In Tanzania resident companies are taxed on earnings generated both locally and overseas. Nonresident businesses are taxed on income sourced within Tanzania. The standard corporate income tax rate is 30%, including for Tanzanian permanent establishments of foreign companies.
Technical and management service providers serving mining, oil and gas businesses face a separate charge of 10% of turnover, collected through withholding tax. Other qualifying payments to nonresidents attract the applicable withholding rates. Gains from selling investments are taxed at 30% when Tanzania’s income source rules bring them within its taxing jurisdiction.
Incentives for Listed Businesses
Companies joining the Dar es Salaam Stock Exchange can access a 25% corporate tax rate for three consecutive years. Eligibility requires at least one quarter of their shares to be issued to the public.
Read Also: Tanzania Personal Income Tax Guide: Tax Rates, Exemptions, Residency Rules and Capital Gains
Relief for Selected Industries
New businesses assembling vehicles, tractors or fishing boats qualify for a 10% corporate tax rate during their first five operating years. Newly established pharmaceutical and leather manufacturers receive a 20% rate over the same period, provided they hold a performance agreement with the Tanzanian government.
Minimum Tax for Persistent Losses
Companies carrying unrelieved tax losses for the current year and the two preceding income years pay alternative minimum tax of 1% of turnover.
Agricultural businesses and providers of health or education services are exempt. Tea processors also benefit from a temporary exemption covering 1 July 2024 through 30 June 2027. These exceptions determine whether a loss-making business must account for minimum tax despite having no taxable profit.
FAQs
Are overseas earnings taxable in Tanzania?
Resident companies pay tax on worldwide income. Nonresident businesses are taxed on income sourced within Tanzania.
How are investment disposal gains taxed?
Gains falling within Tanzania’s income source rules attract income tax at 30%.
What tax applies to technical and management services?
Providers serving mining, oil and gas businesses face withholding tax of 10% of turnover.
Can newly listed companies receive a tax reduction?
Yes. Companies newly listed on the Dar es Salaam Stock Exchange qualify for a 25% rate for three consecutive years if at least 25% of their shares are issued to the public.
What incentive supports new assembly businesses?
New assemblers of vehicles, tractors and fishing boats receive a 10% corporate tax rate for their first five operating years.
Do pharmaceutical and leather manufacturers receive tax relief?
Yes. New manufacturers with a government performance agreement qualify for a 20% rate during their first five operating years.
When does alternative minimum tax apply?
It applies when a company has unrelieved tax losses for the current income year and the preceding two years, unless exempt.
How much is alternative minimum tax?
The charge is 1% of turnover, meaning a qualifying loss-making company can still owe tax.
Which businesses are exempt from minimum tax?
Agricultural companies and health or education service providers are exempt. Tea processors also qualify temporarily, from 1 July 2024 to 30 June 2027.
Source: Tanzania Revenue Authority