
into such assets and includes, in the case of a person carrying on a
banking business, loans made in the ordinary course of that business;

"trust" means an arrangement under which a trustee holds assets but

excludes a partnership and a corporation;
"trustee" -
(a) means an individual or body corporate holding assets in a
fiduciary capacity for the benefit of identifiable persons or for
some object permitted by law and whether or not the assets are
held alone or jointly with other persons or the individual or
body corporate is appointed or constituted trustee by personal
acts, by will, by order or declaration of a court or by other
operation of the law; and
(b) includes-
(i) any executor, administrator, tutor or curator;
(ii) any liquidator, receiver, trustee in bankruptcy or judicial
manager;
(iii) any person having the administration or control of assets
subject to a usufruct, fideicommissum or other limited interest;
(iv) any person who manages the assets of an incapacitated
individual; and
(v) any person who manages assets under a private foundation
or other similar arrangements;
"turnover" in relation to a business by a resident person for the year of
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

income, means an amount to be included in calculating the person's

income under section 8 without deducting any amount under
Subdivision D of Division I of Part III;
"unapproved retirement fund" means a retirement fund that is not an approved
retirement fund;
"underlying ownership" –
(a) in relation to an entity, means membership interests owned in the
entity, directly or indirectly through one or more interposed
entities, by individuals or by entities in which no person has a
membership interest; or
(b) in relation to an asset owned by an entity, means the asset owned
by the persons having underlying ownership of the entity in
proportion to that ownership of the entity;
"unit trust" means -
(a) an arrangement under which a trustee holds assets for the benefit of
at least twenty persons; and
(b) where the entitlements of the persons to participate in the income
or capital of the arrangement are divided into units such that the
entitlements are determined by the number of units owned;
"upstream activities" has the meaning ascribed to it under the Petroleum Act;
"withholdee" means a person receiving or entitled to receive a payment from
which income tax is required to be withheld under Subdivision A of
Division II of Part VII;
"withholding agent" means a person required to withhold income tax from
a payment under Subdivision A of Division II of Part VII;
"written down value" of a pool of depreciable assets-
(a) at the end of a year of income has the meaning ascribed to it
under paragraph 3(4) of the Third Schedule; and
(b) at a particular time ("the time") during a year of income means-
(i) the written down value of the pool at the end of the previous
year of income; plus
(ii) expenditure incurred prior to the time, which is added to the
depreciation basis of the pool during the year of income or
to be added during the following year of income under
paragraph 3(5) of the Third Schedule; less

(iii) incomings derived during the year of income or to be derived

with respect to a realisation occurring prior to the time in
respect of assets that are or have been in the pool; and
"year of income" has the meaning ascribed to it under section 20.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

PART II IMPOSITION OF INCOME TAX

Charge of 4.-(1) Income tax shall be charged and is payable for each year of
tax income in accordance with the procedure in Part VII by every person -
(a) who has total income for the year of income or is a
corporation which has a perpetual unrelieved loss
determined under section 19 for the year of income and the
previous two consecutive years of income;
(b) who has a domestic permanent establishment that has
repatriated income for the year of income; or
(c) who receives a final withholding payment during the year of
income; or
(d) who is a representative assessee from or through whom a non-
resident person is in receipt of any income, whether directly or
indirectly. (Inserted by F.A. 2020)

(2) The amount of income tax payable by a person for a year of

income shall be equal to the sum of the income tax payable with
respect to subsection (1).
(3) Subject to the provisions of subsections (4) and (5), the
income tax payable by a person with respect to subsection
(1)(a) is calculated by-
(a) applying the relevant rates of income tax determined
under paragraph 1, 3(1) or 3(3) of the First Schedule, as
the case may be, to the person's total income or
turnover for the year of income; and
(b) subtracting from the resulting amount any tax credit
that the person may claim for the year of income under
section 77.
(4) The income tax payable with respect to subsection (1)(a) by a
resident individual who is not required to file a return of income
under section 92(a)(ii) (and who does not elect to file a return)
shall be equal to the sum of the amounts to be withheld under
section 81 by the individual's employer or employers from
payments made to the individual during the year of income and
the sum of instalments paid by the person under section 90(1)
with respect to gains realised during the year of income.

(5) Where a resident individual meets the requirements of

paragraph 2(1) of the First Schedule with respect to a year of
income, the income tax payable by the individual with respect to
subsection (1)(a) for the year of income shall be equal to the
amount of presumptive income tax provided in paragraph
2(3) or 2(5) (inserted by F.A 2023) of the First Schedule.

(6) The income tax payable by a person with respect to subsection

(1)(b) shall be calculated by applying the rate of income tax
mentioned in paragraph 3(4) of the First Schedule to the
permanent establishment's repatriated income for the year of
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

income.

(7) Subject to the provisions of section 86(4), the income tax

payable by a person with respect to subsection(1)(c) shall be the
sum of the amounts calculated by applying the relevant rates of
income tax determined under paragraph 4 of the First Schedule
to the amount of each final withholding payment received by
the person during the year of income.

(8) The income tax payable by a corporation with perpetual unrelieved

loss for three consecutive years of income under paragraph (a) of
subsection (1) shall not apply to a corporation conducting
agricultural business or engaged in the provision of health or
education.

PART III INCOME TAX BASE

Division I: Calculating the Income Tax Base

Subdivision A: Total Income

Total 5.-(1) The total income of a person shall be the sum of the person's
income chargeable income for the year of income from each
employment, business and investment less any reduction
allowed for the year of income under section 61 relating to
retirement contributions to approved retirement funds.
(2) The total income of each person shall be determined separately.

Subdivision B: Chargeable Income

Chargeable 6.-(1) Subject to the provisions of subsection (2), the chargeable

income income of a person for a year of income from any
employment, business or investment shall be-
(a) in the case of a resident person, the person's income
from employment, business or investment for the
year of income irrespective of the source of the
income;
(b) in the case of a non-resident person, the person's
income from employment, business or investment
for the year of income, but only to the extent that the
income has a source in the United Republic; and
(c) in the case of a resident corporation which has
perpetual unrelieved losses referred to in
subsection (1)(a) of section 4, the turnover of
such corporation for a year of income; and
(d) in the case of a representative assessee, the income of
a non-resident or beneficial owner from business or
investment for the year of income deemed to accrue or
arise in the United Republic. (Inserted by F.A. 2020)
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(2) The chargeable income of a resident individual who at the

end of a year of income has been resident in the United
Republic for two years or less in total during the whole
of the individual’s life shall be determined under subsection
(1)(b).

Income from 7.-(1) An individual's income from an employment for a year of

employment income shall be the individual's gains or profits from the
employment of the individual for the year of income.
(2) Subject to the provisions of subsections (3), (4) and (5) in
calculating an individual's gains or profits from an
employment for a year of income the following payments
made to or on behalf of the individual by the employer or an
associate of the employer during that year of income shall be
included:
(a) payments of wages, salary, payment in lieu of leave,
fees, commissions, bonuses, gratuity or any
subsistence travelling entertainment or other
allowance received in respect of employment or
service rendered;
(b) payments providing any discharge or reimbursement
of expenditure incurred by the individual or an
associate of the individual;
(c) payments for the individual's agreement to any
conditions of the employment;
(d) retirement contributions and retirement payments;
(e) payment for redundancy or loss or termination of
employment;
(f) other payment made in respect of employment
including benefits in kind quantified in accordance
with section 27;
(g) other amounts as may be required to be included
under Division II of this Part; and
(h) annual director’s fees payable to a director other
than a full time service director.

(3) In calculating an individual's gains or profits from an

employment, the following shall be excluded -
(a) exempt amounts and final withholding payments;
(b) on premises cafeteria services that are available on a
non-discriminatory basis;

(c) medical services, payment for medical services, and

payments for insurance for medical services to the
extent that the services or payments are -
(i) available with respect to medical treatment of the
individual, spouse of the individual and up to
four of their children; and
(ii) made available by the employer and any
associate of the employer conducting a similar
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

or related business on a non- discriminatory

basis;
(d) any subsistence, travelling, entertainment or other
allowance that represents solely the reimbursement to
the recipient of any amount expended by him
wholly and exclusively in the production of his
income from his employment or services rendered;
(e) benefits derived from the use of motor vehicle
where the employer does not claim any deduction or
relief in relation to the ownership, maintenance or
operation of the vehicle;
(f) benefit derived from the use of residential premises
by an employee of the Government or any institution
whose budget is fully or substantially out of
Government budget subvention;
(g) payment providing passage of the individual, spouse
of the individual and up to four of their children to
or from a place of employment which correspond to
the actual travelling cost where the individual is
domiciled more than twenty miles from the place of
employment and is recruited or engaged for
employment solely in the service of the employer at
the place of employment;
(h) retirement contributions and retirement payments
exempted under the Public Service Social Security
Fund Act;
(i) payment that it is unreasonable or administratively
impracticable for the employer to account for or to
allocate to their recipients;
(j) allowance payable to an employee who offers
intramural private services to patients in a public
hospital; and
(k) housing allowance, transport allowance, responsibility
allowance, extra duty allowance, overtime allowance,
hardship allowance and honoraria payable to an
employee of the Government or its institution whose
budget is fully or substantially paid out of
Government budget subvention.
(4) In calculating an individual’s gains or profit from payment
for redundancy or loss or termination of employment, any
payment received in respect of a year of income which
expired earlier than five years prior to the year of income in
which it was received, or which the employment or services
ceased, if earlier such payment shall, for the purposes of
calculation of the tax payable thereon, be allocated equally
between the years of income in which it is received or, if
the employment or services ceased in an earlier year
between such earlier year of income and the five years
immediately preceding such year of income in which such
payment is so received or as the case may be, such
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

earlier year of income in which the employment or services

ceased, and each such portion, allocated to any such year of
income shall be deemed to be income of that year of income
in addition to any other income in that year of income.
(5) Where amount received as compensation for the
termination of any contract of employment or services,
whether or not provision is made in such contract for the
payment of such compensation-
(a) if the contract is for a specified term, the amount
included in gains or profits shall not exceed the
amount which would have been received in respect of
the unexpired period of such contract and shall be
deemed to have accrued evenly in such unexpired
period;
(b) if the contract is for an unspecified term and provides
for compensation on the termination thereof, such
compensation shall be deemed to have accrued in the
period immediately following such termination at a
rate equal to the rate per annum of the gains or
profits from such contract received immediately prior
to such termination; and
(c) if the contract is for an unspecified term and does not
provide for compensation on the termination thereof,
any compensation paid on the termination thereof shall
be deemed to have accrued in the period
immediately following such termination at a rate equal
to the rate per annum of the gains or profits from
such contract received immediately prior to such
termination, but the amount so included in gains or
profits shall not exceed the amount of three years’
remuneration at such rates.

Income from 8.-(1) A person's income from a business for a year of income is
business the person's gains or profits from conducting the business
for the year of income.
(2) Subject to the provisions of subsection (3), there shall be
included in calculating a person's gains or profits from
conducting a business for a year of income the following
amounts derived by the person from conducting the
business during the year of income -
(a) service fees;
(b) incomings for trading stock;
(c) gains from the realisation of business assets or
liabilities of the business as calculated under
Division III of this Part;
(d) amounts required to be included under paragraph
4 of the Third Schedule on the realisation of the
person's depreciable assets of the business;
(e) amounts derived as consideration for accepting a
restriction on the capacity to conduct the
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

business;
(f) gifts and other ex gratia payments received by
the person in respect of the business;
(g) amounts derived that are effectively connected
with the business and that would otherwise be
included in calculating the person's income from
an investment; and
(h) the amount of tax benefit or advantage quantified
under section 27 or other amounts required to be
included under Division II of this Part, Parts IV,
V or VI.
(3) The following are excluded in calculating a person's gains or
profits from conducting a business-
(a) exempt amounts and final withholding payments;
and
(b) amounts that are included in calculating the
person's income from any employment.

Income from 9.-(1) A person's income from an investment for a year of income
investment is the person's gains or profits from conducting the
investment for the year of income.
(2) Subject to the provisions of subsection (3), in calculating
a person's gains or profits from conducting an investment
for a year of income the following amounts derived by the
person from conducting the investment during that year of
income shall be included, namely-
(a) any dividend, distribution of a trust, gains of an
insured from life insurance, gains from an interest
in an unapproved retirement fund, interest, natural
resource payment, rent or royalty;
(b) net gains from the realisation of investment assets
of the investment as calculated under Division III
of this Part;
(c) amounts derived as consideration for accepting a
restriction on the capacity to conduct the
investment; and
(d) the amount of tax benefit or advantage quantified
under section 27 of the Act or other amounts
required to be included under Division II of this
Part, Parts IV, V or VI.

(3) In calculating a person's gains and profits from conducting

an investment, the amounts shall be excluded, namely –
(a) exempt amounts and final withholding payments;
and
(b) amounts that are included in calculating the
person's income from any employment or business.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Subdivision C: Exemption from Tax

Minister may 10.-(1) The Minister may, by order published in the

exempt Gazette, provide-
income from (a) that any income or class of incomes accrued in or
tax derived from the United Republic shall be exempt
from tax to the extent specified in such order; or
(b) that any exemption under the Second Schedule shall
cease to have effect either generally or to such
extent as may be specified in such order.
(2) The Minister may, by order published in the
Gazette, amend, vary or replace the Second Schedule.
(3) Notwithstanding any law to the contrary, no exemption shall
be provided from tax imposed by this Act and no
agreement shall be concluded that affects or purports to affect
the application of this Act, except as provided for-
(a) by the provisions of this Act;
(b) by an agreement:
(i) on a strategic project; and
(ii) on public interest, as may be approved by the
Cabinet; and
(iii) for a strategic investment or (inserted by Written
law amendments, 2022) special strategic
investment approved by the National Investment
Steering Committee under the Tanzania
Investment Act (inserted by F.A. 2022),

(4) The requirement under subsection (3)(b) shall not apply to a

strategic project with a total tax payable not exceeding one
billion shillings for the entire project period. (Inserted by F.A.
2020) (deleted by F.A. 2021)

(4) The exemption granted under this section shall cease to have
effect and the income tax shall become due and payable as if the
exemption has not been granted if such exemption has been enjoyed
in any way by another person not entitled to enjoy similar
priveleges as are conferred under this Act (inserted by Written law
amendments, 2022 – Note: the amendment did not renumber
below paragraph)

(4) The requirement under subsection (3)(b) shall not apply

to-
(a) a strategic project with a total tax payable not
exceeding one billion shillings for the entire
project period; or
(b) grant agreement, non-concessional or
concessional loan agreement between the
Government of the United Republic and a donor
or lender where such agreement provides for
income tax exemption. (replaced by F.A. 2021)
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Subdivision D: Deductions

General 11.-(1) For purposes of calculating a person's income deduction

principles of shall not be allowed-
deductions (a) for consumption expenditure incurred by the
person or excluded expenditure incurred by the
person; or
(b) otherwise, except as provided for by this Act.
(2) Subject to this Act, for purposes of calculating a person's
income for a year of income from any business or
investment, there shall be deducted all expenditure incurred
during the year of income, by the person wholly and
exclusively in the production of income from the business or
investment.
(3) Deduction is not allowed under subsection (2) for
expenditure of a capital nature.
(4) For purposes of this section -
“consumption expenditure” means any expenditure incurred
by any person in the maintenance of himself, his
family or establishment, or for any other personal or
domestic purpose;
“excluded expenditure” means -
(a) tax payable under this Act;
(b) bribes and expenditure incurred in corrupt
practice;
(c) fines and similar penalties payable to a
Government or a political subdivision of a
Government of any country for breach of any
law or subsidiary legislation;
(d) expenditure to the extent to which incurred by a
person in deriving exempt amounts or final
withholding payments;
(e) distributions by an entity; or
(f) withholding tax paid by a withholder; and
"expenditure of a capital nature" means expenditure
that secures a benefit lasting longer than twelve months.

Interest 12.-(1) For the purposes of section 11(2), interest incurred by a

person during a year of income under a debt obligation shall
be incurred wholly and exclusively in the production of
income from a business or investment if -
(a) where the debt obligation was incurred in
borrowing money, the money is employed during
the year of income or was used to acquire an
asset that is employed during the year of income
wholly and exclusively in the production of
income from the business or investment; or
(b) in any other case, the debt obligation was
incurred wholly and exclusively in the production
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

of income from the business or investment.

(2) The total amount of interest that an exempt- controlled

resident entity may deduct in accordance with section
11(2) for a year of income shall not exceed the sum of
interest equivalent to debt-to-equity ratio of 7 to 3.
(3) In this section, an entity is an exempt-controlled resident
entity for a year of income if it is resident and at any time
during the year of income twenty five percent or more of
the underlying ownership of the entity is held by entities
exempt under the Second Schedule, approved retirement
funds, charitable organisations, non-resident persons or
associates of such entities or persons.
(4) Where there is a change of the amount of debt or equity,
the amount of equity or debt shall be the average of
balances of amount of debt or equity at the end of
each period.
(5) For purposes of this section-

“debt” means any debt obligation excluding:

(i) a non-interest bearing debt obligation;
(ii) a debt obligation owed to a resident financial
institution; and
(iii) a debt obligation owed to a non-resident
bank or financial institution on whose
interest tax is withheld in the United
Republic;

“equity” means:
(i) paid up share capital;
(ii) paid up share premium; and
(iii) retained earnings on an unconsolidated basis
determined in accordance with generally accepted
accounting principles; and

“equity” means means paid up share capital at the end of

the year of income; and (replaced by F.A. 2022)

“period” means a month or part of a month.

(6) Notwithstanding any other provision to the contrary, the

amount of deductible realized foreign exchange loss on
interest free debt obligation shall be the amount of loss
attributable to not more than seventy percent of such
obligation. (Inserted by F.A. 2020)

Trading stock 13.-(1) For purposes of calculating a person's income for a year
of income from any business, there shall be deducted in
respect of the trading stock of the business the allowance
determined under subsection (2).
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(2) The allowance shall be calculated as -

(a) the opening value of trading stock of the
business for the year of income; plus
(b) expenditure incurred by the person during the
year of income that is included in the cost of
trading stock of the business; less
(c) the closing value of trading stock of the
business for the year of income.
(3) The opening value of trading stock of a business for a
year of income shall be the closing value of trading stock
of the business at the end of the previous year of income.
(4) The closing value of trading stock of a business for a year
of income shall be the lower of -
(a) the cost of the trading stock of the business at the
end of the year of income; or
(b) the market value of the trading stock of the
business at the end of the year of income.
(5) Where the closing value of trading stock is determined in
accordance with subsection (4)(b), the cost of the trading
stock shall be reset to that value.

Repair and 14.-(1) For purposes of calculating a person's income for a year of
maintenance income from any business, there shall be deducted all
expenditure expenditure to the extent incurred during the year of
income, by the person and in respect of the repair or
maintenance of depreciable assets owned and employed by
the person wholly and exclusively in the production of
income from the business.

(2) Deductions shall not be allowed under subsection (1) for

expenditure in improving an asset, but that
expenditure may be included in the cost of the asset
if the requirements of section 37 are met.

Agriculture 15.-(1) For the purposes of calculating a person's income for a

improvement, year of income from any business, there shall be deducted
research agricultural improvement, research and development and
development environmental expenditure to the extent incurred by the
and person during the year of income in conducting the
environmental business.
expenditure (2) For the purposes of this section -
“agricultural improvement expenditure” means expenditure
incurred by the owner or occupier of farm land in
conducting an agriculture, livestock farming or fish
farming business where the expenditure is incurred in -
(a) clearing the land and excavating irrigation
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

channels; or
(b) planting perennial crops or trees bearing crops;
"environmental expenditure" means expenditure incurred by
the owner or occupier of farmland for prevention of soil
erosion; and
"research and development expenditure” means expenditure
incurred by a person in the process of developing the
person's business and improving business products or
process and includes expenditure incurred by a company
for the purposes of an initial public offer and first listing
on the Dar es Salaam Stock Exchange but excludes any
expenditure incurred that is otherwise included in the
cost of any asset used in the use in any such process,
including an asset referred to in paragraph 1(3) of the
Third Schedule.

Gifts to public, 16.-(1) For purposes of calculating a person's income for a year of
charitable and income from any business, there shall be deducted -
religious (a) amounts contributed during the year of income to a
institutions charitable institution referred to in subsection (8) of
section 64 or social development project;
(b) any donation made under section 12 of the
Education Fund Act; and
(c) amount paid to local government authority,
which are statutory obligations to support
community development projects.;
(d) contribution made to the AIDS Trust Fund
established under the Tanzania Commission for
AIDS Act; and
(e) contribution made to the Government in the fight
against Coronavirus disease (COVID-19). (Inserted
by F.A. 2020)

(2) The provisions of subsection (1)(e) shall cease to have effect

on such date as the Minister may, by notice published in the
Gazette, determine. (Inserted by F.A. 2020)

(3) The deduction available under subsection (1)(a) for a

year of income shall not exceed two percent of the
person's income from the business calculated without a
deduction under that subsection.
(4) For purposes of calculating a person’s income for a year of
income from any employment, there shall be deducted any
donation made under section 12 of the Education Fund Act.
(5) Subject to subsection (3), an employee who makes a
donation to the Fund may apply to the Commissioner for
deduction.
Depreciation 17. For the purposes of calculating a person's income for a year
allowances for of income from any business, there shall be deducted in
depreciable
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

assets respect of depreciation of depreciable assets owned and

employed by the person during the year of income wholly and
exclusively in the production of the person's income from the
business the allowances granted under the Third Schedule.

Losses on 18. For purposes of calculating a person's income for a year of

realisation of income from any business, there shall be deducted any loss of
business assets the person, as calculated under Division III of this Part, from
and liabilities the realisation during the year of income of –
(a) a business asset of the business that is or was
employed wholly and exclusively in the production
of income from the business;
(b) a debt obligation incurred in borrowing money,
where the money is or was employed or an asset
purchased with the money is or was employed
wholly and exclusively in the production of income
from the business; or
(c) a liability of the business other than a debt
obligation incurred in borrowing money, where the
liability was incurred wholly and exclusively in the
production of income from the business.
Losses from 19. -(1) For purposes of calculating the income of a person,
business or other than a partnership or a foreign permanent
investment establishment, for a year of income from a business or
investment, there shall be deducted-
(a) any unrelieved loss of the year of income of the
person from any other business or investment;
and
(b) any unrelieved loss of a previous year of income of
the person from any business or investment;
(2) Income of a person for the year of income having chargeable
income and unrelieved losses for the four previous
consecutive years of income may, subject to other limitations
imposed by this section, be reduced by reason of use of the
unrelieved losses which shall not be below thirty per centum
of that income before any reduction for losses:

Provided that, the requirement under this subsection shall not

apply to a corporation undertaking agricultural business or
providing health or education services. (Inserted by F.A.
2020)

(3) For purposes of subsection (1), a person may deduct an

unrelieved loss-
(a) in the case of a foreign source loss from an
investment, only in calculating the person's foreign
source income from an investment;
(b) in the case of other losses from an investment,
only in calculating the person's income from an
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

investment;
(c) in the case of other foreign source losses, only in
calculating the person's foreign source income;
(d) in the case of loss incurred on agricultural
business, only in calculating the person’s income
derived from agricultural business; and
(e) in the case of loss incurred in dealing with a
speculative transaction, only in calculating the
person’s income derived from a speculative
transaction.
(4) Where a person calculates income for a year of income from
more than one business or investment of the person, and
deducts an unrelieved loss in more than one such
calculation, the person may choose the calculation or
calculations in which the loss or part of the loss is deducted.

(5) For the purposes of this section -

“agricultural business” means the practice of rearing of crops or
animals including forestry, beekeeping, aqua-culture and
farming with a view to deriving a profit but excludes
processing of agricultural produce other than preparing such
produce for the purpose of sale in its original form;
"loss" of a year of income of a person from any business or
investment shall be calculated as the excess of amounts
deducted in calculating the person's income from the business
or investment over amounts included in calculating such
income;
“speculative transaction” means-
(a) a transaction which is a contract for sale or purchase of a
commodity including stocks and shares settled otherwise
than actual delivery or transfer of the commodity; or
(b) any agreement for repurchase or resale, forward sale or
purchase, futures contract, option or swap contract; and
"unrelieved loss" means the amount of a loss that has not been
deducted in calculating a person's income under subsection (1)
or section 26(3).

Division II: Rules Governing Amounts Used in Calculating the Income Tax Base
Subdivision A: Tax Accounting and Timing

Year of 20.-(1) Subject to the provisions of this section, the year of

income income for every person shall be the calendar year.
(2) Subject to the provisions of subsections (6), (7) and (8), an
entity may apply, in writing, to the Commissioner for
approval to change the entity's year of income from -
(a) the calendar year; or
(b) a twelve-month period previously
approved by the Commissioner
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

under subsection (3), to another

twelve-month period.
(3) Where, in an application under subsection (2), the entity
shows a compelling need to change the entity's year of
income, the Commissioner may, by notice in writing,
approve the application subject to any conditions as the
Commissioner prescribes.
(4) The Commissioner may, by notice in writing, revoke an
approval granted to an entity under subsection (3).
(5) Where an entity's year of income changes, the period
between the end of its previous year of income and the
beginning of its new year of income shall be another year of
income of length of up to twelve months, or to eighteen
months subject to the approval of the Commissioner.
(6) The year of income for every person's foreign permanent
establishment shall be the same as the year of income of
its owner.
(7) The year of income for every non-resident partnership,
trust or corporation shall be the period, not exceeding twelve
months, for which the entity makes up its accounts or, if it
has no such period, the calendar year.
(8) The initial year of income of a person shall be the period of
twelve months or less or subject to the approval of
Commissioner eighteen months or less from the time the
person starts to exist until the end of the person's year of
income as calculated according to the foregoing subsections.

Basis of 21.-(1) Subject to this Act, a person shall account for his income
accounting according to generally accepted accounting principles.
for income (2) Notwithstanding the provisions of subsection (1), an
tax purposes individual shall account for income tax purposes on a cash basis
in calculating the individual's income from an employment or
investment.
(3) A corporation shall account for income tax purposes on an
accrual basis.
(4) Unless the Commissioner prescribes otherwise by notice in
writing, individuals in calculating income from a business,
partnerships and trusts shall account for income tax purposes
on either a cash or accrual basis according to the method that
most clearly reflects the person's gains or profits.
(5) Subject to the provisions of subsections (2) and (3), a person
may apply in writing for a change in the person's basis of
accounting for income tax purposes and the Commissioner
may by notice in writing approve the application but only
if satisfied that the change is necessary to clearly reflect the
person's gains and profits.
(6) Where any aspect of a person's basis of accounting for
income tax purposes is changed, adjustments shall be made in
the year of income of the change so that no item is omitted or
taken into account more than once.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(7) In this section “generally accepted accounting principles”

means the principles adopted by the National Board of
Accountants and Auditors.

Cash basis 22. Subject to this Act, a person who accounts for income tax
accounting purposes on a cash basis -.
(a) derives an amount and, therefore, shall include
the amount in calculating the person’s income or
otherwise account for the amount as required by
this Act when payment is received or made
available to the person; and
(b) incurs expenditure and, therefore, may deduct
the expenditure in calculating the person’s income
or otherwise account for the expenditure as
required by this Act when payment is made.

Accrual basis 23.-(1) Subject to this Act, a person who accounts for income tax
accounting purposes on an accrual basis-
(a) derives an amount when it is receivable by the
person; and
(b) incurs expenditure when it is payable by the
person.
(2) Subject to this Act, an amount is receivable by a person when
the person becomes entitled to receive it, even if the time for
discharge of the entitlement is postponed or the entitlement is
payable by instalments.
(3) Subject to this Act, an amount shall be treated as payable by a
person when all the events that determine liability have
occurred and the amount of the liability can be determined
with reasonable accuracy, but not before economic
performance with respect to the amount occurs.
(4) For purposes of subsection (3), economic performance
occurs -
(a) with respect to the acquisition of services or
property, at the time the services or property are
provided;
(b) with respect to the use of an asset, at the time
the asset is used; or
(c) in any other case, at the time the person makes
payment in full satisfaction of the liability.
(5) Where in calculating income on an accrual basis -
(a) a person includes a payment of a particular
quantity to which the person is entitled or deducts a
payment of a particular quantity that the person is
obliged to make; and
(b) subsequently that entitlement or obligation is
satisfied by a payment received or made by the
person, as the case requires, of a different
quantity, including by reason of a change in
currency valuations,
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

then appropriate adjustments shall be made at the time the

payment is received or made so as to remedy the
inaccuracy.

Claim of 24. For purposes of sections 22 and 23, an amount shall be treated as
right derived or expenditure incurred by a person notwithstanding
that the person is not legally entitled to receive the amount or
liable to make the payment, if the person claims to be legally
entitled to receive, or legally obliged to pay the amount.

Reverse of 25.-(1) Where a person has deducted expenditure in calculating

amounts the person's income and the person later recovers the
including bad expenditure, the person shall, at the time of recovery,
debts include the amount recovered in calculating the person's
income.
(2) Where a person has included an amount in calculating the
person's income and, because of a legal obligation to do so,
the person later refunds the amount, the person may, at the
time of refund, deduct the amount refunded in calculating
the person's income.
(3) Where in calculating income on an accrual basis a person
deducts expenditure that the person shall be obliged to
make and the person later disclaims an obligation to
incur the expenditure, the person shall, at the time of
disclaimer, include the amount disclaimed in calculating
the person's income.
(4) Subject to the provisions of subsection (5), where in
calculating income on an accrual basis a person includes an
amount to which the person is entitled and the person later-
(a) disclaims an entitlement to receive the amount; or
(b) in the case where the amount constitutes a debt
claim of the person, the person writes off the debt as
bad,
the person may, at the time of disclaimer or writing off, deduct
the amount disclaimed or written off in calculating the
person's income.
(5) A person may disclaim the entitlement to receive an amount
or write off as a bad debt claim of the person -
(a) in the case of a debt claim of a financial institution,
after the debt claim has become a bad debt as
determined in accordance with the relevant
standards established by the Bank of Tanzania and
that such institution has taken all reasonable steps in
pursuing payment and the institution reasonably
believes that debt claim will not be satisfied; and
(b) in any other case, only after the person has taken all
reasonable steps in pursuing payment and the
person reasonably believes that the entitlement or
debt claim will not be satisfied
Long-term 26.-(1) In the case of a person accounting for income tax purposes on
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

contracts an accrual basis, amounts to be included or deducted in

calculating income that relate to a long-term contract shall be
taken into account on the basis of the percentage of the contract
completed during each year of income.
(2) The percentage of completion shall be determined
by comparing the total expenditure allocated to the contract
and incurred before the end of the year of income with the
estimated total contract expenditure as determined at the time
of commencement of the contract.
(3) Where for the year of income in which a long-term
contract is completed, the person has an unrelieved loss
determined under section 19 for the year of income or a
previous year of income that is attributable to the long-term
contract, the Commissioner may allow the loss to be-
(a) carried back to a previous year of income; and
(b) treated as an unrelieved loss for that year.
(4) The amount treated as an unrelieved loss for a
year of income under subsection (3)(b) shall not exceed the
amount by which amounts included in calculating income for
that year of income under the contract exceed deductions
under the contract for the year.
(5) An unrelieved loss for a year of income shall be attributable
to a long-term contract to the extent that deductions in
calculating the income from the business that relate to the
contract exceed inclusions in that calculation that relate to the
contract.
(6) For purposes of this section, "long-term contract”-
(a) means a contract for manufacture, installation, or
construction, or, in relation to each, the performance
of related services, which is not completed within the
year of income in which work under the contract
commences; but
(b) excludes a contract estimated to be completed within
six months of the date on which work under the
contract commenced.
(7) The regulations may apply the percentage of completion
method to other types of contracts that span more than one
year of income where the contract may accelerate expenditure
in early years or delay income until later years of the contract.
Subdivision B:
Quantification, Allocation and Characterisation of Amounts

Quantification
according to 27.-(1) A payment or amount to be included or
market value deducted in calculating income shall be quantified as
follows
-
(a) for payments consisting of the availability for
use or use of a motor vehicle during a year of
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

income provided in return for services whether

by way of employment or otherwise or
provided by an entity to a member or manager
of the entity, the amount of the payment shall
be as prescribed in the Fifth Schedule;
(b) for payments consisting of a loan provided in
return for services whether by way of
employment or otherwise or by an entity to a
member or manager of the entity-
(i) where the loan is made by an
employer to an employee, the term
of the loan is less than twelve
months and the aggregate amount
of the loan and any similar loans
outstanding at any time during the
previous twelve months does not
exceed three months basic salary,
the quantity of the payment is nil; and
(ii) in any other case, the amount by
which –
(aa) the interest that would have
been paid by the payee during the
year of income of the payee in
which the payment is made if
interest were payable under the
loan at the statutory rate for the
year of income, exceeds;

(bb) the interest paid by the payee

during the year of income
under the loan, if any;
(c) for payments consisting of the provision of
premises including any furniture or other
contents by an employer for residential
occupation by an employee during a year of
income, (i) or (ii), whichever is less, reduced
by any rent paid for the occupation by the
employee, where -
(i) is the market value rental of the part
of the premises occupied by the
employee for the period occupied
during the year of income; and
(ii) is the greater of -
(aa) fifteen percent of the
employee's total income for the year
of income, calculated without
accounting for the provision of the
premises and, where the premises
are occupied for only part of the
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

year of income, apportioned as

appropriate; and
(bb) expenditure claimed as a
deduction by the employer in
respect of the premises for the period
of occupation by the employee during
the year of income;
(d) for purposes of tax benefit or advantage, the
amount of tax benefit or advantage shall be
three hundred thirty percent of the actual tax
benefit or advantage:
Provided that, for the purpose of this paragraph,
tax benefits or advantage means benefit or
advantage obtained by a person by shifting
an obligation to pay income tax to another
person; and
(e) in any other case, the amount prescribed by
the regulations or, in the absence of
regulations, the market value.

(2) The amount of a payment is quantified without

reduction for any income tax withheld from the
payment under Subdivision A of Division II of Part VII.

(3) The market value of an asset shall be determined

without regard to any restriction on transfer of the asset
or the fact that the asset is not otherwise convertible
into a payment of money or money's worth.
Quantification 28.-(1) Subject to the provisions of subsection (4),
in shillings for purposes of this Act, a person's tax payable, income and
amounts to be included and deducted in calculating income
shall be quantified in Tanzania shillings.
(2) Subject to subsection (3), where an amount to
be included or deducted in calculating income is quantified
in a currency other than Tanzania shillings, the amount
shall be converted at the exchange rate quoted by the
Bank of Tanzania and applying between the currency and
the shilling at the time the amount is taken into account
for income tax purposes.
(3) For purposes of subsection (2) and where
the Commissioner permits, by notice in writing, a person
may use the average exchange rate applying during the
year of income as determined by the Commissioner.
(4) The Commissioner may, by notice in writing, for
a specified period of time and on such terms and
conditions as he thinks fit, permit an entity to quantify
amounts to be included and deducted in calculating
income in any foreign currency that is convertible into
Tanzania shillings.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Indirect 29.-(1) Subsection (2) shall apply where a person

payments indirectly benefits from a payment or directs who is to be the
payee of the payment and the payer, an associate of the payer
or a third person under an arrangement with the payer or
with an associate of the payer intends the payment to benefit
the person.
(2) Where this subsection applies, the Commissioner
may, by practice note generally or by notice in writing
served on the person -
(a) treat the person as the payee of the payment;
(b) treat the person as the payer of the payment;
or
(c) treat the person as the payee of the payment
and as making an equal payment to the
person who would be considered the payee
of the payment if this subsection were
ignored.

Jointly owned 30. -(1) For purposes of calculating a person's income from
investment an investment that is jointly owned with another person,
amounts to be included and deducted in that calculation
shall be apportioned among the joint owners in proportion
to their respective interests in the investment.

(2) Where the interests of joint owners cannot be

ascertained they shall be treated as equal.

Compensation 31. Subject to the provisions of section 25,

and recovery where a person or an associate of the person derives an
payments amount "the compensation amount" which compensates
for or represents recovery of –

(a) income or an amount to be included in

calculating income, which the person expects
or expected to derive; or
(b) a loss or an amount to be deducted in
calculating income, which the person has
incurred or which the person expects or
expected to incur,
the compensation amount shall be included in calculating
income of the person and takes its character from the
amount compensated for.

Annuities, 32.-(1) Payments made by a person under a finance lease

instalment or in acquiring an asset under an instalment sale, other
sales and than an instalment sale that provides for commercial
finance leases periodic interest payable on balance outstanding, shall
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

be treated as interest and a repayment of capital under a

loan made by the lessor or seller to the lessee or buyer,
as the case requires.
(2) Payments made to a person under an annuity
shall be treated as interest and a repayment of capital
under a loan made by the person to the payer of the
annuity.
(3) The interest and repayment of capital under
subsections (1) and (2) shall be calculated as if the loan
were a blended loan with interest compounded six-
monthly.
(4) Where an asset is leased under a finance
lease, the lessor shall be treated as transferring ownership
of the asset to the lessee.
(5) Subject to section 44, where a person transfers an
asset under an instalment sale or, by reason of subsection
(4), under a finance lease -
(a) the person shall be treated as deriving an
amount in respect of the transfer equal to
the market value of the asset immediately
before the transfer; and
(b) the person who acquires the asset shall be
treated as incurring expenditure of an equal
amount in acquiring the asset.
(6) Where the lessee under a finance lease
returns the asset to the lessor before ownership passes to
the lessee, other than by reason of subsection (4), the
lessee shall be treated as transferring ownership of the
asset back to the lessor.
(7) For the purpose of this section, where an
alternative financing arrangement approved by the Bank of
Tanzania is payable as cost plus margin, the margin shall
be treated in the same manner as interest. (inserted by F.A.
2022)
(8) For purposes of this section -
"blended loan" means a loan under which payments by
the borrower represent in part a payment of interest
and in part a repayment of capital where the
interest part is calculated on capital outstanding at
the time of each payment and the rate of interest is
uniform over the term of the loan;
"finance lease" means a lease where -
(a) the lease agreement provides for transfer of
ownership following the end of the lease term
or the lessee has an option to acquire the asset
after expiry of the lease term for a fixed or
presupposed price;
(b) the lease term exceeds seventy five percent of
the useful life of the asset;
(c) the estimated market value of the asset after
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

expiry of the lease term is less than twenty

percent of its market value at the start of the
lease;
(d) in the case of a lease that commences before
the last twenty five percent of the useful life of
the asset, the present value of the minimum
lease payments equals or exceeds ninety
percent of the market value of the asset at the
start of the lease term; or
(e) the asset is custom-made for the lessee and
after expiry of the lease term the asset will not
be of practical use to any person other than the
lessee; and
"lease term" includes an additional period for which the
lessee has an option to renew a lease.
Transfer 33.-(1) In any arrangement between persons who are
pricing and associates, the persons shall quantify, apportion and
other allocate amounts to be included or deducted in
arrangements calculating income between the persons as is necessary
between to reflect the total income or tax payable that would have
associates arisen for them if the arrangement had been conducted at
arm’s length.
(2) Where, in the opinion of the Commissioner,
a person has failed to comply with the provisions of
subsection (1), the Commissioner may make adjustments
consistent with subsection (1) and in doing so the
Commissioner may-
(a) re-characterise the source and type of
any income, loss, amount or payment; or
(b) apportion and allocate expenditure, including
that referred to in section 71(2) incurred by
one person in conducting a business that
benefits an associate in conducting a business
to the person and the associate based on the
comparability analysis of the businesses.

Income 34.-(1) Where a person attempts to split income with

splitting another person, the Commissioner may, by notice in
writing,
(a) adjust amounts to be included or deducted in
calculating the income of each person; or
(b) re-characterise the source and type of any
income, loss, amount or payment,
to prevent any reduction in tax payable as a result
of the splitting of income.
(2) Subject to the provisions of subsection (3), a reference
in subsection (1) to a person attempting to split income
includes a reference to a transfer, either directly or
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

indirectly, between the person and an associate of the

person of-
(a) amounts to be derived or expenditure to be
incurred; or
(b) an asset with the result that the transferee
receives or enjoys amounts derived from owning
the asset.
(3) Subsection (2) applies only where the reason or one of
the reasons for the transfer is to lower the tax payable by the
person or the associate.
(4) In determining under subsection (2) whether a person is
seeking to split income, the Commissioner shall consider
the market value of any payment made for the transfer.
Repealed 35. Repealed by Act No.10 of 2015 s.116.

Division III: Assets and Liabilities

Subdivision A: Central Concepts

Calculation 36.-(1) A person's gain from the realisation of an asset

of gains and or liability is the amount by which the sum of the
losses incomings for the asset or liability exceeds the cost of
the asset or liability at the time of realisation.
(2) The loss of a person from the realisation of
an asset or liability is the amount by which the cost of the
asset or liability exceeds the sum of the incomings for the
asset or liability at the time of realisation.
(3) Subject to the provisions of subsection (4),
net gains from the realisation of investment assets of an
investment of a person for a year of income are calculated
as the sum of all gains from the realisation of investment
assets of the investment during the year reduced by -
(a) the total of all losses from the realisation of
investment assets of the investment during
the year;
(b) any unrelieved net loss of any other
investment of the person for the year; and
(c) any unrelieved net loss for a previous year
of income of the investment or any other
investment of the person.
(4) A person may claim a reduction under subsection
(3) with respect to a foreign source loss on the realisation
of an asset or liability only to the extent that the amount,
which the loss is to reduce, includes gains on the
realisation of an asset or liability with a foreign source.
(5) Where a person may use an unrelieved net loss
of an investment in more than one calculation under
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

subsection (3), the person may choose the calculation or

calculations in which the loss or part of the loss is used, and
is limited to one such use.
(6) For purposes of this section, "unrelieved net
loss" of an investment for a year of income means the
excess of losses over gains from the realisation of
investment assets of the investment during the year of
income reduced by any amount of the excess that has
previously been taken into account under subsection
(3)(b) or (c).

Cost of asset 37.-(1) Subject to this Act, the cost of an asset of a

person is the sum of -
(a) expenditure incurred by the person in
acquiring the asset including, where
relevant, expenditure of construction,
manufacture or production of the asset;
(b) expenditure incurred by the person in
altering, improving, maintaining and
repairing the asset;
(c) expenditure incurred by the person in
realising the asset;
(d) incidental expenditure incurred by the
person in acquiring and realising the asset;
and
(e) any amount required-
(i) by Subdivision B of Division I of this
Part to be directly included in
calculating the person's income; or
(ii) that is an exempt amount or final
withholding payment of the person;
but excludes consumption expenditure, excluded
expenditure and expenditure to the extent to which it is
directly deducted in calculating the person's income or
included in the cost of another asset.
(2) For purposes of determining the cost of
trading stock of a business of a person -
(a) no amount shall be included in respect of
the repair, improvement or depreciation of
depreciable assets; and
(b) subject to paragraph (a) but without
otherwise limiting amounts to be included
under subsection (1), the person shall use
the absorption-cost method.
(3) Where assets owned by a person, being -
(a) trading stock; or
(b) any other type of asset prescribed by
the regulations,
are fungible and not readily identifiable, the person may
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

elect for the cost of the assets to be determined

according to the first-in-first-out method or the average-
cost method but, once chosen, the method may only be
changed with the written permission of the Commissioner.

(4) Where a person inherits an asset from a deceased,

that person shall be treated as having incurred
expenditure equal to the market value of that asset at
the time of such acquisition.

(5) Subject to the provisions of subsection (6), where a

person becomes a resident of the United Republic for
the first time, the net cost of an asset held by the
person immediately before becoming resident is equal to
the market value of the asset at that time.

(6) Subsection (5) does not apply to an asset that was a

domestic asset of the person immediately before
becoming resident.
(7) For purposes of this section -
“absorption-cost method” means the generally
accepted accounting principle under which the
cost of trading stock is the sum of direct
asset costs, direct labour costs and factory
overhead costs;
“average-cost method” means the generally accepted
accounting principle under which costs are
allocated to fungible assets of a particular type
owned by a person based on a weighted
average cost of all assets of that type owned by
the person;
“direct labour costs” means expenditure incurred by a
person on labour that directly relates to the
production of trading stock;
“direct asset costs” means expenditure incurred by a
person in acquiring any asset or assets, as
described in subsection (1)(a), that constitutes
trading stock or becomes an integral part of
trading stock produced;
“factory overhead costs” means all expenditure
incurred by a person in producing trading stock
except direct labour and direct asset costs;
“first-in-first-out method” means the generally
accepted accounting principle under which costs
are allocated to a fungible asset of a particular
type owned by a person based on the
assumption that assets of that type owned by the
person are realised in the order of their
acquisition; and
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

"incidental expenditure" incurred by a person in

acquiring or realising an asset includes-
(a) advertising expenditure, taxes, duties
and other expenditure of transfer; and
(b) expenditure of establishing,
preserving or defending ownership
of the asset,
and the expenditure referred to in paragraphs (a) and
(b) includes any related remuneration for the services of
an accountant, agent, auctioneer, broker, consultant,
legal advisor, surveyor or valuer.
Incomings for 38. Subject to this Act, incomings for an asset of a person means -
asset
(a) amounts derived by the person in respect of owning the
asset including-
(i) amounts derived from altering or decreasing the value
of the asset; and
(ii) amounts derived under the asset including by way of
covenant to repair or otherwise; and
(b) amounts derived or to be derived by the person in respect
of realising the asset,
but excludes any amount to the extent that it is an exempt
amount, a final withholding payment or, other than in the case of
trading stock, an amount to be directly included in calculating
the person's income under Subdivision B of Division I of this
Part.
Realisation 39. A person who owns an asset shall be treated as realising
the asset-
(a) subject to paragraph (b), when the person parts
with ownership of the asset including when the
asset is sold, exchanged, transferred, distributed,
cancelled, redeemed, destroyed, lost, expired or
surrendered;
(b) in the case of an asset of a person who ceases to
exist, excluding a deceased individual,
immediately before the person ceases to exist;
(c) in the case of an asset other than a Class 1, 2, 3, 5, 6
or 8 depreciable asset or trading stock, where the
sum of the incomings for the asset exceeds the cost
of the asset;
(d) in the case of an asset that is a debt claim owned by
a financial institution, when the debt claim becomes
a bad debt as determined in accordance with the
relevant standards established by the Bank of
Tanzania and the institution writes the debt off as
bad after such institution had taken all reasonable
steps in pursuing payment and the institution
reasonably believes that the debt claim will not be
satisfied;
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(e) in the case of an asset that is a debt claim owned by

a person other than a financial institution, the person
reasonably believes the debt claim shall not be
satisfied, the person has taken all reasonable steps in
pursuing the debt claim and the person writes the
debt off as bad;
(f) in the case of an asset that is a business asset,
depreciable asset, investment asset or trading;
(g) in the case of a foreign currency debt claim when
such debt is actually paid; or
(h) in the case of an asset owned by an entity, in the
circumstances referred to in section 56(1).
Application 40.-(1) The costs and incomings of a liability of
of this a person shall be determined consistently with sections 37
Division to and 38 as though a reference to an asset were a
liabilities reference to a liability and the following shall be included:
(a) in the costs, expenditure incurred in realising
the liability; and
(b) in the incomings, amounts derived in respect
of incurring the liability.

(2) A person who owes a liability shall be

treated as realising the liability-
(a) subject to paragraph (b), when the person
ceases to owe the liability including when the
liability is transferred, satisfied, cancelled,
released or expired;
(b) in the case of a liability of a person who ceases
to exist, excluding a deceased individual,
immediately before the person ceases to exist;
(c) in the case of a foreign currency debt
obligation, when such debt is actually paid;
(d) in the case of a liability of an entity, in the
circumstances referred to in section 56 (1); and
(e) subject to the provisions of subsection (3), in
the case of a liability owed by a resident person,
immediately before the person becomes a non-
resident person, other than liabilities owed by
the person through a permanent establishment
situated in the United Republic immediately
after becoming non-resident.
(3) Subject to the provisions of any regulations,
the provisions of Subdivision B shall apply, with any
necessary adaptations, to liabilities in a manner similar
to that in which they apply to assets.

Reverse, 41.-(1) Subject to the provisions section 25, where a

quantification person has included expenditure in the cost of an asset or
and liability and later recovers the expenditure, the person shall
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

compensation include the amount recovered in the incomings for the asset
for costs and or liability, as the case requires.
incomings (2) Subject to the provisions of section 25, where a
person has included an amount derived in the incomings
for an asset or liability and, because of a legal obligation to
do so, later refunds the amount, the person may include the
amount refunded in the cost of the asset.
(3) Section 28 applies to the cost of and
incomings for an asset or liability in the same manner as
it applies to amounts to be included and deducted in
calculating income.
(4) Subject to any or other adjustment under this
Act, where a person or an associate of a person derives an
amount "the compensation amount" which compensates for
or represents recovery of actual or expected costs or
incomings for an asset or liability or a loss in value of an
asset or increase in a liability, the compensation amount shall
be included in the incomings for the asset or liability, as the
case requires.

Subdivision B: Special Rules

Realisation with 42. Where a person realises an asset in any of

retention the manners described in section 39(d) to (h) -
(a) the person shall be treated as having parted
with ownership of the asset and deriving an
amount in respect of the realisation equal to the
market value of the asset at the time of
the realisation; and
(b) the person shall be treated as reacquiring the
asset and incurring expenditure of the
amount referred to in paragraph (a) in the
acquisition.

Transfer of asset 43. Where on divorce settlement or bona fide

to spouse or separation agreement an individual transfers an asset to a
former spouse or former spouse and an election for this subsection
spouse to apply is made by the spouse or former spouse in writing-
(a) the individual is treated as deriving an amount in
respect of the realisation equal to the net cost of
the asset immediately before the realisation; and
(b) the spouse or former spouse is treated as
incurring expenditure of the amount referred to
in paragraph (a) in acquiring the asset.

Transfer of asset 44.-(1) Subject to the provisions of this section and section
to associate or 43, where a person realises an asset by way of transfer of
for no ownership of the asset to an associate of the person or by
consideration way of transfer to any other person by way of gift-
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(a) the person shall be treated as deriving an amount in

respect of the realisation equal to the greater of the
market value of the asset or the net cost of the asset
immediately before the realisation; and
(b) the person who acquires ownership of the asset shall
be treated as incurring expenditure of the amount
referred to in paragraph (a) in the acquisition.

(2) Where a person realises an asset, being a business

asset, depreciable asset or trading stock, by way of
transfer of ownership of the asset to an associate of the
person and the requirements of subsection (4) are met -
(a) the person shall be treated as deriving an amount in
respect of the realisation equal to the net cost of the
asset immediately before the realisation; and
(b) the associate shall be treated as incurring expenditure
of the amount referred to in paragraph (a) in
acquiring the asset.
(3) For purposes of subsection (2), the net cost of a
depreciable asset at the time of its realisation is equal to
its share of the written down value of the pool to
which it belongs at that time apportioned according to
the market value of all the assets in the pool.
(4) The requirements specified in subsection (2) shall be -
(a) either the person or the associate is an entity;
(b) the asset or assets are business assets, depreciable
assets or trading stock of the associate
immediately after transfer by the person;
(c) at the time of the transfer-
(i) the person and the associate are residents; and
(ii) the associate or, in the case of an associate
partnership, none of its partners is exempt from
income tax;

(d) there is continuity of underlying ownership in the

asset of at least fifty percent; and
(e) an election for subsection (2) to apply is made by both
the person and the associate in writing.
Involuntary 45.-(1) This section shall apply where a person
realisation of involuntarily realises an asset in any of the manners
asset with described in section 39(a), acquires a replacement asset
replacement of the same type within one year of the realisation and
elects in writing for this subsection to apply.
(2) Where this section applies, the person
shall be treated as -
(a) deriving an amount in respect of the
realisation equal to-
(i) the net cost of the asset immediately
before the realisation; plus
(ii) the amount, if any, by which amounts
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

derived in respect of the realisation

exceed expenditure incurred in
acquiring the replacement asset,
calculated ignoring this section; and
(b) incurring expenditure in acquiring the
replacement asset equal to -
(i) the amount referred to in paragraph
(a)(i); plus
(ii) the amount, if any, by which
expenditure incurred in acquiring the
replacement asset exceed amounts
derived in respect of the realisation
calculated ignoring this section.
(3) For purposes of this section, the net cost of
a depreciable asset at the time of its realisation is equal
to its share of the written down value of the pool to
which it belongs at that time apportioned according to
the market value of all the assets in the pool.

(4) The regulations may prescribe the

circumstances in which the replacement of one
security in a corporation with another security in a
corporation, including as a result of reconstruction,
constitutes an involuntary realisation.

Realisation by 46. Subject to the provisions of section 32, where

separation rights or obligations with respect to an asset owned by
one person are created in another person, including by
way of lease of an asset or part thereof, then –
(a) where the rights or obligations are permanent, the
person shall be treated as realising part of the asset
but is not treated as acquiring any new asset or
liability; and
(b) where the rights or obligations are temporary or
contingent, the person is not treated as realising
part of the asset or liability but as acquiring a new
asset.
Apportionment 47.-(1) Where a person acquires one or more assets by way
of costs of transfer at the same time or as part of the same
and incomings arrangement, the expenditure incurred in acquiring each
asset shall be apportioned between the assets according to
their market values at the time of acquisition.

(2) Where a person realises one or more assets by way of

transfer at the same time or as part of the same
arrangement, the amounts derived in realising each asset
shall be apportioned between the assets according to their
market values at the time of realisation.
(3) Where a person who owns an asset realises part of it, the net
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

cost of the asset immediately before the realisation shall be

apportioned between the part of the asset realised and the part
retained according to their market values immediately after the
realisation.

PART IV
RULES APPLICABLE TO PARTICULAR TYPES OF PERSONS

Division I: In General
Subdivision A: Partnerships

Principles of 48.-(1) Notwithstanding the provisions of section 4 but subject

Taxation to the rest of this Act, a partnership shall not be liable to pay
income tax with respect to its total income and shall not be
entitled to any tax credit with respect to that income.
(2) Partnership income or a partnership loss of a partnership
shall be allocated to the partners in accordance with this
Subdivision.
(3) Amounts derived and expenditure incurred by partners in
common shall be treated as derived or incurred by partnership
and not the partners.
(4) Assets owned and liabilities owed by partners in common
shall be treated as owned or owed by the partnership and not
the partners and shall be treated as -
(a) in the case of assets, acquired when they begin to
be so owned;
(b) in the case of liabilities, incurred when they begin
to be so owed; and
(c) realised when they cease to be so owned or owed.
(5) All activities of a partnership shall be treated as conducted
in the course of the partnership business.
(6) Subject to this Part and Division II of Part III, arrangements
between a partnership and its partners shall be recognised other
than the following, which are taken into account in
determining a partner's share under section 50(4) -
(a) loans made by a partner to a partnership and any
interest paid with respect thereto; and
(b) services provided by a partner to a partnership,
including by way of employment, and any service fee
or income from employment payable with respect
thereto.
(7) Subject to any consequences under section 56, if on the
change of partners in a partnership at least two existing
partners continue, the partnership shall be treated as the same
entity both before and after the change.
Partnership 49.-(1) Partnership income from a business of a resident or
income non-resident partnership for a year of income shall be the
or loss chargeable income of the partnership for the year of income
from the business calculated as if the partnership were a
resident partnership.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(2) A partnership loss from a business of a resident or non-

resident partnership for a year of income shall be the loss of
the partnership for the year of income from the business
calculated under section 19(4).
Taxation of 50.-(1) For purposes of calculating a partner's income from a
partners partnership for a year of income of the partner there shall be
-
(a) included the partner's share of any
partnership income under section 49(1); and
(b) deducted the partner's share of any
partnership loss under section 49(2),
for a year of income of the partnership ending on the
last day of or during the year of income of the partner.
(2) Partnership income or a partnership loss allocated to
partners under subsection (1) -
(a) shall retain its character as to type and source;
(b) shall be treated as an amount derived or
expenditure incurred, respectively, by a
partner at the end of the partnership's year
of income; and
(c) shall be allocated to the partners
proportionately to each partner's share,
unless the Commissioner, by notice in
writing, permits otherwise.
(3) At the time partnership income is treated as derived by
partners under subsection (2)(b), any income tax under
this Act or foreign income tax paid or treated as paid
by the partnership with respect to the partnership
income shall be allocated to the partners,
proportionately to each partner's share, and treated as
having been paid by them.
(4) For purposes of this section and subject to section
48(6), a "partner's share" is equal to the partner's
percentage interest in any income of the partnership
as set out in the partnership arrangement.

Cost and 51.-(1) The following costs and incomings shall be

incomings of included in the cost of a partner's membership interest
partner’s in a partnership, namely-
membership (a) amounts included in calculating the partner's
interest in income under section 50 (1)(a), at the time of
partnership that inclusion; and
(b) the partner's share determined under section
50(4) of exempt amounts and final
withholding payments derived by the
partnership at the time the amount or
payment is derived.
(2) The following shall be included in the incomings
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

for a partner's membership interest in a partnership-

(a) amounts deducted in calculating the partner's
income under section 50(1)(b), at the time of
deduction;
(b) distributions made by the partnership to the
partner, at the time of distribution; and
(c) the partner's share determined under section
50(4) of consumption or excluded expenditure
incurred by the partnership, at the time the
expenditure is incurred.

Subdivision B: Trusts

Taxation of 52.-(1) A trust or unit trust shall be liable to tax

trusts separately from its beneficiaries and separate
calculations of total income shall be made for separate
trusts regardless of whether they have the same
trustees.
(2) Distributions-
(a) of a resident trust or unit trust shall be
exempt in the hands of the trust's
beneficiaries; and
(b) of a non-resident trust or unit trust shall be
included in calculating the income of the
trust's beneficiaries. (Deleted by F.A. 2020)

(2) Distributions of a trust or unit trust shall be

included in calculating the income of the trust’s
beneficiary.
(2A) For purposes of subsection (2), in the case of
an individual’s testamentary trust incorporated for
purposes of social protection of settlor’s surviving minor
dependants, distributions shall not include the trust’s
discharge of its primary obligations. (Substituted by F.A.
2020)

(3) Amounts derived and expenditure incurred

by a trust or a trustee in the capacity of trustee other
than as a bare agent, whether or not derived or incurred
on behalf of another person and whether or not any
other person is entitled to such an amount or income
constituted by such an amount, shall be treated as
derived or incurred by the trust and not any other
person.
(4) Assets owned and liabilities owed by a
trust or a trustee in the capacity of trustee other than
as a bare agent shall be treated as owned or owed by
the trust and not any other person.
(5) Where a receiver referred to in section
66(5) of the Tax Administration Act is a trustee -
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(a) the trust shall be treated as conducting or

continuing the activities of the person
whose assets come into the possession of
the receiver; and
(b) amounts derived and expenditure incurred
by the trust shall be included in calculating
the income of the trust in the same manner
as they would have been included in
calculating the income of the person if
they were derived or incurred by the
person prior to the event resulting in the
appointment of the receiver.
(6) Subject to this Part and Division II of Part
III, arrangements between a trust and its trustees or
beneficiaries shall be recognised.

Subdivision C: Corporations

Taxation of 53.-(1) A corporation shall be liable to tax separately from

corporations its shareholders.
(2) Amounts derived and expenditure incurred jointly or
in common by the managers or shareholders for the
purposes of a corporation that lacks legal capacity,
shall be treated as derived or incurred by the
corporation and not any other person.
(3) Assets owned and liabilities owed jointly or in
common by the managers or shareholders for the
purposes of a corporation that lacks legal capacity
shall be treated as owned or owed by the corporation
and not any other person.
(4) Subject to this Part and Division II of Part III,
arrangements between a corporation and its
managers or shareholders shall be recognised.

Taxation of
54.-(1) Dividends-
shareholders
(a) distributed by a resident corporation shall
be taxed in the hands of the corporation's
shareholders in the form of a final
withholding tax; and
(b) distributed by a non-resident corporation
shall be included in calculating the income
of the shareholders.
(2) A dividend distributed by a resident corporation to
another resident corporation shall be taxed at the rate
provided for in the First Schedule where the corporation
receiving the dividend holds twenty five percent or more of
the shares in the corporation distributing the dividend and
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

controls, either directly or indirectly, twenty five percent or

more of the voting power in the corporation.

Division II: General Provisions Applicable to Entities

Asset dealings 55. Subject to the provisions of section 44(2), where an

between entities asset is realised by way of transfer of ownership of the
and members asset by an entity to one of its members or vice versa -
(a) the transferor shall be treated as deriving
an amount in respect of the realisation equal
to the market value of the asset
immediately before the realisation; and
(b) the transferee shall be treated as incurring
expenditure of the amount referred to in
paragraph (a) in the acquisition.

Change in 56.-(1) Where the underlying ownership of an entity

control changes by more than fifty percent as compared with
that ownership at any time during the previous three
years, the entity shall be treated as realising any assets
owned and any liabilities owed by it immediately before
the change.
(2) Subject to the provisions of subsection (4),
where there is a change in ownership of the type
referred to in subsection (1), after the change the entity
shall not be permitted to -
(a) deduct a loss under section 19(1) that was
incurred by the entity prior to the change;
(b) in a case where the entity has, prior to the
change, included an amount in calculating
income in terms of section 25(2) or (4), claim
a deduction under those provisions after the
change;
(c) carry back a loss under section 26(3) that
was incurred after the change to a year of
income occurring before the change;
(d) reduce under section 36(3) gains from the
realisation of investment assets after the
change by losses on the realisation of
investment assets before the change; or
(e) carry forward foreign income tax under
section 77(3) that was originally paid with
respect to foreign source income derived by
the entity prior to the change.

(3) Where there is a change in ownership of the

type referred to in subsection (1) during a year of
income of the entity, the parts of the year of income
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

before and after the change shall be treated as separate

years of income.
(4) The provisions of subsection (2) shall not
apply where for a period of two years after a change of
the type mentioned in subsection (1), the entity -
(a) conducts the business or, where more than
one business was conducted, all of the
businesses that it conducted at any time
during the twelve month period before the
change and conducts them in the same
manner as during the twelve month period;
and
(b) conducts no business or investment other
than those conducted at any time during the
twelve month period before the change.

(5) The preceding provisions of this section shall not apply

where change of underlying ownership referred to in
subsection (1)-
(a) is a result of allotment of new membership
interest of the entity; or
(b) is a sole result of transfer of membership
interest of a resident entity to another resident
person. (inserted by F.A. 2023)

(6) The entity shall have the duty to report to

the Commissioner immediately before and after the
changes referred to under subsection (1) have occurred.

Income or 57.-(1) Where a distribution is made by an entity to an

dividend acquirer in the course of an income or dividend
stripping stripping arrangement, the arrangement shall be treated
as though -
(a) the payment referred to in subsection
(2) is a distribution made by the entity
to the original member of the entity; and
(b) the distribution made by the entity to
the acquirer is in an amount equal to
the distribution less the amount of the
payment.
(2) For the purpose of subsection (1) “income or
dividend stripping arrangement” means an
arrangement under which –
(a) an entity has accumulated, current or
expected income “the “income”;
(b) a person “the acquirer” acquires a
membership interest in the entity and the
acquirer or an associate of the acquirer
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

makes a payment “the payment", whether

or not in respect of the acquisition and
whether or not the payment is at the time
of acquisition, to another person who is or
was a member in the entity “the original
member" or an associate of such another
person;
(c) the payment reflects, in whole or in part,
the income of the entity; and
(d) after the acquirer acquires the interest in
the entity, the entity makes a distribution
to the acquirer that represents, in whole or
in part, the income.

PART V
SPECIAL INDUSTRIES
Division I: Insurance Business

General
insurance 58.-(1) For purposes of this Act, a person's activities in
business conducting a general insurance business shall be
treated as a business separate from any other activity
of the person and the person's income or loss from
the business for any year of income shall be
calculated separately.
(2) For purposes of calculating the
income of a person for a year of income from a
general insurance business -
(a) there shall be included, together with any
other amounts to be included under other
provisions of this Act -
(i) premiums derived during the year of
income by the person as insurer,
including as re-insurer, in
conducting the business; and
(ii) proceeds derived during the year of
income by the person under any
contract of re- insurance in respect
of proceeds referred to in paragraph
(b)(i); and
(b) there shall be deducted, together with any
other amounts deductible under other
provisions of this Act -
(i) proceeds incurred during the year of
income by the person as insurer,
including as re-insurer, in conducting
the business; and
(ii) premiums incurred during the year of
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

income by the person under any

contract of re-insurance in respect of
proceeds referred to in subparagraph (i).
Life insurance
59.-(1) For purposes of this Act, a person's activities in
business
conducting a life insurance business shall be treated as a
business separate from any other activity of the person and
the person's income or loss from the business for any year
of income shall be calculated separately.
(2) For purposes of calculating the income of a person
for a year of income from a life insurance business -
(a) there shall be included any amounts to be
included under other provisions of this Act
but the following amounts shall not be
included and not be an income of the person-
(i) premium derived during the year of
income by the person as insurer,
including as re- insurer, in conducting
the business; and
(ii) proceeds derived during the year of
income by the person under any
contract of re- insurance in respect of
proceeds referred to in paragraph (b)(i);
and
(b) there shall be deducted only the expenses
of managing the business's investments
including commission that are deductible
under other provisions of this Act but the
following amounts shall not be deductible
and not be included in the cost of any asset
or liability of the person-
(i) proceeds incurred during the year of
income by the person as insurer,
including as re- insurer, in conducting
the business; and
(ii) premiums incurred during the year of
income by the person under any
contract of re-insurance in respect of
proceeds referred to in subparagraph
(i).
Proceeds from 60.-(1) Subject to subsection (2) and sections 58 and 59, for purposes of
insurance calculating the income of a person, the treatment of proceeds derived by
the person from insurance shall be determined in accordance with section
31.

(2) Subject to the provisions of sections 58 and

59 , gains of an insured from life insurance shall be-
(a) in the case where the proceeds are paid by
a resident insurer, exempt in the hands
of the insured; and
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(b) in the case where the proceeds are paid by

a non-resident insurer, included in
calculating the income of the insured.
(3) For purposes of this section, "gains of an
insured from life insurance" means the extent to which
proceeds from life insurance paid by an insurer exceed
premiums paid to the insurer with respect to the
insurance.

Division II: Retirement Savings

Retirement
contributions to 61.-(1) Subject to the provisions of subsection (2),
approved an individual may claim a reduction in calculating
retirement fund total income for a year of income equal to retirement
contributions made during the year of income by-
(a) the individual; or
(b) an employer of the individual where the
contribution is included in calculating the
individual's income from the employment,
to an approved retirement fund in respect of an interest
of the individual or a spouse of the individual in the fund.
(2) The reduction claimed by an individual
under subsection (1) for any year of income shall be
the actual contribution or the statutory amount required
whichever is lesser.
Taxation of 62.-(1) Subject to the provisions of this section,
retirement funds the provisions of Parts III and IV shall apply to a
retirement fund and the calculation of income of a
retirement fund.
(2) For purposes of calculating the income of a
retirement fund-
(a) retirement contributions received by the
fund shall not be included in the calculation
and shall not be an incoming of the fund; and
(b) retirement payments shall not be deductible
and are not included in the cost of any asset
or liability of the fund.
(3) Where an approved retirement fund ceases to
be an approved retirement fund during a year of
income, its income tax payable under section 4(1)(a)
for the year of income shall be increased by an amount
equal to the income tax rate applicable to corporations
applied to -
(a) all retirement contributions received by the
fund from or on behalf of resident
individuals and total income of the fund
during the period from its most recent
approval as an approved retirement fund to
when it ceased to be so approved, less;
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(b) all retirement payments made by the fund

from its most recent approval as an approved
retirement fund to when it ceased to be so
approved in respect of individuals who
were resident during that period.

Retirement 63.-(1) Gains from an interest in an unapproved retirement

payments fund shall be-
(a) in the case where the retirement
payments are paid by a resident fund,
exempt in the hands of the payee; and
(b) in the case where the retirement
payments are paid by a non-resident fund,
included in calculating the income of the
payee.
(2) For purposes of this section, "gain from an interest in
an unapproved retirement fund" means the extent to
which retirement payments made by an unapproved
retirement fund in respect of an interest in the fund
exceed retirement contributions paid to the fund in
respect of the interest.

Division III:
Charitable Organisations, Clubs and Trade Associations

Charitable 64.-(1) A charitable organisation or religious organisation

organisations shall be treated as conducting a business with respect
to its functions referred to in subsection (8) as the
"charitable business".
(2) For purposes of calculating the income of a charitable
organisation or religious organisation for any year of
income from its charitable business -
(a) there shall be included, together with any
other amounts required to be included
under other provisions of this Act, all
gifts and donations received by the
organisation; and
(b) there shall be deducted, together with any
other amounts deductible under other
provisions of this Act –

(i) amounts applied in pursuit of the

organisation or religious
organisation’s functions referred to in
subsection (8) by providing reasonable
benefits to resident persons or, where
the expenditure on the benefits has a
source in the United Republic, persons
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

resident anywhere; and

(ii) twenty five percent of the organisation

or religious organisation's income from
its charitable business calculated
without any deduction under
subparagraph (i) and any investments.

(3) This subsection shall apply to any amount applied by a

charitable organisation or religious organisation during
a year of income other than in the manner referred
to in subsection (2)(b)(i) or as a reasonable payment
to a person for assets or services rendered to the
organisation by the person.
(4) Where subsection (3) applies -
(a) the organisation or religious organisation
shall be treated as conducting a business other
than its charitable business; and
(b) the sum of amounts to which that subsection
applies for the year of income less any
income of the organisation or religious
organisation from a business other than its
charitable business or business referred to in
paragraph (a) shall be treated as income of
the organisation or religious organisation that
has a source in the United Republic derived
during the year of income from the business
referred to in paragraph (a).

(5) Notwithstanding the provision of section 19, a

charitable organisation or religious organisation -
(a) may not set any loss from its charitable
business against its income from any other
business; and
(b) may only set losses from any other business
against income from any such other business.

(6) Where a charitable organisation or religious

organisation ceases to be a charitable organisation or
religious organisation during a year of income -
(a) the organisation or religious organisation
shall be treated as conducting a business
other than its previous charitable business;
and
(b) there shall be included in calculating the
organisation or religious organisation’s
income for the year of income from the
business referred to in paragraph (a) any
amounts claimed as a deduction under
subsection (2)(b)(ii) during that year of
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

income or any prior year of income during

which the organisation was a charitable
organisation or religious organisation.
(7) Where a charitable organisation or religious
organisation wishes to save funds for a project that is
detailed in material particulars and which the
organisation is committed to, the organisation or
religious organisation may apply to the Commissioner
and the Commissioner may approve the saving as
meeting the requirements of subsection (2)(b)(i).

(8) For purposes of this section, “charitable organisation”

means a resident entity of a public character that
satisfies the following conditions:
(a) the entity was established and functions solely
as an organisation for:
(i) the relief of poverty or distress of
the public;
(ii) the advancement of education; or
(iii) the provision of general public health,
education, water or road construction
or maintenance; and
(b) the entity has been issued with a ruling by
the Commissioner under section 11 of the
Tax Administration Act currently in force
stating that it is a charitable organisation or
religious organisation.
Clubs and trade 65.-(1) Subject to subsection (2), the activities of a club,
associations trade association or similar institution shall be treated as a
business and for the purposes of calculating the club,
association or institution’s income for a year of
income from that business there shall be included,
together with any other amounts to be included under
other provisions of this Act, entrance fees,
subscriptions and other amounts derived from members
during the year of income.
(2) Where three-quarters or more of the
amounts to be included in calculating the income of a
members club or trade association for a year of
income from the business referred to in subsection (1)
are derived from members of the club or association, the
income from that business shall be exempt and shall
not constitute chargeable income of the club or
association.
(3) For purposes of this section -
“members club” means a club or similar institution all
the assets of which are owned in common by,
tested ignoring section 53(3), or held in trust for the
members thereof;
“member” means -
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(a) in the case of a club or similar institution, a

person who, while a member, is entitled to an
interest in all the assets of the club or institution
in the event of its liquidation or who is entitled to
vote at a general meeting of the club or
institution; and
(b) in the case of a trade association, a person who is
entitled to vote at a general meeting of the
association; and
“trade association” means any association of persons-
(a) that are all separately engaged in a particular type
of business; and
(b) formed with the main object of safeguarding or
promoting the business interests of such persons.

Division IV: Minerals

Subdivision A: Prospecting and Mining

Application of 65A.This subdivision applies where a person is

subdivision conducting mining operations without a separate license
solely for processing, smelting or refining of minerals.

Principles of 65B.-(1) A person conducting mining operations shall be

taxation subject to income tax with respect to those operations
as provided by this Act, and as modified by this
subdivision.

(2) The income tax payable in respect of mining

operations for a year of income shall be calculated by
applying the rate set out in paragraph 1(5) of the First
Schedule to a person's total income from mining
operations for the year of the income.

(3) Subject to subsection (2), where a person has

other total income, that income shall be charged at the
appropriate rate under the First Schedule.

(4) For purposes of calculating a person's total

income from mining operations
(a) all mining operations conducted by a person
shall be treated as business activities save as
arrangement referred to under section 65H of
this Act;
(b) each separate mining operation shall be
treated as an independent business and the
person must prepare accounts for that
business separate from any other activity of
the person; and
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(c) the person shall calculate chargeable income

and income tax liability for the business
independently for each year of income.

(5) The provisions of section 33 shall apply-

(a) to arrangements between a separate mining
operation and other activities of the person
conducting the mining operation including
mining operations under a different mineral
rights or processing, smelting or refining
operations of the person;
(b) as though the arrangements were conducted
between associated persons; and
(c) so as to treat the transfer of an asset to or
from a separate mining operation as an
acquisition and disposal of the asset.
(6) Where subsection (5) applies, section 33 shall
apply to arrangements between the persons with respect
to the mining operations as though they were
associated persons.

Separate mining 65C.-(1) Subject to this section, each mineral right

operations shall constitute a separate mining operation.
(2) Where a person holding a prospecting licence
is granted a mining licence and the mining licence area
falls wholly within the prospecting licence area, the
following conditions shall apply-
(a) mining operations conducted by the person
with respect to the prospecting licence to the
date of grant of the mining licence shall be
treated as conducted with respect to the
separate mining operation; and
(b) from the date of grant of the mining licence,
mining operations conducted with respect to
the new prospecting licence outside the mining
licence area shall be treated as a new separate
mining operation.

(3) Where a person holds a mining licence in

relation to mining area and such mining area is
extended mining operations conducted by the person
with respect to the mining licence in both the original
area and the extended area shall be treated as conducted
with respect to the same mining operation.
(4) For purposes of clarity, the prospecting and
mining ring fencing set up by this section and section
65B-
(a) starts with the grant of a prospecting licence
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

and prospecting operations conducted with

respect to that licence;
(b) may, subject to the limitations in this section,
continue into a mining licence granted with
respect to the prospecting licence and mining
operations conducted with respect to that
licence; and
(c) ends at the point minerals from the mining
operations are sufficiently processed to produce
a first saleable product.

(5) The Minister may, after consultation with the

Minister responsible for mining, make regulations as may
be necessary for the better carrying out the provisions
of this section.

Income from 65D. In calculating a person's income from a

mining separate mining operations for a year of income, there
operations shall be included, together with any other amounts
required to be included under other provisions of this
Act, the following-
(a) incomings derived from the disposal of
minerals produced from the licence area;
(b) amounts received in respect of the sale of
data or information pertaining to the
operations or mineral reserves;
(c) amounts required to be included under
paragraph 5 of the Third Schedule including
from the assignment or other disposal of an
interest in the mineral right with respect to
which the operation is conducted after
commencement of production: and
(d) amounts required to be included under section
65I in respect of a surplus in a rehabilitation
fund.

Deduction for 65E.-(1) In calculating a person's income from a

mining separate mining operation for a year of income, there
operations shall be deducted, together with any other amounts
deductible under other provisions of this Act, the
following-
(a) annual charges incurred by the person under
the Mining Act or Mining Development
Agreements with respect to the mineral rights;

(b) depreciation allowances granted with respect to

the mining operation and calculated in
accordance with paragraph 5 of the Third
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Schedule;
Provided that, depreciation basis for purposes of
depreciation allowance shall not exceed the cost of
investment as determined by the Commission under
section 22 of the Mining Act;
(c) contributions to and other expenses incurred in
respect of a rehabilitation fund for the
operation as required by the law or approved
under Mining Development Agreements by
the Minister responsible for mining; and
(d) expenses incurred in respect of acquisition of
rehabilitation bond.
(2) Deduction shall not be allowed in calculating
income from a separate mining operations-
(a) under sections 15, 16, 17 or 26;
(b) for royalty incurred by a person under the Mining Act,
(added by Laws Revision (Misc. Amendments) Act, 2023
and renumbered subsequent items)
(c) for an unrelieved loss under section 19,
except as permitted by section 65F;
(d) for a bonus payment referred to in section 65G; or
(e) for expenses incurred by the person
implementing an approved mine closure
fund in excess of the amount contributed to
the approved rehabilitation fund.

Losses from 65F.-(1) The provisions of section 19 shall apply to

mining unrelieved losses of a person from a separate mining
operations operation with the following conditions-
(a) losses from the separate mining operations may be
deducted only in calculating future income from
that operation and not income from any other
activity whether a mining operation under a
different mineral right, processing, smelting,
refining or a non-mining activity;

(b) income from the separate mining operations may

not be reduced by a loss from any other activity
whether a mining operation under a different mineral
rights, processing, smelting, refining or a non-
mining activity; and
(c) income from the separate mining operation for any
year of income may be reduced by reason of the
use of unrelieved losses from that operation subject
to other limitations imposed by section 19 but not
below thirty percent of that income before any
reduction for losses.
(2) The perpetual loss making corporation
rules shall not apply in conducting mining operations
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

under a prospecting licence.

Bonus payments 65G.-(1) Bonus payments for the grant, transfer
or assignment of a mineral rights, whether in form of a
lump sum or dependent on or calculated by reference to
specific production targets, are not deductible in
calculating income from a separate mining operation.
(2) In this section, “bonus payment” shall not
include annual charges and royalties paid under the
Mining Act or Mining Development Agreements.

Realisation of 65H.-(1) Mineral rights shall be an asset

mineral rights which is separate from any other interest in the land
that constitutes the license area and separate from any
other asset employed in mining operations.

(2) For purposes of farm-out, arrangement

mineral rights shall be deemed as investment asset
when realised before commencement of production.
(3) Where mineral right is realised in terms of
subsection (2), relevant provisions under this Act in
respect of realisation of investment or business asset
shall apply.

(4) Where mineral right is realised together with

other assets used in mining operations or where a
mineral right is realised in part, the provisions of
section 47 shall apply for purposes of apportionment
of expenditure, costs and amounts derived from the
realisation.
(5) Incomings from the realisation of mineral
rights include amounts derived by the holder of the
right from the realisation and also include amounts to
be derived in the future from the realisation in
accordance with section 38(b).
(6) For purposes of section 38(b), an amount
including any form of payment or benefit to be
derived in the future from the realisation of an asset
shall be taken into account as an incoming at its market
value at the time of the realisation or in any other case,
in accordance with section 27(1)(d).
(7) In calculating the market value of an
obligation to pay a future amount, there shall apply
present value of a reasonable estimate of the amount of
the future payment.
(8) An amount taken into consideration under
subsections (6) and (7) as incoming from the
realisation of mineral rights shall be included in the cost
of the asset for the acquirer.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(9) The right to receive a future amount

shall be realised in a different amount to the extent that
the provisions of sections 25 and 41 shall apply to make
adjustments.
(10) The provisions of this section shall apply to
the realisation of mineral rights where the incomings
from the realisation include an overriding royalty.

Rehabilitation 65I.-(1) Rehabilitation fund shall be exempt from tax.

fund (2) Amounts paid from a rehabilitation fund to
meet expenses of activities authorised by an approved
mine closure plan for which the fund was established
are not income of the mineral right holder which is
otherwise required to meet those expenses.
(3) Any amounts in a rehabilitation fund which
are paid to or come under the control of a mineral
right holder and which are not referred to in subsection
(2) are included in calculating income of the mineral
rights holder from the associated mineral operations.

Subdivision B: Processing, Smelting and Refining

Licensee
conducting 65J.-(l) A licensee conducting processing, smelting
processing, or refining with respect to minerals shall be subject to
smelting or income tax with respect to the activities as provided by
refining this Act, and as modified by this subdivision to the
extent that there is no modification, the standard rules in
this Act shall apply.

(2) In calculating a licensee's income from a

business which includes processing, smelting or refining
of minerals, there shall be deducted amounts deposited
in respect of a rehabilitation fund established for the
licence.

(3) There shall be no deduction allowed in

calculating income from a separate mining operation-

(a) under section 15, 16, 17 or 26;

(b) for an unrelieved loss under section 19, except
as permitted by section 65F;
(c) expenses incurred by the person in
implementing the rehabilitation plan for the
operation in excess of deposits in the
rehabilitation fund.
(4) Unrelieved losses of a licensee arising from
conducting a business that includes processing, smelting
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

or refining may be deducted under section 19 so as to

reduce total income of the licensee but not below thirty
percent of total income before any deduction for such
an unrelieved loss.
(5) The provisions of section 65I shall apply
to a rehabilitation fund established for a processing,
smelting or refining licence as though a reference to
“mineral rights holder” were a reference to the “holder of
that license.”
(6) For purposes of this section, "licence"
means a licence granted in respect to processing,
smelting or refining under respective Mining Act.

Division V: Petroleum
Subdivision A: Petroleum Operations

Principles of 65K.-(1) A person conducting petroleum operations

taxation pursuant to licence granted under the Petroleum Act shall
be subject to income tax with respect to those
operations as prescribed by this Act and as modified by
this division.
(2) Income tax payable in respect to petroleum
right for a year of income shall be calculated by applying
the rate set out in paragraph 1(6) of the First Schedule to
a person's total income from petroleum right for the year
of income.
(3) Subject to subsection (2), where a person
has other total income, that income shall be charged
at the appropriate rate under the First Schedule.
(4) For purposes of calculating a person's total
income from petroleum right-
(a) all petroleum right conducted by a person shall
be treated as business activities save as
arrangement referred to under section 65Q of
this Act;
(b) each separate petroleum right shall be treated
as an independent business and the person
shall prepare accounts for that business
separate from any other activity of the person;
and
(c) a person shall calculate chargeable income
and income tax liability for the business
independently for each year of income.
(5) The provisions of section 33 shall apply-
(a) to arrangements between a separate petroleum
right and other activities of the person
conducting the petroleum right including other
petroleum right or midstream or downstream
activities of the person;
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(b) as though the arrangements were conducted

between associated persons; and
(c) so as to treat the transfer of an asset
especially petroleum to or from a separate
petroleum right as an acquisition and disposal
of the asset.
(6) Where subsection (5) applies, section 33 shall
apply to arrangements between the persons with respect to
the petroleum right as though they were associated persons.
(7) The Minister may, after consultation with the
Minister responsible for mining, make regulations as may
be necessary for the better carrying out the provisions of
this section.
Separate 65L.-(l) Subject to this section, petroleum operations
petroleum rights pertaining to each petroleum right shall constitute a separate
petroleum operation.
(2) Where a person holding an exploration petroleum
right which is partly converted into a development petroleum
right, the following conditions shall apply-
(a) petroleum operations conducted by the person in
respect of the exploration licence to the date of
grant of development licence are treated as
conducted with respect to the development
licence, and so are treated as conducted with
respect to the same petroleum right; and
(b) from the date of grant of the development
licence referred to in paragraph (a), exploration
operations conducted with respect to the area
outside the development area but within the
exploration right shall be treated as separate
petroleum operation.
(3) For purposes of subsection (2), a person holds
an exploration petroleum right that is partly converted into
a development petroleum right, where-
(a) the person holds a petroleum right which is or
dependent on an exploration licence including by
reason of a Production Sharing Agreement;
(b) a development licence is subsequently granted and
the development area falls wholly within the
exploration area; and
(c) as a consequence, the person holds a different
petroleum right with respect to the development
area.
(4) For purposes of this section and section 65K the
upstream ring fencing set up-
(a) all petroleum rights held by a person who
conducts petroleum operations shall be treated as
business activities save as arrangement referred to
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under section 65Q of this Act;

(b) subject to the limitations in this section, may
continue into a development licence granted with
respect to the exploration licence and
development and production rights conducted
with respect to that licence; and
(c) ends at the delivery point identified in the
Production Sharing Agreement.

Income from 65M.-(1) Subject to this section, in calculating a

petroleum rights person's income from a separate petroleum rights for a year
of income, there shall be included, together with any other
amounts required to be included under other provisions of
this Act, the following-
(a) incomings derived from the disposal of petroleum
obtained from the licence area valued at the
delivery point identified in the Production Sharing
Agreement;
(b) amounts received in respect of the sale of data or
information pertaining to the operations or
petroleum reserves; and
(c) amounts required to be included under paragraph
5 of the Third Schedule including from the
assignment or other disposal of an interest in the
petroleum right with respect to which the
operation is conducted after commencement of
production.
(2) In the case of a contractor under a Production
Sharing Agreement, in calculating inclusions under
subsection (l)(a), include the contractor's full share of
petroleum from profit oil or profit gas.

Deductions for 65N.-(1) In calculating a person's income from a

petroleum rights separate petroleum right for a year of income, there shall be
deducted, together with any other amounts deductible under
other provisions of this Act, the following-
(a) annual fees incurred by the person with respect to
the petroleum right under section 114 of the
Petroleum Act;

(b) depreciation allowances in respect of depreciable

assets other than the assets whose costs are
recouped from the cost oil or cost gas under a
production sharing agreement granted with
respect to the operations and calculated in
accordance with paragraph 6 of the Third
Schedule; and

Provided that, assets owned and employed by a

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person on international pipeline shall be treated as

depreciable assets of class 6 pool of depreciable
assets. (inserted by F.A. 2021)

(c) amounts deposited in respect of the

decommissioning fund for the petroleum
operation.

(1A) For purposes of subsection (1),

“international pipeline” means a cross border pipeline
for transportation of crude oil from a foreign country to
a port facility in the United Republic in which such crude
oil is exported to another foreign country. (inserted by F.A.
2021)

(2) There shall be no deduction allowed in calculating

income from a separate petroleum right-
(a) under section 15, 16, or 26;
(b) any expenditure and depreciation allowance in
respect of assets covered by cost petroleum under
a production sharing agreement;
(c) for unrelieved loss under section 19, except as
permitted by section 65O;
(d) any bonus payment; and
(e) expenses incurred by the person in implementing
the decommissioning plan for the operation in
excess of deposits in the decommissioning fund.
Losses from
65O.-(1) The provision of section 19 shall apply to
petroleum rights
unrelieved losses of a person from a separate petroleum
right with the following modifications-
(a) losses from the separate petroleum right may be
deducted only in calculating future income from
that operation and not income from any other
activity, whether an upstream, midstream or
downstream petroleum activity or a non-
petroleum activity;
(b) income from the separate petroleum right may
not be reduced by a loss from any other activity
whether an upstream, midstream or downstream
petroleum activity or a non-petroleum activity;
and
(c) income from the separate petroleum right for any
year of income may be reduced by reason of the
use of unrelieved losses from that operation,
subject to other limitations imposed by section 19
but not below thirty percent of that income
before any reduction for losses.
(2) The perpetual loss corporation rules shall not apply
to a person conducting exploration operations.
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Bonus payments 65P. Bonus payments made with respect to a

petroleum right, whether in form of a lump sum or
otherwise, shall not be deductible in calculating income
from a separate petroleum right:
Provided that, bonus payments shall neither be
included in the cost of the petroleum right nor depreciated
over the term of the right.
Realisation of 65Q.-(1) A petroleum right shall be an asset separate
petroleum rights from any other interest in the land that constitutes the
license area and separate from any other asset employed in
petroleum operations.
(2) For purposes of farm-out arrangement, petroleum
rights shall be deemed as investment asset when realised
before commencement of production.
(3) Where petroleum rights realised in terms of
subsection (2), relevant provisions under this Act in respect
of realisation of investment or business asset shall apply.
(4) Where a petroleum right is realised together with
other assets used in petroleum operations or where a
petroleum right is realised in part, the rules in section 47
shall apply for purposes of apportionment expenditure, costs
and amounts derived from the realisation.
(5) The incomings from the realisation of a
petroleum right which include amounts derived by the
holder of the right from the realisation, shall include
amounts to be derived in the future from the realisation.
(6) For purposes of section 38(b), an amount
including any form of payment or benefit to be derived in
the future from the realisation of an asset, shall be taken into
account as an incoming at its market value at the time of the
realisation or in any other case, in accordance with section
27(1)(d).
(7) In calculating the market value of an obligation to
pay a future amount, there shall apply present value of a
reasonable estimate of the amount of the future payment.
(8) An amount taken into consideration under
subsections (6) and (7) as incomings from the realisation of a
petroleum right shall be included in the cost of the asset for
the acquirer.
(9) The right to receive a future amount shall be
realised in a different amount to the extent that the
provisions of sections 25 and 41 shall apply to make
adjustments.
(10) The provisions of this section shall apply to the
realisation of a petroleum right where the incomings from
the realisation include an overriding royalty.

Decommissioning 65R.-(1) A decommissioning fund shall be exempt

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funds from tax.

(2) Amounts paid from a decommissioning fund to
meet expenses of activities authorised by the
decommissioning plan for which the fund was established
shall not be an income of the petroleum right holder which
otherwise required to meet those expenses.
(3) Any amounts in a decommissioning fund which
are paid to or come under the control of a petroleum right
holder and which are not referred to in subsection (2) shall
be included in calculating income of the petroleum rights
holder from the associated petroleum rights.
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Subdivision B: Midstream and Downstream Activities

Midstream and 65S.-(1) A licensee conducting midstream or

downstream downstream activities with respect to petroleum shall be
activities subject to income tax with respect to the activities as
prescribed by this Act, and as modified by this Subdivision.

(2) In calculating a licensee's income from a business

which includes conducting midstream or downstream
activities with respect to petroleum, there shall be deducted
amounts deposited in and other expenses incurred in respect
of the decommissioning fund established for the licence.

(3) There shall be no deduction allowed in

calculating income from a separate petroleum right-
(a) under section 15, 16, 17 or 26;
(b) for unrelieved losses under section 19, except as
permitted by section 65O; or
(c) expenses incurred by the person in implementing
the decommissioning plan for the operation in
excess of the amount contributed in the
decommissioning fund.

(4) Unrelieved losses of a licensee arising from

conducting a business that includes midstream or
downstream activities may be deducted under section 19 so
as to reduce total income of the licensee but not below thirty
percent of total income before any deduction for such an
unrelieved loss.
(5) The provisions of section 65R applies to a
decommissioning fund established under section 197 of the
Petroleum Act as though a reference to "petroleum right
holder" were a reference to the “holder of a midstream or
downstream licence.”
(6) In this section, "licence" means a licence granted
in respect to midstream and downstream activities under the
Petroleum Act.

Division VI:
Transportation

Persons engaged 65T.-(1) The income of a resident person engaged in

in transportation transportation of passengers or goods shall be determined
of passengers or in accordance with Subdivision B of Part III.
goods (inserted
by F.A. 2022) (2) Expenses of a resident person engaged in transportation
(Repealed by F.A. of passengers or goods shall be determined in accordance
2023) with Subdivision D of Part III.
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(3) Notwithstanding the provisions of sub-section (1), tax

payable by a resident person under this Division shall be
determined in accordance with the rates prescribed in
paragraph 2(5) of the First Schedule.

(4) The tax payable under subsection (3) shall be the person’s
advance tax.

(5) The persons referred to under this Division shall comply with
electronic means of issuing receipts as may be prescribed
by the Commissioner. (Inserted by F.A. 2022)
(Repealed by F.A. 2023)

PART VI
INTERNATIONAL

Division I: Residence and Source

Resident persons 66.-(1) An individual is resident in the United Republic

for a year of income if the individual-
(a) has a permanent home in the United Republic
and is present in the United Republic during any
part of the year of income;
(b) is present in the United Republic during the year
of income for a period or periods amounting in
aggregate to one hundred eighty three days or
more;
(c) is present in the United Republic during the year
of income and in each of the two preceding years
of income for periods averaging more than one
hundred twenty two days in each such year of
income; or
(d) is an employee or an official of the Government
of the United Republic posted abroad during the
year of income.
(2) A partnership is a resident partnership for a
year of income if at any time during the year of income a
partner is a resident of the United Republic.
(3) A trust is a resident trust for a year of income if -
(a) it was established in the United Republic;
(b) at any time during the year of income, a trustee of
the trust is a resident person; or
(c) at any time during the year of income a resident
person directs or may direct senior managerial
decisions of the trust, whether the direction is or
may be made alone or jointly with other persons
or directly or through one or more interposed
entities.
(4) A corporation is a resident corporation for a year of
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income if-
(a) it is incorporated or formed under the laws of
the United Republic whether physically or
through any electronic means (inserted by F.A.
2022); or
(b) at any time during the year of income the
management and control of the affairs of the
corporation are exercised in the United
Republic.
Source of income 67.-(1) A person shall calculate his income or loss
and loss from any employment, business or investment that has a
source in the United Republic separately from any income
or loss from that employment, business or investment that
has a foreign source.

(2) A person's income from any employment,

business or investment has a source in the United Republic
to the extent to which -
(a) the amounts directly included in calculating that
income that have a source in the United
Republic, exceed the amount stipulated in
paragraph (b);
(b) the amounts directly deducted in calculating
that income that have a source in the United
Republic.
(3) A person's loss from any business or
investment has a source in the United Republic to the extent
to which the amounts referred to in subsection (2)(b) exceed
those referred to in subsection (2)(a).
(4) A person's foreign source of income or loss
from an employment, business or investment shall be
calculated as -
(a) the person's worldwide income or loss from that
employment, business or investment calculated
notwithstanding subsection (1); less
(b) any income with a source in the United
Republic from that employment, business or
investment; or plus
(c) any loss with a source in the United Republic
from that employment, business or investment.
Source of directly 68.-(1) Amounts directly included in calculating
included and income have a source in the United Republic where they
deducted consist of –
amounts (a) incomings, gains and amounts referred to in
section 8(2)(b), (c) or (d) or section 9(2)(b), to
the extent to which a domestic asset or domestic
liability is involved; and
(b) subject to paragraph (a), payments that have a
source in the United Republic.
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(2) Amounts directly deducted in calculating

income have a source in the United Republic where they
consist of -
(a) allowances referred to in sections 13(1) or 17
and expenditure referred to in section 14(1) to
the extent to which -
(i) subject to subparagraph (ii), they relate to
domestic assets; or
(ii) where the expenditure or allowances relate to
moveable tangible assets used by a person
who conducts a business of land, sea or air
transport operator or charterer to carry
passengers, cargo, mail or other moveable
tangible assets, the assets are used to carry
passengers who embark or cargo, mail or
other moveable tangible assets that are
embarked in the United Republic, other than
as a result of transhipment;
(b) losses from the realisation of business assets,
investment assets and liabilities of a business
where the asset or liability involved is a
domestic asset or domestic liability; and
(c) subject to paragraphs (a) and (b), payments that
have a source in the United Republic.
Source of 69. The following payments have a source in the United
payments Republic-
(a) dividends paid by a resident corporation;
(b) interest paid by a resident person or domestic
permanent establishment;
(c) natural resource payments made in respect of or
calculated by reference to natural resources taken
from land or the sea situated within the United
Republic or its territorial waters including payment
made for harnessing, generating or utlising land, air
or water natural resources for generation of power
or anything of value whether the respective natural
resource is located alongside the border or within
the country (inserted by F.A. 2022);
(d) rent paid for the use of, right to use or
forbearance from using an asset situated in the
United Republic;
(e) royalties paid for the use of, right to use or
forbearance from using an asset in the United
Republic;
(f) premiums for general insurance or re-insurance paid
to, and proceeds from general insurance or re-
insurance paid by a resident person in respect of the
insurance or re-insurance of any risk in or outside the
United Republic;
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(g) payments received by a person who conducts a

business of land, sea or air transport operator or
charterer in respect of -
(i) the carriage of passengers who embark or
cargo, mail or other moveable tangible assets
that are embarked in the United Republic,
other than as a result of transhipment; or
(ii) rental of containers and related equipment
which are supplementary or incidental to
carriage referred to in subparagraph (i);
(h) payments received by a person who conducts a
business of transmitting messages by cable, radio,
optical fibre or satellite or electronic
communication in respect of the transmission of
messages by apparatus established in or outside the
United Republic, whether or not such messages
originate in or outside the United Republic;
(i) payments, including service fees, of a type not
mentioned in paragraphs (g) or (h) or attributable
to employment exercised, service rendered or a
forbearance from exercising employment or
rendering service –
(i) in the United Republic, regardless of the place
of payment; or
(i) irrespective of the place of exercise, rendering
or forbearance; and
(ii) regardless of the place of payment:
Provided that, the services are consumed in the
United Republic; (inserted by F.A. 2020)
(iii) where the payer is the Government of the United
Republic, irrespective of the place of exercise,
rendering or forbearance;
(j) proceeds of life insurance and retirement payments not
falling within paragraph (i) the "return" paid by a
resident person or a domestic permanent establishment
and any premium or retirement contribution paid to a
resident person or domestic permanent establishment
to secure such a return;
(k) gifts and other ex gratia payments to the extent
received in respect of business or investment
conducted with domestic assets; and
(l) payments not mentioned in the above paragraphs made
in respect of -
(i) the acquisition of a domestic asset, incurring of a
domestic liability or realisation of such an asset or
liability; or
(ii) activity conducted or a forbearance from
conducting activity in the United Republic.
(m) payments made by an individual other than payments
made in conducting a business in respect of a service
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rendered by a nonresident through a digital market

place (inserted by F.A. 2022)(deleted by F.A. 2023)

(m) payments received by a non-resident in respect of an

electronic service consumed by or attributable to an
individual in the United Republic regardless of the
place of payment provided that, the consumption of the
service by an individual is not made in the course of
doing business. (replaced by F.A. 2023)

Income accruing 69A.-(1) Income accruing or arising in the United Republic,

or arising in whether directly or indirectly through or from-
United Republic
(Inserted by F.A. (a) any business connection;
2020) (b) any property;
(c) any asset or any source of income including the
sources of payment referred to in section 69; or
(d) transfer of an asset situated in the United Republic,
shall be deemed to accrue or arise in the United Republic and
shall be taxed through a representative assessee of a non-
resident person or a beneficial owner.
(2) Nothing in this section shall preclude the Commissioner
from assessing the tax to a non-resident person or
beneficial owner under any provision of this Act.
(Inserted by F.A. 2020)

Division II: Permanent Establishments

Principles of 70.-(1) The income tax liability under section

taxation 4(1)(a) of a person with a domestic or foreign
permanent establishment shall be calculated as if the
person and the permanent establishment were
independent but associated persons and the permanent
establishment were resident in the country in which it is
situated.
(2) In addition to taxation in accordance with
subsection (1), a person with a domestic permanent
establishment shall be taxed with respect to the
repatriated income of the permanent establishment in
accordance with sections 4(1)(b) and 74.
(3) Part VII of this Act shall apply as though
a reference to a "resident person" includes a
reference to a domestic permanent establishment of a
non-resident person as though the permanent
establishment were a person separate from the non-
resident person.
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Calculating 71.-(1) Subsections (2) to (6) apply for the

income of purposes of calculating the income of a domestic or
permanent foreign permanent establishment separately from that of
establishment its owner.
(2) Subject to Division II of Part III, the following
amounts derived and expenditure incurred shall be
attributed to the permanent establishment, namely -
(a) amounts derived and payments received in
respect of assets held by, liabilities owed by
or the business of the permanent
establishment; and

(b) expenditure incurred and payments made for

the purposes of assets held by, liabilities
owed by or the business of the permanent
establishment, but only to the extent the
expenditure is recorded in the accounts of
the permanent establishment.
(3) The following assets and liabilities shall be treated
as assets or liabilities of the permanent
establishment -
(a) tangible assets situated in the country of
the permanent establishment;
(b) intangible assets created by or through the
permanent establishment;
(c) intangible assets, to the extent that they
may be exploited in the market of the
country of the permanent establishment;
(d) subject to subsection (6)(b), debt obligations
incurred in borrowing money, to the extent
that the money is employed in or used to
acquire an asset that is employed in the
business of the permanent establishment; and
(e) other liabilities arising directly out of the
business of the permanent establishment.
(4) In addition to the circumstances specified in
sections 39 and 40 the permanent establishment
shall be treated as realising an asset held by it or
liability owed by it –
(a) in the case of a tangible asset, when the
asset is no longer situated in the country of
the permanent establishment;

(b) in the case of an intangible asset, to the

extent the asset is available for exploitation
in the country in which the owner is resident
or a country in which the owner has another
permanent establishment; or
(c) in the case of a liability referred to in
subsection (3)(d), the money or asset is no
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longer employed in the business of the

permanent establishment.
(5) The following activities shall be treated as
conducted by the permanent establishment-
(a) employment by the owner of any individual
who is resident in the country of the
permanent establishment;
(b) sales of trading stock by the owner of the
same or a similar kind as those sold through
the permanent establishment; and
(c) other business activities of the owner
conducted with residents of the country of
the permanent establishment of the same or
a similar kind as those effected through the
permanent establishment.
(6) Subject to Division II of Part III, the only
arrangements between a permanent establishment and
the owner that are recognised are the following -
(a) the transfer of an asset or liability between
the permanent establishment and the owner
or vice versa, in accordance with
subsections (3) and (4); and
(b) where the owner carries on a banking
business through the permanent
establishment, has received written approval
under this subsection from the
Commissioner and subject to such
conditions as the Commissioner thinks
fit, entries shown in the same manner in
the accounts of the owner and the
permanent establishment as-
(i) a debt obligation between the owner
and the permanent establishment or vice
versa; and
(ii) interest derived or incurred with respect
to a debt obligation referred to in
subparagraph (i),
but where this paragraph applies no debt
obligation incurred by the owner shall be
attributed to the permanent establishment
under subsection (3)(d).
(7) In this section, “the owner” means the owner of the
permanent establishment.
Repatriated 72.-(1) Subject to the provisions of subsection (2), the
income of repatriated income of a domestic permanent establishment
domestic of a non-resident person for a year of income shall be
permanent calculated according to the following formula -
establishment A+B–C
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Where -
A. is the net cost of assets of the permanent
establishment at the start of the year of income
plus the market value of capital contributed to
the permanent establishment by the owner during
the year.
B. is net total income of the permanent
establishment for the year of income; and
C. is the net cost of assets of the permanent
establishment at the end of the year of income
plus, where the establishment has no total
income for the year of income, any unrelieved
loss for the year of income referred to in section
19(4).
(2) The repatriated income shall not exceed -
(a) the net total income of the permanent
establishment for the year of income plus
the balance of the permanent
establishment's accumulated profits account
referred to in subsection (3) at the end of the
previous year of income after the adjustments
referred to in that subsection, less
(b) where the permanent establishment has no
total income for the year of income, any
unrelieved loss for the year of income referred
to in section 19(4) for the year of income.

(3) For purposes of calculating repatriated income, a

domestic permanent establishment shall maintain an
accumulated profits account which, at the end of each year of
income, shall be -
(a) credited with the net total income of the
permanent establishment for the year of
income; and
(b) debited with the repatriated income and, where
the permanent establishment has no total
income, any unrelieved loss referred to in
section 19(4) for the year of income.
(4) For purposes of this section -
“net cost of assets” of a domestic permanent establishment -
(a) at the start of a year of income equals the net
cost of assets at the end of the previous year of
income, if any; and
(b) at the end of a year of income is calculated as -
(i) the written down value of the permanent
establishment's pools of depreciable
assets at the end of the year of income
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plus the net cost of other assets of the

permanent establishment at the end of the
year of income; less
(ii) the net incomings for liabilities of the
permanent establishment at the end of
the year of income;
"net incomings for a liability to a particular period” means
the amount by which cumulative incomings for the
liability exceed cumulative costs for the liability to the
time; and
“net total income” of a domestic permanent establishment
for a year of income is its total income for the year of
income calculated without any deduction under section
19(1)(b) less income tax payable under section 4(1)(a)
with respect to that income.
Division III:
Controlled Foreign Trusts and Corporations

Principles of 73.-(1) Controlled foreign trusts and corporations and

taxation their members shall be taxed in accordance with
Subdivisions B and C of Part IV as modified by this
Division.
(2) A controlled foreign trust or corporation shall
be treated as distributing its unallocated income to its
members at the end of each year of income in
accordance with section 75.

Unallocated 74.-(1) The unallocated income of a controlled foreign trust

income of or corporation for a year of income shall be -
controlled (a) the attributable income of the trust or
foreign trust and corporation for the year of income; less
corporation (b) any distributions made by the trust or
corporation during the year of income
determined otherwise than in section 75(1) that
are included in calculating the income of a
member under section 52(2)(b) or 54(1)(b),
respectively and in the case of distributions by a
resident financial institution and for purpose of
section 75(6), amount of distributions which are
treated as not-distributable as determined by
the Bank of Tanzania (inserted by F.A. 2022).
(2) The “attributable income” of a controlled foreign
trust or corporation for a year of income shall be its total
income for the year of income calculated as if the trust or
corporation were resident.

Taxation of 75.-(1) Where at the end of a year of income a trust or

members of corporation is a controlled foreign trust or
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

controlled corporation, the trust or corporation shall be treated as

foreign trusts or distributing to its members at that time its unallocated
corporations income for the year of income referred to in section
74(1) according to each member's share.

(2) A member who is treated as receiving a distribution

under subsection (1) may deduct the amount treated as
distributed in calculating the member's income of a future
year of income to the extent to which -
(a) the amount has not previously been
deducted under this subsection; and
(b) distributions of the type referred to in section
74(1)(b) received by the member during the
year of income exceed the member's share of
the trust or corporation's attributable income
for the year of income referred to in section
74(2).
(3) To the extent that all dividends distributed by a
controlled foreign corporation during a year of income,
including as a result of subsection (1), do not exceed the
corporation's attributable income for the year of income
referred to in section 74(2), then dividends distributed to
shareholders who are corporations and associated with
the corporation at the time of distribution are treated as -
(a) having the same character as to type and
source as the corporation's attributable
income; and
(b) made proportionately out of each type and
source of the corporation's attributable
income.
(4) At the time an amount is treated as distributed by a
controlled foreign corporation to an associated
shareholder under subsection (3), the shareholder shall
be allocated any income tax under this Act or foreign
income tax paid or treated as paid by the corporation
with respect to the amount.

(5) A shareholder is treated as having paid the tax

allocated to the shareholder by subsection (4) at the time
of allocation and foreign tax relief may be available to
the shareholder under section 77 but no other tax credit
shall be available to the shareholder.

(6) Subsections (3), (4) and (5) shall apply to

distributions by a resident corporation made during any
year of income to a non-resident associate of the
corporation as though the corporation were a controlled
foreign corporation and the attributable income of the
corporation were its total income for the year of income
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(7) For purposes of this section, a “member's share” with

respect to income of trust or corporation shall be -
(a) equal to the member's percentage right to share
in the income on distribution; or
(b) where that right is not reasonably certain, such
percentage as the Commissioner thinks
appropriate in the circumstances.
Cost and 76.-(1) Any amount treated as distributed to a member under
incomings of section 75(1) shall be included in the cost of the member's
member's membership interest in the non-resident trust or corporation
interest in at the time of distribution.
controlled (2) Any amount deducted by a member under section
foreign 75(2) shall be included in the incomings for the member's
trust or membership interest in the non-resident trust or corporation
corporation at the time of deduction.
Division IV: Foreign Tax Relief

Foreign tax 77.-(1) Subject to subsection (4), a resident person

relief other than a partnership may claim a foreign tax credit for a
year of income for any foreign income tax paid by the
person to the extent to which it is paid with respect to the
person's taxable foreign income for the year of income.
(2) Foreign tax credits claimed under subsection
(1) are calculated separately for each year of income and
shall not exceed the average rate of Tanzania income tax
of the person for the year of income applied to the person's
taxable foreign income.
(3) For purposes of subsections (1) and (2), there
shall be treated as foreign income tax paid by a resident
person with respect to the person's taxable foreign income
for a year of income any unrelieved foreign income tax of a
previous year of income paid by the person.
(4) A person may elect to relinquish a foreign tax
credit available for a year of income and claim a deduction
for the amount of the foreign income tax but otherwise no
deduction is available for foreign income tax.
(5) For purposes of this section -

“average rate of Tanzania income tax” of a

resident person for a year of income means
the percentage that income tax payable by the
person under section 5(1)(a) calculated under
section 4(3) without a reduction for any
foreign tax relief) shall be of the total
income of the person for the year of income;

“taxable foreign income” of a resident person

for a year of income means foreign source
income that shall be included in the person's
chargeable income from any employment,
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

business or investment for the year of

income; and

"unrelieved foreign income tax" of a resident

person means foreign income tax paid by the
person with respect to the person's taxable
foreign income -
(a) for which a foreign tax credit has
not been granted under subsection (1)
as a result of the limitation in
subsection (2); and
(b) that has not been relinquished under
subsection (4).

Tax credit for 77A. A resident person, other than a partnership, who
business or carries out business or investment in both Mainland
investment Tanzania and Tanzania Zanzibar, may claim a tax credit for
operating in year of income for any income tax paid by the person in
both Mainland relation to the person’s taxable income from business or
Tanzania and investment carried out in Mainland Tanzania or Tanzania
Tanzania Zanzibar, as the case may be.(Inserted by F.A. 2022)
Zanzibar
(Inserted by
F.A. 2022)

PART VII
TAX PAYMENT PROCEDURE

Division I: General Obligations

Types of tax and 78.-(1) Tax payable under this Act means-
methods of (a) income tax imposed under section 4(1), including
payment amounts payable by a withholding agent or
withholdee under Division II, by an instalment
payer under Division III and on assessment under
Division IV of this Part;
(b) interest and penalties imposed by assessment
Division I of Part VIII;
(c) an amount required to be paid to the Commissioner
in collection from a tax debtor under section 112(9)
or 128(3); and
(d) an amount required to be paid to the Commissioner
in respect of a tax liability of a third party
under section 115(2), 116 (3) or (4), 117(2) or
118(1) or (3).

(2) Tax shall be paid to the Commissioner in the form and at the
place is may be prescribed.

Time for 79. Subject to section 55 of the Tax Administration

 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

payment of tax Act, tax shall be payable-

(a) in the case of income tax payable by withholding,
at the time provided for in section 84;
(b) in the case of income tax payable by instalment,
on the date by which the instalment is to be paid
under section 88 or 90;
(c) in the case of income tax payable on an
assessment under section 94, on the date by which
the return of income must be filed.

Repealed 80. Repealed by Act No.10 of 2015 s.120.

Repealed 80A. Repealed by Act No 10 of 2015 s.120.

Division II: Income Tax Payable by Withholding

Subdivision A: Withholding Obligations

Withholding by 81-(1) A resident employer who makes a payment that

employers is to be included in calculating the chargeable income of an
employee from the employment shall withhold income tax
from the payment at the rate provided for in paragraphs 1
and 4(a) of the First Schedule.
(2) The obligation of an employer to withhold income
tax under subsection (1) shall not be reduced or extinguished
because the employer has a right or is under an obligation to
deduct and withhold any other amount from the payment or
because of any other law that provides that an employee's
income from employment shall not be reduced or subject to
attachment.

Withholding 82.-(1) Where a resident person-

from investment (a) pays a dividend, interest, natural resource
returns payment, rent or royalty; and
(b) the payment has a source in the United Republic
and is not subject to withholding under section
81,
the person shall withhold income tax from the
payment at the rate provided for in paragraph 4(b) of
the First Schedule.
(2) This section shall not apply to -
(a) payments made by individuals unless made in
conducting a business (deleted by F.A. 2022);
(a) payment made by individuals unless made in conducting a
business; (reinstated by F.A. 2023)
(b) interest paid to a resident financial institution;
(c) payments that are exempt amounts;
(d) rent paid to a resident person for the use of an
asset other than aircraft, land or buildings; or
(e) interest payable to a non-resident bank by a
strategic investor except for interest payable on
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

any loan taken by a strategic investor from an

associated or related company.
(f) interest paid to a holder of corporate or municipal
bonds issued and listed at the Dar es Salaam Stock
Exchange with effect from 1st July, 2022. (inserted
by F.A. 2022)

Withholding 83.-(1) Subject to subsection (2), a resident person who-

from service fees
and contract (a) is conducting business of extractive industry in
payments mining, oil or gas pays a service fee to another
resident person in respect of management or
technical services provided wholly and
exclusively for the business;
(b) pays to a non-resident an insurance premium with
a source in the United Republic;
(c) pays to-
(i) a non-resident a service fee with a source in
United Republic; or
(ii) a resident person a service fee for provision of
professional services.
(d) pays money transfer commission to a
money transfer agent, (deleted by F.A. 2020)
(d) pays-
(i) money transfer commission to a money
transfer agent;
(ii) fee, commission or any other charge to a
commercial bank agent; or
(iii) fee, commission or any other charge to a
digital payment agent, (substituted by F.A.
2020)
shall withhold income tax from the payment at the rate
provided for in paragraph 4(c) of the First Schedule.

(e) is a buyer of precious metals, gemstones and other

precious stones supplied by the holder of a primary
mining licence or artisanal miner; (inserted by F.A.
2023)
(f) makes payment to a resident person in respect of
verified carborn emission reduction. (inserted by
F.A. 2023)

(2) This section shall not apply to-

(a) payments made by individuals unless made in
conducting a business; or
(b) payments that are exempt amounts.

(3) For the purposes of subsection (1), “digital payment

agent” means a person who renders digital payment
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

services at a fee, commission or any other charges.

(Inserted by F.A. 2020)

(4) For purposes of subsection (1)(c)(ii), “professional

service” means services rendered by a person
licensed as a practitioner by any recognised
professional body and shall include other services or
activities of an independent business character
including consultancy, legal, architectural,
engineering, supervisory, accounting, auditing,
medical, artistic, survey, theatrical performance,
sports, exhibition, private security services, private
investigation and consultancies in various disciplines
or any entertainment held or given other than those
for remuneration under contract of employment:

Provided that, where the service referred in

subsection (1)(c)(ii) involves construction works, the
payment which is subject to withholding shall be
based on the ratio of 3:2 for materials and services
respectively.
Withholding of 83A.-(1) Subject to subsection (2), any resident
income tax for corporation which makes a payment in respect of
goods goods supplied by a resident person in the course of
conducting business shall withhold income tax at the rate
provided for under paragraph 4(c) of the First Schedule.
(2) This section shall apply to a resident
corporation whose budget is wholly or substantially
financed by the Government budget subvention.
Repealed 83B.-(1) Repealed by Act No. 6 of 2019 s.6
Withholding 83B.-(1) A resident corporation which makes a payment in
from respect of agricultural, livestock and fishery products
agricultural, supplied by a resident person in the course of conducting
livestock and business shall withhold income tax at the rate specified
fisheries under paragraph 4(c) of the First Schedule.
products
(inserted by F.A. (3) For purposes of this section, resident corporation
2021) shall not include agricultural marketing cooperative
(repealed by societies and cooperative unions. (Inserted by F.A. 2021)
Misc. (repealed by Misc. Amendments No. 6 of 2021)
Amendments No.
6 of 2021)

Subdivision B: Procedure Applicable to Withholding

Statements and 84.-(1) Every withholding agent shall pay to the

payments of tax Commissioner within seven days after the end of each
withheld or calendar month any income tax that has been withheld in
treated as accordance with Subdivision A during the month.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

withheld “(2)Every withholding agent shall file with the

Commissioner within thirty days after the end of each
six- month calendar period a statement in the manner
and form prescribed specifying- (deleted by F.A. 2021)
(2) Every withholding agent shall file with the
Commissioner, within seven days of the month following
the month to which the tax relates, a withholding tax
statement for the calendar month in the manner and form
prescribed, specifying- (replaced by F.A. 2021)
(a) payments made by the agent during the
period that are subject to withholding under
Subdivision A;
(b) the name and address of the withholdee;
(c) Taxpayer Identification Number of the
withholdee; (inserted by F.A. 2021)
(d) income tax withheld from each payment; and
(e) any other information that the Commissioner
may prescribe.
(3) A withholding agent who fails to withhold
income tax in accordance with Subdivision A must
nevertheless pay the tax that should have been withheld
in the same manner and at the same time as tax that is
withheld.
(4) Where a withholding agent fails to withhold
income tax from a payment as required by Subdivision
A-
(a) the withholdee shall jointly and severally, be
liable with the withholding agent for the
payment of the tax to the Commissioner; and
(b) the tax shall be payable by the withholdee
within seven days after the end of the
calendar month in which the payment is
received.
(5) A withholding agent who withholds income
tax under Subdivision A and pays the tax to the
Commissioner shall be treated as having paid the
amount withheld to the withholdee for the purposes of
any claim by the withholdee for payment of the amount
withheld.
(6) A withholding agent who fails to withhold
income tax under Subdivision A but pays the tax that
should have been withheld to the Commissioner in
accordance with subsection (3) shall be entitled to
recover an equal amount from the withholdee.
Withholding 85.-(1) A withholding agent shall prepare and
certificates serve on a withholdee-
(a) separately for each period referred
to in subsections (2) and (3);
(b) at the time referred to in those subsections; and
(c) in the form prescribed,
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

a withholding certificate setting out the amount of

payments made to the withholdee and income tax
withheld from those payments under Subdivision A by
the agent during the period.
(2) Subject to subsection (3), a withholding
certificate shall cover a calendar month and shall be
served within thirty days after the end of the month.
(3) In the case of income tax withheld under
section 81, a withholding certificate –
(a) shall cover the part of the calendar year during
which the employee shall be employed; and
(b) shall be served by 30th January after the end of
the year or, where the employee has ceased
employment with the withholding agent during
the year, no more than thirty days from the date
on which the employment ceased.
Final 86.-(1) For purposes of this Act, the following are final
withholding withholding payments-
payments (a) dividends paid by-
(i) a resident corporation;
(ii) non-resident corporation to a resident
individual, other than a dividend received
by-
(aa) an individual in conducting
a business; or
(bb) an individual referred to in section 6(2);
(b) interest paid by financial institution to a resident
individual where the interest is paid with respect
to a deposit held with the institution, other than -
(i) interest received by the individual in
conducting a business; or
(ii) foreign source interest paid to an individual
referred to in section 6(2);

(c) rent paid to a resident individual under a lease of

land or a building and associated fittings and
fixtures, other than -
(i) rent received by an individual in conducting
a business; or
(ii) foreign source rent paid to an individual
referred to in section 6(2);
(d) service fees paid to a resident person that are
subject to withholding under section 83(1)(a) and
(d);
(e) payments made to non-resident persons other than
through a domestic permanent establishment of
the person that are subject to withholding under
Subdivision A or would be so subject if section
83(1)(a) is not applied;
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(f) interest paid to a unit trust; and

“(g) payment made to a resident person as
specified under section 83B(1). (deleted by F.A. 2022)

(g) payment for purchase of minerals made to a

primary licence holder or artisanal miner;
(inserted by F.A. 2023)
(h) payment made to resident person in respect of
verified carborn emission reduction. (inserted
by F.A. 2023)

(2) Income tax-

(a) withheld from a final withholding payment under
Subdivision A of Division II of this Part; or
(b) paid with respect to a final withholding payment in
accordance with section 84(3) or (4),
satisfies the withholdee's income tax liability under
section 4(1)(c) with respect to the payment.

(3) Subject to the provisions of subsection (4), where a

final withholding payment is not subject to
withholding tax whether by reason of section 83(2)(a)
or that the payer is non-resident-

(a) the recipients income tax liability under section

4(1)(c) with respect to the payment shall be
payable by way of assessment under Division IV
of this Part as though that liability were a liability
under section 4(1)(a); and
(b) where the payment is a foreign source payment, a
foreign tax credit shall be available under section
77 for any foreign income tax imposed on the
payment and the credit shall be calculated as
though the payment were taxable foreign income.
(4) Where-
(a) a resident individual the "landlord" receives rent
during a year of income in respect of residential
premises situated in the United Republic that are
leased by another individual as the residence of
that other individual;
(b) the rent is not received by the landlord in
conducting a business; and
(c) the total of the rent received by the landlord under
the lease and any other lease meeting the
requirements of paragraphs (a) and (b) during the
year of income does not exceed five hundred
thousand shillings,
then the landlord shall not have tax liability under
section 4(1)(c) with respect to receipt of the rent.
Credit for 87. The withholdee of a payment that is not a
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

non-final final withholding payment shall be treated as having

withholding paid any income tax-
tax (a) withheld from the payment under Subdivision
A of Division II of this Part; or
(b) paid with respect to the payment in
accordance with section 84(3) or (4);
and the withholdee is entitled to a tax credit in an
amount equal to the tax treated as paid for the year of
income in which the payment is derived.

Division III: Income Tax Payable by Instalment

Payment of 88.-(1) A person an "instalment payer" who derives or

income tax by expects to derive any chargeable income during a
quarterly year of income-
instalment (a) from a business or investment, or
(b) from an employment where the employer is
not required to withhold tax under section
81 from payments received by the person
that are included in calculating the person's
income from the employment,
shall pay income tax for the year of income by
quarterly instalments as provided for by this section.
(2) An instalment payer shall pay instalments of
income tax -
(a) in the case of a person whose year of income
is a twelve month period beginning at the
start of a calendar month, on or before the
last day of the third, sixth, ninth and twelfth
months of the year of income; or
(b) in any other case, at the end of each three-
month period commencing at the beginning
of the year of income and a final instalment
on the last day of the year of income unless it
coincides with the end of one of the three-
month periods.

(3) Subject to subsection (4), the amount of each

instalment of income tax payable by an instalment payer
for a year of income is calculated according to the
following formula -
[A – C]
---------
B
Where-
A is the estimated tax payable by the
instalment payer for the year of income at
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

the time of the instalment under section 89;

B is the number of instalments remaining for
the year of income including the current
instalment; and
C is the sum of any-
(a) income tax paid during the year of
income, but prior to the due date for
payment of the instalment, by the
person by previous instalment under
this section; or section 90;
(b) income tax withheld under Subdivision
A of Division II during the year of
income, but prior to the due date for
payment of the instalment, from
payments received by the person that are
included in calculating the person's
income for the year of income; and
(c) income tax paid in accordance with
section 83(3) or (4) with respect to a
payment of the kind referred to in
paragraph (b) that shall be paid to the
Commissioner by the withholding agent
or the withholdee during the year of
income but prior to the due date for
payment of the instalment.
(4) Where an instalment shall be payable at a time
when an instalment payer’s estimated tax payable for a
year of income is fifty thousand shillings or less or the
amount of an instalment calculated under subsection (3)
is twelve thousand five hundred shillings or less, the
amount of the instalment shall be nil.

(5) Where an instalment payer is a resident person who

conducts agricultural business involving seasonal crops
in the United Republic during a year of income and
conducts no other business instalments for the year of
income shall be nil.

(6) An instalment payer shall be entitled to a tax credit

for a year of income in an amount equal to the income
tax paid by way of instalment for the year of income
under this section.
Statement 89.-(1) Subject to the provisions of subsection
of estimated tax (7) and section 39 of the Tax Administration Act,
payable every person who is an instalment payer for a year of
income under section 88 shall file with the
Commissioner-
(a) in the case of a resident person to whom
section 88(5) applies, by the end of
September, of the year of income; and
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(b) in any other case, by the date for payment of

the first tax instalment an estimate of tax
payable for the year of income.
(2) An estimate of tax payable of a person for a
year of income shall, subject to any instructions by
the Commissioner to the contrary -
(a) be in the manner and form prescribed estimating
(i) the person's chargeable income for the
year of income from each employment,
business and investment and the source
of that income;
(ii) the person's total income for the year of
income and the income tax to become
payable with respect to that income under
section 4(1)(a);
(iii) in the case of a domestic permanent
establishment of a non-resident person, the
permanent establishment's repatriated
income for the year of income and the
income tax to become payable with respect
to that income under section 4(1)(b); and
(iv) any other information that the
Commissioner may prescribe.

(b) be signed by the person and includes a

declaration that, to the best of that person’s
knowledge and belief, the estimate is full
and true; and
(c) have attached to it any other information that
the Commissioner may prescribe.

(3) Subject to the provisions of subsections (6)

and (9), the sum of the income tax referred to in
subsection (2)(a)(ii) and (iii) shall be the person's
estimated tax payable for the year of income.

(4) In estimating income tax payable for a year

of income under subsection (2)(a)(ii) and, in particular,
calculating any foreign tax relief to be claimed under
section 77, a person may take account of foreign income
tax only if the person has paid such tax or the person
reasonably estimates that such tax shall be paid
during the year of income.

(5) An instalment payer's estimate under

subsections and (2) shall remain in force for the whole of
the year of income unless the person files with the
Commissioner a revised estimate, in the form and
specifying the information referred to in subsection (2),
together with a statement of reasons for the revision.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(6) Subject to subsection (8), a revised estimate

filed by a person under subsection (5) is the person's
estimated tax payable for the year of income, but only
for the purposes of calculating instalments payable
under section 88 for the year of income after the date
the revised estimate is filed with the Commissioner.

(7) The Commissioner may -

(a) specify by notice in writing that an
instalment payer or class of instalment
payers are not required to submit an
estimate under subsection (1); or
(b) extend the time for filing such an estimate
in accordance with section 39 of the Tax
Administration Act.

(8) Where an instalment payer fails to file an

estimate for a year of income as required by
subsection (1), or an instalment payer shall not be
required to submit an estimate by reason of subsection
(7), the Commissioner shall –

(a) make an estimate of the person's

estimated tax payable for the year of
income, which may take into account the
income tax payable under section 4(1)(a)
and (b) for the previous year of income;
and
(b) serve on the instalment payer a written
notice stating the Commissioner's
estimate, and the manner in which it is
calculated.
(9) Where the Commissioner serves an
instalment payer with a notice under subsection (8),
then for the purposes of section 88 the estimated tax
payable by the person for the year of income shall be
the amount estimated by the Commissioner.
Single instalment 90.-(1) Where a person an “instalment payer” derives a
at time of gain in conducting an investment from the realisation of an
realisation or interest in land, petroleum or mineral rights or
receipt buildings situated in the United Republic licence or
concessional right on reserved land (Inserted by F.A. 2020)
shares or securities held in resident entity that the person
shall pay income tax by way of single instalment equal
to-
(a) in the case of a resident person, ten percent
of the gain;
(b) in the case of a resident person who realises an
interest in land or building and does not have
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

records of costs of assets, three percent of the

incomings or approved value of the asset,
whichever is greater; (inserted by F.A. 2023)
(c) in the case of realisation of mineral rights under
section 65H, thirty percent and petroleum right
under section 65Q, thirty percent; or
(d) in the case of a non-resident person, twenty
percent of the gain.

(1A) A person referred to under subsection (1) shall, within

fourteen days from the date of realisation of the interest,
report to the Commissioner. (Inserted by F.A. 2020)

“(2) The instalment referred to in subsection (1) shall be

paid before the title to an investment asset is transferred,
and the appropriate authorities for registration,
transfer or approval shall not register such transfer or
change of name without the production of a certificate of
the Commissioner certifying that the instalment has been
paid or that no instalment is payable. (Deleted by F.A.
2020)

(2) The instalment referred to in subsection (1) shall be

paid within thirty days or such other period
determined by the Commissioner from the date of
realisation of an interest. (Substituted by F.A. 2020)

(2A) The appropriate authorities for registration, transfer

or approval shall not register transfer of the interest
or change of name without the production of a
certificate by the Commissioner certifying that the
instalment has been paid or that no instalment is
payable. (Inserted by F.A. 2020)

(3) This subsection applies where -

(a) a non-resident person, an “instalment payer”,
receives a payment in conducting a business
of land, sea or air transport operator or
charterer;
(b) no part of that business is conducted through
a permanent establishment of the person
situated in the United Republic; and
(c) the payment is received in respect of-
(i) the carriage of passengers who embark
or cargo, mail or other moveable
tangible assets that are embarked in the
United Republic, other than as a result
of transhipment; or
(ii) rental of containers and related
equipment which are supplementary or
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

incidental to carriage referred to in

paragraph (a).

(4) Subsection (3) shall not apply to payment received

in respect of carriage of fish or horticulture
products by a foreign aircraft.
(5) Where subsection (3) applies the person shall pay
income tax by way of single instalment equal to five
percent of the gross payment.
(6) A tax certificate issued by the Commissioner
showing that the instalment referred to in subsection
(4) has been paid is necessary before the vehicle,
ship or aircraft in respect of which the payment
shall be received shall be permitted to clear
customs and leave the United Republic and the
proper officer of Customs by whom customs
clearance may be granted shall refuse clearance until
such a certificate is produced.
(7) Civil or criminal proceedings shall not be
instituted or maintained against the proper officer
of Customs or any other authority in respect of a
refusal of clearance under this section, nor shall the
fact that a vehicle, ship or aircraft is detained under
this section affect the liability of the owner,
charterer or agent to pay border, harbour or airport
dues and charges for the period of detention.

(8) An instalment payer shall be entitled to a tax credit

for a year of income in an amount equal to the
income tax paid by way of single instalment for the
year of income under this section.

(9) For purposes of this section, “date of realisation of

an interest” means-
(a) the date of execution of contract for sale;
(b) the date of parting with possession, use or
control of a realised asset; or
(c) the date of payment of part or whole of the
consideration for the realised asset,
whichever comes earlier.
(Inserted by F.A. 2020)
Tax payment on 90A.-(1) Where a non- resident person receives a payment
income realised that has a source in the United Republic from an
through digital individual, other than a payment made in the course of
market place conducting business, in respect of services rendered
(inserted by F.A. through a digital market place an electronic service
2022) (substituted by F.A. 2023), such person shall pay income
tax for payments received in a calendar month by way
of single instalment equal to two percent of the gross
payment.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(2) A person referred to under subsection (1) shall

be liable to pay income tax by filing a return to the
Commissioner on or before the seventh twentieth
(substituted by F.A. 2023) day of the month following the
month to which the payment relates.
(3) The Minister may, by regulations, prescribe
procedures for assessing and collecting income tax or
giving effect to the provisions of this section.
(4) For the purpose of subsection (1), “gross
payment” means the payment made but does not include
value added tax. (inserted by F.A. 2022)(deleted by F.A.
2023)
(4) For purposes of this section, “gross
payment” means a total amount of payment, excluding
value added tax, derived by a non-resident person from
an individual, other than a payment made in the course
of conducting a business, in respect of electronic
services.(deleted by F.A. 2023)

Division IV: Income Tax Payable on Assessment

Subdivision A: Returns

Returns of 91.-(1) Subject to sections 92 and 94 of this Act

income and 39 and 48 of the Tax Administration Act, every
person shall file with the Commissioner not later than six
months after the end of each year of income a return of
income for the year of income.

(2) A return of income of a person for a year

of income shall, subject to any instructions by the
Commissioner to the contrary -
(a) be in the manner and form prescribed
specifying –
(i) the person's chargeable income for the
year of income from each
employment, business and investment
and the source of that income;
(ii) the person's total income for the year
of income and the income tax payable
with respect to that income under
section 4(1)(a);
(iii) in the case of a domestic permanent
establishment of a non-resident person,
the permanent establishment's
repatriated income for the year of
income and the income tax payable
with respect to that income under
section 4(1)(b);
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(iv) any income tax paid by the person for

the year of income by withholding,
instalment or assessment for which a tax
credit is available under sections 67, 88,
90 of this Act or 47 of the Tax
Administration Act;
(v) the amount of income tax still to be paid
for the year of income calculated as the
sum of the tax referred to in
subparagraphs (ii) and (iii) less the tax
already paid referred to in subparagraph
(iv); and
(vi) any other information that the
Commissioner may prescribe;
(b) in the case of a corporation, be prepared
or certified by a certified public accountant
in public practice;
(c) include a declaration that the return is
complete and accurate;
(d) be signed by -
(i) the person; and
(ii) a person specified in section 37(2)(a)
of the Tax Administration Act;
(e) have attached to it –

(i) any withholding certificates supplied to

the person under section 85 with
respect to payments derived by the
person during the year of income;
(ii) any statement provided to the person
under section 38(3) of the Tax
Administration Act;
(iii) certified financial statements; and
(iv) any other information that the
Commissioner may prescribe.
Return of
income not 92. Unless requested by the Commissioner by notice in
required writing served on the person and subject to a right of
the person to elect to file a return, no return of income
for a year of income shall be required under section 91
from -
(a) a resident individual -
(i) who has no income tax payable for the
year of income under section 4(1)(a);
or
(ii) whose income for the year of income
consists exclusively of either or both of
the following:
(aa) income from any employment
where the employer is
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

required to withhold tax under

section 81 from payments
made to the individual that
are included in calculating the
individual's income from the
employment; or
(bb) gains of the type referred to in
section 90(1); or
(b) a non-resident person other than one with a
domestic permanent establishment who has
no income tax payable for the year of income
under section 4(1)(a) or whose income tax
payable for the year of income under section
4(1)(a) consists exclusively of gains of the
type referred to in section 90(1) or 90A
(inserted by F.A. 2022).
Repealed Repealed by Act No.10 of 2015 s.124.

Subdivision B: Assessments

Self-assessment 94.-(1) Where an entity files a return of income

for a year of income, an assessment shall be treated as
made on the due date for filing the return of-

(a) the income tax payable by the person for the

year of income under section 4(1)(a) and
(b) in the amount shown in the return; and
(b) the amount of that tax still to be paid for
the year of income in the amount shown
in the return the "tax payable on the
assessment".

(2) Where an entity fails or is not required to file

a return of income for a year of income then, until such
time as a return shall be filed, an assessment shall be
treated as made on the due date for filing the return that -
(a) the income tax payable by the person for
the year of income shall be equal to the sum
of any income tax withheld from payments
derived by the person during the year of
income under Division II and any income
tax paid by the person by instalment for
the year of income under Division III of this
Part; and
(b) there is no tax payable on the assessment.

(3) Where an individual files a return of income,

the Commissioner shall assess the tax as expeditiously
as possible after the expiry of the time allowed for the
filing of a return of income.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(4) Where an individual has filed a return of

income, the Commissioner may -
(a) accept such return and make assessment on
the basis of the return; or
(b) if the Commissioner has reasonable cause to
believe that such return is not true and
correct, determine, according to the best of
his judgement, the amount of the income of
that individual and assess the tax accordingly.

(5) Where an individual has not filed a return

for any year of income, whether or not he has been
required by the Commissioner so to do, and the
Commissioner considers that, that individual has
income chargeable tax for such year, the
Commissioner may determine, according to the best of
his judgement, the amount of the income of that
individual and assess the tax accordingly.

(6) Subject to the provisions of subsections (1)

and (2), the Commissioner may make an assessment
under subsections (3), (4) or (5), at any time prior to the
expiry of three years following the year of income to
which the assessment relates:
Provided that -
(a) where any fraud or wilful neglect has been
committed by or on behalf of any person in
connection with or in relation to any tax for
any year of income, an assessment in
relation to such year of income may be made
at any time; and
(b) in the case of payment referred to in
subsections (4) and (5) of section 7 an
assessment in relation thereto may be made
at any time prior to the expiry of three years
following the year of income in which the
payment is received.

(7) Subsection (5) shall not affect any liability

otherwise incurred by that individual under this Act in
consequence of the failure to file a return.
Repealed 95.-127 Repealed by Act No. 10 of 2015 s.124.

PART X
ADMINISTRATION
Division II: Official Documentation and Registration
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

International
agreements 128.-(1) To the extent that the terms of an
international agreement to which the United Republic
is a party are inconsistent with the provisions of this
Act, apart from subsection (5) and Subdivision B of
Division II of Part III, the terms of the agreement
prevail over the provisions of this Act.
(2) This subsection applies where the
Commissioner receives a request pursuant to an
international agreement from the competent authority
of another country for the collection in the United
Republic of an amount payable by a person otherwise
referred to as the "tax debtor" under the tax laws of the
other country.
(3) Where subsection (2) applies, the
Commissioner may, by service of a notice in
writing, require the tax debtor to pay the amount to
the Commissioner by the date specified in the notice
and for transmission to the competent authority.
(4) This subsection applies where an
international agreement provides that the United
Republic shall exempt income or a payment or
subject income or a payment to reduced tax.
(5) Where subsection (4) applies, the exemption
or reduction shall not be available to any entity that
meets the following conditions-
(a) the entity is, for the purposes of the
agreement, a resident of the other contracting
state; and
(b) fifty percent or more of the underlying
ownership of the entity is held by persons,
being individuals or entities in which no
individual holds part of the underlying
ownership, that are not, for the purposes of the
agreement, residents of the other contracting
state or the United Republic.
(6) For purposes of this section, “international
agreement” means a treaty or other agreement with a
foreign government that has entered into force in the
United Republic providing for -
(a) relief of international double taxation and the
prevention of fiscal evasion; or
(b) reciprocal administrative assistance in the
enforcement of tax liabilities.
Regulations 129. The Minister may make regulations for the better
carrying into effect of the principles, purposes and
provisions of this Act”.
Repealed 130. – 140. Repealed by Act No. 10 of 2019 s.124
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

PART XI
TRANSITIONAL PROVISIONS

Repeal 141.-(1) Repeals the Income Tax Act No.33 of 1973.

(2) The applicable regulations, rules, orders or notices made

under the Repealed Income Tax Act, and in force shall
continue to be in force, so far as may be, as if they have been
made as regulations, rules, orders or notices under this Act
until such time as they are amended or revoked by regulations,
rules, orders or notices made under this Act.
Transition 142.-(1) Subject to subsections (6) and (8), the repealed
legislation continues to apply for years of income
commencing prior to the date on which this Act comes into
effect.
(2) All appointments made under the repealed
legislation and subsisting at the date this Act comes into
effect shall be deemed to be appointments made under this
Act.
(3) Any international agreement made by the
Government of the United Republic that is effective at the
time this Act comes into effect shall continue to have
effect under this Act.

(4) All blank forms and other documents used in

relation to the repealed legislation may continue to be used
under this Act and all references in those forms and
documents to provisions of and expressions appropriate to
the repealed legislation are taken to refer to the
corresponding provisions and expressions of this Act.

(5) A reference in this Act to -

(a) a previous year of income includes, where
the context requires, a reference to a year of
income under the repealed legislation; or
(b) this Act or to a provision of this Act
includes, where the context requires, a
reference to the repealed legislation or to a
corresponding provision of the repealed
legislation, respectively.

(6) Subject to sections 20(4), (6), (7) and (8), a

person whose year of income under the repealed
legislation is, at the time the repealed legislation ceases to
have effect, a period of twelve months other than the
calendar year shall be treated as having been granted
approval by the Commissioner under section 20(3) to use
that year of income under this Act.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(7) Interest derived by a person from long-term

bonds of not less than three years maturity period issued
and listed on the Dar es Salaam Stock Exchange in the
fiscal year 2002/2003 shall be exempted under this Act.

(8) The provisions of sections 7(2), 9(2) and

Division II of Part V shall apply for the year of income
commencing on or after 1 January, 2005.
Agreements 143.-(1) Subject to subsection (2), where the Government of
and the United Republic has concluded a binding agreement
certificates with a person whether before or after the commencement of
for fiscal this Act such that certain provisions of the repealed legislation
stability or provisions of this Act that are later repealed will continue to
apply or not be altered to the detriment of the person-
(a) the provisions of the repealed legislation shall
continue to apply -
(i) to the extent provided for in the
agreement, for the duration of the
agreement; or
(ii) until such time as the person
relinquishes the right to apply those
provisions,
(b) in calculating the tax liability of the person
during the application period referred to in
paragraph (a), the Commissioner may, in the
Commissioner's discretion –
(i) continue to apply other provisions of
the repealed legislation that the
Commissioner considers are associated
with or that have an application that
is consequential upon the provisions
mentioned in paragraph (a) instead of
applying the corresponding provisions
under this Act; and
(ii) disapply any provisions in this Act
that have no corresponding provision
in the repealed legislation.

(2) An agreement referred to in subsection (1) has no

effect on the application of this Act until such time as it
shall be incorporated in a register to be kept by the
Minister and known as the Register of Tax Agreements.

(3) A person seeking the benefit of an agreement

referred to in subsection (1) shall apply to the Minister for
inclusion of the agreement in the Register of Tax
Agreements.

(4) For purposes of this section, an agreement concluded

by the Government of the United Republic includes a
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

certificate issued by the Tanzanian Investment Centre

under the Tanzania Investment Act.
Assets and 144.-(1) Subject to the provisions of subsection (2), the
liabilities following provisions shall apply in calculating the cost of
assets owned and net incomings of liabilities owed-
(a) the net cost of a depreciable asset or class
of depreciable assets for which capital
allowances were available under the repealed
legislation is, at the commencement, the
residue of expenditure or written down
value for the asset or assets, as the case
requires, under the repealed legislation at
the time the repealed legislation ceased to
have effect;
(b) the net cost of a depreciable asset for which
capital allowances were not available under
the repealed legislation is, at the
commencement, the market value of the asset
at that time;
(c) the net cost of a business asset or
investment asset that is an interest in any
premises or a financial asset within the
meaning of section 13 of the Income Tax
Act, 1973 is, at the commencement, the
lower of the asset’s cost determined under
section 13 of the Income Tax Act, 1973 and
adjusted for inflation and devaluation to the
date of commencement of this Act only and
the market value of the asset at that time of
commencement;
(d) the net cost of a business asset or
investment asset, other than an asset referred
to in paragraph (c), is, at the
commencement, the market value of the
asset at that time of commencement; and
(e) the net incomings of a liability of a business
is, at the commencement, the market value
of the liability expressed in a positive
amount at that time.
(2) The net cost of an asset for which a deduction or
immediate expensing was available under the repealed
legislation is, at the commencement, nil.

Repealed 145. Repealed by Act No.2 of 2016 s.31.

 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

FIRST SCHEDULE

(Made under section 4(6))

TAX RATES

Rates of 1.-(1) Subject to subparagraphs (2), (3) and (4) of this

income tax paragraph and paragraph 2, the total income of a resident
for individual for a year of income shall be taxed at the
individuals following rates-
TOTAL INCOME RATE PAYABLE
1. Where the total income NIL
does not exceed
2,040,000/=
2. Where the total income 9% of the amount in excess of
exceeds 2,040,000/= but Tshs. 2,040,000/=
does not exceed
Tshs.4,320,000/=
3. Where the total income Tshs. 205,200/= plus 20% of the
exceeds 4,320,000/= but amount in excess of 4,320,000/=
does not exceed
6,480,000/=
4. Where the total income Tshs. 637,200/= plus 25% of the
exceeds 6,480,000/= but amount in excess of 6,480,000/=
does not exceed
8,640,000/=
5. Where the total Tshs.1,177,200/= plus 30%
income exceeds of the amount in excess of
8,640,000/= 8,640,000/=
Deleted by F.A. 2020

TOTAL INCOME RATE PAYABLE

1. Where the total income NIL
does not exceed
3,240,000/=
2. Where the total income 9% of the amount in excess of
exceeds 3,240,000/= but Tshs. 3,240,000/=
does not exceed
Tshs.6,240,000/=
3. Where the total income Tshs. 270,000/= plus 20% of the
exceeds 6,240,000/= but amount in excess of 6,240,000/=
does not exceed
9,120,000/=
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

4. Where the total income Tshs. 846,000/= plus 25% of the

exceeds 9,120,000/= but amount in excess of 9,120,000/=
does not exceed
12,000,000/=
5. Where the total Tshs.1,566,000/= plus 30%
income exceeds of the amount in excess of
12,000,000/= 12,000,000/=
(Substituted by F.A. 2020) (Deleted by F.A. 2021)

TOTAL INCOME RATE PAYABLE

1.Where the total NIL
income does not exceed
3,240,000/=
2. Where the total 8% of the amount in excess
income exceeds of Tshs. 3,240,000/=
3,240,000/= but does
not exceed
Tshs.6,240,000/=
3. Where the total Tshs.240,000/= plus 20% of the
income exceeds amount in excess of
6,240,000/= but does 6,240,000/=
not exceed 9,120,000/=
4. Where the total Tshs. 816,000/= plus 25%
income exceeds of the amount in excess of
9,120,000/= but does 9,120,000/=
not exceed
12,000,000/=
5. Where the total Tshs.1,536,000/= plus 30%
income exceeds of the amount in excess of
12,000,000/= 12,000,000/=

(Substituted by F.A. 2021)

(2) Subparagraph (3) shall apply where -

(a) the total income of a resident individual for a
year of income exceeds Tshs. 2,040,000/=
3,240,000 (substituted by F.A. 2020); and
(b) any of the following (the "gains") are included in
calculating the individual's income-
(i) net gains from the realisation of investment
assets but not exceeding the amount calculated
as -
A–B
Where -
A is any gain from the realisation of shares and
securities in a resident corporation or an interest
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

in land or buildings situated in the United

Republic; and

B is losses on the realisation of assets referred to

in A used in calculating the net gains; and

(ii) a commuted pension from an approved

retirement fund.

(3) Where this subparagraph applies -

(a) the greater of -
(i) the individual's total income less the gains;
or (ii) Tshs. 2,040,000/=,
shall be taxed at the rates specified in
subparagraph (1) as though it were the only total
income of the individual; and
(b) the balance of the total income shall be
taxed at the rate of ten percent.
(4) The total income of a non-resident individual for a
year of income shall be taxed at the rate of thirty percent.
(5) The total income of a person from conducting
mining operations shall be taxed at the rate of thirty percent.
(6) The total income of a person from conducting
petroleum operations shall be taxed at the rate of thirty
percent.
(7) The Minister may, in consultation with the
Minister responsible for finance of the Revolutionary
Government of Zanzibar, determine the rate applicable in
Tanzania Zanzibar.
Presumptive 2.-(1) Where a resident individual meets the
income tax following requirements for a year of income the
for individual's income tax payable with respect to section
individuals 4(1)(a) for the year of income shall be equal to the amount
of presumptive income tax provided in subparagraph (3)-
(a) the individual's income for a year of income
consists exclusively of income from a business
not including income derived by independent
professionals and providers of, technical,
management, construction and training services
(Inserted by F.A. 2022) having a source in the
United Republic;
(b) the turnover of the business does not exceed the
threshold in subparagraph (2); and
(c) the individual does not elect to disapply this
provision for the year of income.
(2) The threshold referred to in subparagraph (1)(b) is
100,000,000 shillings.
(3) The amount of presumptive income tax referred
to in subparagraph (1) is -
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

TURNOVER TAX PAYABLE TAX PAYABLE

WHERE SECTION WHERE SECTION
35 OF TAX 35 OF TAX
ADMINISTRATION ADMINISTRATION
ACT IS NOT ACT IS
COMPLIED WITH COMPLIED WITH
Where turnover NIL NIL
does not exceed
Tshs.
4,000,000/=
Where turnover Tshs. 100,000/= 3% of turnover in
exceeds Tshs. excess of Tshs.
4,000,000/= but 4,000,000/=
does not exceed
Tshs.
7,000,000/=
Where turnover Tshs. 250,000/= Tshs. 90,000/= plus
exceeds Tshs. 3% of turnover in
7,000,000/= but excess of Tshs.
does not exceed 7,000,000/=
Tshs.
11,000,000/=
Where Tshs.450,000/= Tshs. 230,000/= plus
turnover 3% of turnover in
exceeds excess of Tshs.
Tshs. 11,000,000/=
11,000,000/=
but
does not exceed
Tshs.
14,000,000/=
Where NOT APPLICABLE Tshs. 450,000/= plus
turnover 3.5% of turnover in
exceeds excess of Tshs.
Tshs. 14,000,000/=
14,000,000/=
but
does not exceed
Tshs.
100,000,000/=

Deleted by F.A. 2022

The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

TURNOVER TAX PAYABLE TAX PAYABLE

WHERE SECTION WHERE SECTION
35 OF TAX 35 OF TAX
ADMINISTRATI ON ADMINISTRATI
ACT IS NOT ON ACT IS
COMPLIED WITH COMPLIED WITH
Where turnover NIL NIL
does not exceed
Tshs.
4,000,000/=
Where turnover Tshs. 100,000/= 3% of turnover in
exceeds Tshs. excess of Tshs.
4,000,000/= but 4,000,000/=
does not exceed
Tshs.
7,000,000/=
Where turnover Tshs. 250,000/= Tshs. 90,000/= plus
exceeds Tshs. 3% of turnover in
7,000,000/= but excess of Tshs.
does not exceed 7,000,000/=
Tshs.
11,000,000/=
Turnover of 3.5% of turnover
Tshs.
11,000,001/= but
does not exceed
Tshs.
100,000,000/=
(Inserted by F.A. 2022)
(4) The Minister may, in consultation with the
Minister responsible for finance of the Revolutionary
Government of Zanzibar, determine the presumptive rate
applicable in Tanzania Zanzibar.
(5) The rates of income tax referred to in section
65T shall be as follows:

Category of Vehicles Tax Payable

Category A : Goods Vehicle
Load Vehicle between 0 - 1 Tonne 180,000
Load Vehicle between 1 - 5 Tonnes 450,000
Load Vehicle between 6 - 10 Tonnes 720,000
Load Vehicle between 11 - 15 Tonnes 1,710,000
Load Vehicle between 16 - 20 Tonnes 2,430,000
Load Vehicle between 21 - 25 Tonnes 2,610,000
Load Vehicle above 25 Tonnes 2,790,000

Category B : Passenger Vehicle

The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Bus and other similar vehicle with 180,000

seating capacity below 10 passengers
Bus with seating capacity above 10 but 450,000
below 16 passengers
Bus with seating capacity from 16 up to 720,000
30 passengers
Bus with seating capacity up to 32 1,710,000
passengers
Ordinary bus 2,430,000
Semi-luxury bus 2,610,000
Luxury bus 2,790,000
(Inserted by F.A. 2022) (deleted by F.A. 2023)

(5) The rates of income tax for a resident individual

engaged in transportation of passengers or goods shall
be as follows:

Class A: Passenger Service Vehicles

S/N Number of Tax Payable
Passengers
1. Up to 15 250,000
2. 16 to 25 550,000
3. 26 to 45 1,100,000
4. 46 to 65 1,600,000
5. Above 65 2,200,000
Class B: Tour Service Vehicles
S/N Number of Tourist Tax Payable
1. Up to 15 650,000
2. 16 to 25 900,000
3. 26 to 45 1,300,000
4. 46 to 65 1,800,000
5. Above 65 2,400,000
Class C: Goods Carrying Vehicles
S/N Capacity (Tonnes) Tax Payable
1. Less than 1 250,000
2. 1 to 5 500,000
3. 6 to 10 750,000
4. 11 to 15 1,100,000
5. 16 to 20 1,300,000
6. 21 to 25 1,650,000
7. 26 to 30 1,900,000
8. More than 30 2,200,000
Class D: Private Hire Service Vehicles
S/N Category of Tax Payable
Vehicles
1. Motor Cycle 65,000
2. Tricycle 120,000
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

3. Taxi 180,000
4. Ride Hailing 350,000
5. Ride Sharing 450,000
6. Special Hire 750,000
(Inserted by F.A. 2023)

Rates of 3.-(1) The total income of a corporation, trust,

income tax unapproved retirement fund or domestic permanent
for entities establishment of a non-resident person for a year of income
shall be taxed at the rate of thirty percent.
(2) Notwithstanding subparagraph (1)-
(a) a newly listed company with the Dar es Salaam
Stock Exchange with at least thirty percent of its
equity ownership issued to the public shall be
taxed at a reduced corporate rate of twenty five
percent for three consecutive years from the date
of listing; and
(b) a corporation with a newly established plant for
assembling motor vehicles, tractors, fishing boats
or out boats engine and having a performance
agreement with the Government shall be taxed at
a reduced corporate rate of ten percent for five
consecutive years from the year of
commencement of production.
(c) a newly established entity dealing in manufacture
of pharmaceuticals or leather products and
having a performance agreement with the
Government of the United Republic of Tanzania
shall be taxed at a reduced corporate tare of
twenty percent for five consecutive years from
the year of commencement of production.
(d) an entity dealing in manufacture of sanitary pads
and having a performance agreement with the
Government of the United Republic shall be
taxed at a reduced corporate rate of twenty five
percent for two consecutive years from the 1st
July 2019 to 30th June 2021.
(3) Income of a corporation with perpetual
unrelieved loss for three consecutive years shall be taxed
at the rate of 0.5 percent of the turnover of the third year
of perpetual unrelieved loss.
(4) The repatriated income of a domestic permanent
establishment of a non-resident person for a year of
income shall be taxed at the rate of ten percent.

Rates of 4. Income tax to be withheld from payments under

withholding Division II of Part VII shall be withheld at the following
tax rates-
(a) payments to which section 81 applies -
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(i) in the case of a resident withholdee - at

the rates prescribed in regulations;
(ii) in the case of a non-resident withholdee -
fifteen percent; or
(iii) in the case of director’s fees referred to in section
7(2)(h)
- fifteen percent;
(b) payments to which section 82 applies -
(i) in the case of dividends -
(aa) of a corporation listed on the Dar
es Salaam Stock Exchange or to
which subsection (2) of section 54
applies– five percent; or
(bb) of any other corporation – ten percent;
(ii) in the case of interest, rent or a
commuted pension paid to a resident
withholdee or interest or rent paid to a
non-resident withholdee – ten percent; or
(iii) in the case of royalty referred to in paragraph (c)
of the definition of the term “royalty” – ten
percent;(Inserted by F.A. 2022)
(iv) in the case of other payments - fifteen percent; and
(c) payments to which section 83 applies -
(i) in the case of service fee referred to in
section 83(1)(a), - five percent for a
resident and fifteen percent for a non-
resident;
(ii) in the case of insurance premium referred
to in section 83(1)(b), - five percent;
(iii) in the case of service fee referred to in
section 83(1)(c), - five percent for a
resident and fifteen percent for a non-
resident;
(iv) in the case of money transfer commission
referred to in section 83(1)(d),- ten percent;
and
(v) in the case of payment referred to under
section 83A, - two percent; and
(vi) in the case of a holder of a primary mining
licence or artisanal miner referred to in
section 83(1)(e)-two percent (inserted by
F.A. 2023)
(vii) in the case of payment made to resident
person in respect of verified carborn
emission reduction referred to in section
83(1)(f)-ten percent (inserted by F.A.
2023)

Change of 5.-(1) Where an order relating to tax rates is in force

rate under the Provisional Collection of Taxes and Duties
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Act, with respect to any year of income, the rates of tax

referred to in this Schedule shall, so long as the order
remains in force, be construed in accordance with the
order.
(2) Subject to subparagraph (1), where the rates of
tax specified under paragraph 1, 2, 3 or 4 are changed for
a year of income without specifying the precise date from
which the change takes effect then -
(a) in the case of tax rates under paragraphs 1, 2
and 3, the change shall be treated as having
effect from the start of the calendar year
specified or if no year is specified from the
start of the calendar year after the Act
changing the rate receives Presidential assent;
and
(b) in the case of tax rates under paragraph 4, the
change shall be treated as having effect from
the start of the calendar year specified or if no
year is specified from the date the Act
changing the rate receives Presidential assent.
(3) Where a tax rate specified under paragraphs 1, 2
or 3 changes and the change takes effect on a date other
than the start of a person's year of income then for the
year of income in which the change takes place -
(a) the person's total income shall be apportioned
between the part of the year of income
occurring before the change and the remaining
part according the number of days in each part;
(b) the total income attributable to the part of the
year of income occurring before the change
shall be taxed at the rate applicable before the
change and that attributable to the remaining
part shall be taxed at the rate applicable after
the change; and
(c) in the case of a resident individual, the
thresholds referred to in paragraph 1(1), both
before and after change, shall be reduced in
proportion to the part of the year of income
occurring before the change and the remaining
part.
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

SECOND SCHEDULE

EXEMPT AMOUNTS
(Made under section 10)

Exempt 1.- (1) The following amounts are exempt from income tax -
amounts
(a) amounts derived by the President of the United
Republic or the President of the Revolutionary
Government of Zanzibar from salary, duty
allowance and entertainment allowance paid or
payable to the President from public funds in
respect of or by virtue of the office as President;
(b) amounts derived by the Government including
Executive Agency established under the Executive
Agencies Act or any local authority of the United
Republic or by the Revolutionary Government of
Zanzibar or any local authority of Zanzibar except
amounts derived from business activities that are
unrelated to the functions of Government;
(c) amounts derived by any person entitled to privileges
under the Diplomatic and Consular Immunities and
Privileges Act to the extent provided in that Act or in
regulations made under that Act;
(d) amounts derived by an individual from employment
in the public service of the Government of a foreign
country provided -
(i) the individual is a resident person solely
by reason of performing the employment or
is a non-resident person; and
(ii) the amounts are payable from the public
funds of the country;
(e) foreign source amounts delivered by -
(i) an individual who is not a citizen of the
United Republic and who is referred to in
paragraph (d); or
(ii) a spouse or child of an individual referred to
in subparagraph (i) where the spouse is
resident in the United Republic solely by
reason of accompanying the individual on the
employment;
(f) amounts derived by -
(i) the East African Development Bank;
(ii) the Price Stabilisation and Agricultural Inputs Trust;
(iii) the Investor Compensation Fund under the
Capital Markets Regulatory Authority;
(iv) the Bank of Tanzania;
(v) Dar es Salaam Stock Exchange; and
(vi) African Development Bank from the sale of
bonds and securities in the capital market;
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(g) amounts derived during a year of income by a

primary co- operative society -
(i) registered under the Co-operative Societies
Act;
(ii) solely engaged in activities as a primary co-
operative in one of the following fields-
(aa) agricultural activities, including
activities related to marketing and
distribution;
(bb) construction of houses for
members of the cooperative;
(cc) distribution trade for the benefit of
the members of the cooperative; and
(dd) savings and credit society; and

(iii) whose turnover for the year of income does not

exceed fifty one hundred (replaced by F.A.
2020) million shillings;
(h) pensions or gratuities granted in respect of wounds or
disabilities caused in war and suffered by the
recipients of such pensions or gratuities;
(i) a scholarship or education grant payable in respect of
tuition or fees for full-time instruction at an
educational institution;
(j) amounts derived by way of alimony, maintenance or
child support under a judicial order or written
agreement;
(k) amounts derived by way of gift, bequest or
inheritance, except as required to be included in
calculating income under sections 7(2), 8(2) or 9(2);
(l) [deleted]
(m) amounts derived by way of foreign living allowance
by any officer of the Government that are paid
from public funds and in respect of performance of
the office overseas;
(n) income derived from gaming by a gaming licensee
who has paid gaming tax under Gaming Act;
(o) income derived from investment or business
conducted within the Export Processing Zone, and
Special Economic Zone during initial period of ten
years;
Provided that, this paragraph shall not apply to
category B investor in the special economic zone
as provided in the Special Economic Zones Act.
(Inserted by F.A. 2020)
(p) income derived from investments exempted under
any written laws for the time being in force in
Tanzania Zanzibar;
(q) amounts derived by a crop fund established by
farmers under a registered farmers cooperative
society, union or association for financing crop
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

procurement from its members;

(r) [deleted]
(s) the fidelity fund established under the Capital
Markets and Securities Act;
(t) interest on bonds issued by the East African
Development Bank which are listed in the Dar es
Salaam Stock Exchange;
(u) amounts derived from gains on realisation of
asset by a unit holder on redemption of a unit by a
unit trust;
(v) interest, fees or other financing charges paid by the
Government to a non- resident bank, financial
institution, other government or representative of
other government arising from a loan agreement that
entitles such non-resident entity to a tax
exemption for purposes of financing Government
projects.
(w) amounts paid to persons entitled to benefits
granted pursuant to the provisions of Part V of the
Political Service Retirement Benefits Act. (inserted
by F.A. 2020)
(x) interest derived by a person from government
bonds of not less than three years issued and listed
on the Dar es Salaam Stock Exchange from 1st
July, 2021.(inserted by F.A. 2021)
(y) amount derived from gain on realisation or
transfer of mineral rights and mineral information
to a partnership entity formed between the
Government and an investor; (inserted by F.A.
2022)
(z) amount derived from gain on realisation or
transfer of free carried interest shares from a
partnership entity to the Government; (inserted by
F.A. 2022)
(aa) amount derived from gain on realisation or
transfer of shares to the Government through the
Treasury Registrar.(inserted by F.A. 2022)
(bb) amount derived from gain on the internal
restructuring of mining companies pursuant to the
requirement of a Framework Agreement entered
between the Government and investor to form
partnership entity;(inserted by F.A. 2023)
(cc) amount derived by the National Health Insurance
Fund from investment returns on fixed deposit,
treasury bonds, treasury bills or dividends.
(inserted by F.A. 2023)

(2) The provisions of item (v) of subparagraph (1)

shall be deemed to have come into operation on the 1st
June, 2017.
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(3) The provisions of item (w) shall be deemed to

have come into operation on the 1st day of July 2016.
(inserted by F.A. 2020)
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

THIRD SCHEDULE

DEPRECIABLE ASSETS, ALLOWANCES AND INCLUSIONS

(Made under section 17)

Classification 1.-(1) Depreciable assets are classified as follows-

and pooling
of
CLASS DEPRECIABLE ASSETS
depreciable
assets 1. Computers and data handling equipment together with
peripheral devices; automobiles, buses and minibuses
with a seating capacity of less than thirty passengers,
goods vehicles with a load capacity of less than
seven tonnes; construction and earth-moving equipment.

2. Buses with a seating capacity of thirty or more

passengers, heavy general purpose or specialised
trucks, trailers and trailer-mounted containers; railroad
cars, locomotives, and equipment; vessels, barges,
tugs, and similar water transportation equipment;
aircraft; other self-propelling vehicles; plant and
machinery used in agriculture or manufacturing;
specialised public utility plant, equipment, and
machinery irrigation installations and equipment.

3. Office furniture, fixtures and equipment; any asset

not included in another Class.
4. [Deleted.]
5. Buildings, structures and similar works of a permanent
nature used in agriculture, livestock farming or fishing
farming.
6. Buildings, structures and similar works of permanent
nature other than those mentioned in Class 5.
7. Intangible assets other than those in Class 4.
8 Plant and machinery including windmills, electric
generators and distribution equipment used in agriculture
and electronic fiscal device purchased by a non value
added tax registered trader, equipment used for
prospecting and exploration of minerals or petroleum.

(2) Each depreciable asset owned and employed by a

person during a year of income wholly and exclusively
in the production of the person's income from a
particular business shall be, at the time the asset is first
owned and so employed, placed in a pool -
(a) in the case of a Class 1, 2, 3, 5 or 8
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

depreciable asset other than one referred to

in paragraph (c), with all other assets of the
same Class so owned and employed by the
person in that business;
(b) in the case of a Class 7 depreciable asset, of its
own separately from other assets of that Class
or any other Class; and
(c) in the case of a moveable tangible asset used
by a person who conducts a business of land,
sea or air transport operator or charterer to
carry passengers, mail, livestock or other
moveable tangible assets between different
countries, of its own separately from other
assets of any Class,
and those pools are referred to as the person's pools of
depreciable assets for the year of income.

(3) To the extent not otherwise provided, expenditure

incurred by a person wholly and exclusively in the
production of the person's income from a business in
respect of natural resource prospecting, exploration and
development shall be treated as if it were incurred in
securing the acquisition of an asset that is used by the
person in that production.
Initial 2.-(1) Subject to this paragraph, an allowance is
allowance granted to a person for each item of plant or machinery
-
(a) that is -
(i) used in manufacturing processes
and fixed in a factory;
(ii) used in fish farming; or
(iii) used for providing services to tourists
and fixed in a hotel; and
(b) that is added to the person’s Class 2 or 3
pools of depreciable assets for a business
of the person in accordance with paragraph
1(2).
(2) The amount of the allowance granted for
each asset under subparagraph (1) is calculated as fifty
percent of the net cost of the asset at the time it is
added to the pool.
(3) The allowance granted to a person under
subparagraph (1) shall be available in two portions as
follows-
(a) the first portion shall be available in the
year of income in which the asset is added
to the person’s pool of depreciable assets;
and
(b) the remaining portion shall be available
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

during the year of income following that in

which the first portion is added, but not if
the pool has been dissolved under
paragraph 4 in the meantime.

Depreciation 3.-(1) Subject to this paragraph, an allowance shall be

allowance granted to a person for a year of income for each of the
person's pools of depreciable assets equal to the
depreciation for the year of income of each pool calculated
in accordance with subparagraphs (2), (7) or (8) of this
paragraph.
(2) Depreciation for a year of income for each of a
person's pools of depreciable assets shall be calculated -
(a) in the case of Class 1, 2 and 3 pools,
according to the diminishing value method;
and
(b) in the case of Class 5, 6 and 7 pools, according
to the straight line method,
using the following formula:
A x B x C/365
Where -
A is the depreciation basis of the pool at the end
of the year of income;
B is the depreciation rate applicable to the pool;
and
C is the number of days in the person's year of
income.
(3) The depreciation basis of a Class 1, 2, 3 or 8 pool
of depreciable assets of a person at the end of a year of
income is the total of-
(a) the depreciation basis of the pool at the end of
the previous year of income, if any, after
deducting depreciation for that pool calculated
under subparagraphs (2), (7) or (8) for that
year of income; and
(b) amounts added to the depreciation basis of the
pool during the year of income under
subparagraph (5) in respect of additions to the
cost of assets in or added to the pool,
reduced, but not below zero, by incomings for the assets in
the pool or that have been in the pool derived during the
year of income.
(4) The depreciation basis of a Class 5, 6 or 7 pool
of depreciable assets of a person at the end of a year of
income shall be the total of -
(a) the depreciation basis of the pool at the end of
the previous year of income; and
(b) amounts added to the depreciation basis of the
pool during the year of income under
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

subparagraph (5) in respect of additions to the

cost of assets in or added to the pool,
reduced, but not below zero, by incomings for the assets in
the pool derived during the year of income.
(5) Additions to the cost of a depreciable asset
included in a person's pools of depreciable assets are
added to the depreciation basis of the person's relevant
pool as follows-
(a) subject to item (b) of this paragraph at the time
the asset is added to the pool in accordance with
subparagraph (2) of paragraph 1 or the
expenditure is incurred, whichever is later; or
(b) in the case of an asset for which an initial
allowance is granted under paragraph 2, twelve
months after the time referred to in subparagraph
(a).

(6) The depreciation rates applicable to each pool

referred to in subparagraph (2) are-

CLASS RATE
1. 37.5%
2. 25%
3. 12.5%
4. [Deleted]
5. 20%
6. 5%
7. 1 divided by the useful life of the asset in
the pool and rounded down to the nearest
half year
8. 100%

(7) Where the depreciation basis of a pool of

depreciable assets at the end of a year of income reduced
by depreciation calculated under subparagraph (2)
produces an amount that is less than one million shillings,
additional depreciation of the pool shall be calculated as
equal to that amount.
(8) The allowance granted to a person under
subparagraph (1) for a year of income with respect to a
Class 5, 6 or 7 pool of depreciable assets shall not exceed
the depreciation basis of the pool at the end of the year of
income reduced by all other such allowances granted to the
person in any previous year of income in respect of the
pool.
(9) For the purposes of calculating the depreciation
basis of a pool of depreciable assets -
(a) amounts to be added under subparagraph (5) in
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

respect of an asset when it is added to the pool

shall be reduced by any initial allowance
available under paragraph 2 in respect of the
asset, irrespective of the year of income for
which the initial allowance is available; and
(b) expenditure incurred in acquiring a road vehicle,
other than a commercial vehicle, to the extent that
the expenditure exceeds thirty million shillings the
excess shall not be recognised.
(10) For the purposes of this paragraph, “commercial
vehicle” means -
(a) a road vehicle designed to carry loads of more
than half a tonne or more than thirteen passengers;
or
(b) a vehicle used in a transportation or vehicle rental
business.

Realisation 4.-(1) The excess of-

of (a) incomings derived by a person during a year of
depreciable income for any assets that are or have been in a
assets Class 1, 2, 3, 5, 6 or 8 pool of depreciable assets
of the person during the year of income; over;
(b) (i) or (ii), as appropriate -
(i) in the case of a Class 1, 2, 3 or 8 pool, the
depreciation basis of the pool at the end
of the year of income calculated under
paragraph 3(3) but disregarding those
incomings; or
(ii) in the case of a Class 5 or 6 pool, the
written down value of the pool at the
end of the year of income calculated
under subparagraph (4) but disregarding
those incomings,
shall be included in calculating the person's income for that
year of income from the business in which the assets are or
were employed.
(2) Where the assets in a pool of depreciable assets of
a person are all realised by the person before the end of a
year of income, the pool shall be dissolved and -
(a) an amount is included in calculating the
person's income for the year of income
calculated in accordance with the following
formula:
A–B
or
(b) an allowance shall be granted to the person for
the year of income calculated in accordance with
 The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

the following formula:

B–A
Where -
A is the person's incomings derived during the
year of income, or to be derived, for the
assets; and
B is the sum of -
(i) the written down value of the pool at the
end of the previous year of income;

(ii) any initial allowance otherwise available

in respect of the pool for the following
year of income under paragraph 2; and
(iii) expenditure added to the depreciation
basis of the pool during the year of
income or to be added during the
following year of income under paragraph
3(5).
(3) [Deleted].

(4) For the purposes of this section, "written down

value" of a pool of depreciable assets at the end of a year of
income means -
(a) in the case of a Class 1, 2, 3 or 8 pool, the
depreciation basis of the pool at the end of the
year of income, if any, after deducting
depreciation for that pool calculated under
paragraph 3(2) and (7) for that year of income; or
(b) in the case of a Class 5, 6 or 7 pool, the
depreciation basis of the pool at the end of the
year of income reduced by all allowances
granted to the person under paragraph 3(1) for
that year of income and any previous year of
income in respect of the pool.
Depreciation 5.-(1) The whole of depreciation allowance
allowances expenditure incurred in respect of mineral or petroleum
for mineral or operations during a year of income shall be placed in a
petroleum separate pool.
operations (2) Subject to subparagraph (1), the depreciation
allowances shall be granted with respect to each pool at
the rates provided for in subparagraph (3).
(3)Depreciation allowance shall be granted for
expenditure pooled under subparagraph (1) for a year of
income at the following rates-

Year of Income Depreciation Allowance

First Year 20% of expenditure
Second Year 20% of expenditure
Third Year 20% of expenditure
Fourth Year 20% of expenditure
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

Fifth Year 20% of expenditure

(4) The depreciation allowance granted with respect to a

particular year of income shall be taken in that year and
shall not be deferred to a later year(s) of income.

(5) Where an asset for which depreciation allowance have

been or may be granted under this paragraph realised
during a year of income-
(a) if the incomings derived from the realisation of
an asset(s), exceed the written down value of
the pool of depreciable assets, the excess shall
be included in calculating income from the
mineral or petroleum operations for the year; and
(b) if the written down value of the pool of
depreciable assets exceed the incomings derived
from realisation of all assets in the pool, the
excess of written down value in the pool of assets
may be granted for that year of income and the
pool shall be dissolved.
(6) Where incomings are derived by a person during a
year of income with respect to a depreciable asset
employed by the person in mineral or petroleum
operations but the asset is not realised at that time in
whole or in part, the incomings shall be included in
calculating income from the mineral or petroleum
operations for the year.
(7) In this paragraph-
“depreciation allowance expenditure” means-
(a) additions to the cost of depreciable assets
owned and employed by a person wholly and
exclusively in mineral or petroleum operations;
and
(b) expenditure other than financial costs incurred
in respect of mineral operations wholly and
exclusively on reconnaissance, appraisal and
prospecting or exploration operations or in
developing mineral or petroleum operations and
infrastructure, including as may be prescribed
by regulations, where-
(i) the expenditure is not directly deductible
in calculating income from the
operations; and
(ii) does not otherwise fall to be included in
the cost of an asset;

“written down value of a pool of depreciable assets at a

particular time during a year of income” means-
(a) the written down value of the pool at the end of
the previous year of income; plus
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

(b) expenditure incurred prior to the time, which is

added to the depreciation basis of the pool
during the year of income or to be added during
the following year of income; less
(c) incomings derived during the year of income or
to be derived with respect to a realisation
occurring prior to the time in respect of assets
that are or have been in the pool; and

“written down value of an asset” means the cost of the

asset less all depreciation allowances granted with
respect to expenditure included in that cost
The Income Tax Act R.E. 2019 – PKF TZ (internal version as at 14 July 2023)

FOURTH SCHEDULE

(Made under section 133(5))

[Revoked by Act No.10 of 2015s.125.]

FIFTH SCHEDULE

(Made under section 27(1)(a))

QUANTIFICATION OF MOTOR VEHICLE BENEFITS

ENGINE SIZE QUANTITY OF PAYMENT

OF VEHICLE
Vehicle less than Vehicle more
5 years old than 5 years
old
Not exceeding Tshs.250,000 Tshs.125,000
1000cc
Above 1000cc but Tshs.500,000 Tshs.250,000
not exceeding
2000cc
Above 2000cc but Tshs.1,000,000 Tshs.500,000
not exceeding
3000cc
Above 3000cc Tshs.1,500,000 Tshs.750,000