Income tax for individuals – Tanzania

Individual Income Tax

Individuals are categorized in two groups, small individual traders who are not required to maintain audited accounts and the medium individual traders who are required to maintain audited accounts. Small traders are taxed by presumptive tax system, whereas medium are taxed based on the annual profit determined from the audited accounts.

a)  Presumptive tax system

This is a tax system where individuals are taxed based on their annual turnover. The Taxpayers under this system are not obligated to prepare and submit audited accounts to the TRA. However, he may opt not to apply the system and prepare audited accounts and pay tax based on profits.

Conditions which qualify to be in Presumptive tax system.

  • the Taxpayer must be a resident individual
  • the annual turnover of the business does not exceed the threshold of TSHS 100 million.
  • he must conduct business only for the year of income hence not be engaged in any other activities such as employment or investments. Under the presumptive tax system, individual’s income must be derived solely from business sources. If income is derived from other sources such as employment and/or investment the presumptive scheme cannot be used.
  • the individual’s income for any year must consist exclusively of income from business with sources in the United Republic of Tanzania.

Rates of tax under presumptive tax System.

Under this system, tax payable is established based annual turnover shown by taxpayers records. In absence of complete records, annual turnover will be estimated based on the best judgment of the commissioner. The turnover bands and their tax rates are as stipulated below:

Annual  turnoverTax payable when records are incompleteTax payable when records are complete
Where turnovers does not exceed Tshs 4,000,000NILNIL
Where turnover exceeds Tshs  4,000,000/= but does not exceed Tshs 7,000,000 Tshs 100,000/=3% of the turnover in excess of Tshs 4,000,000/=
Where turnover exceeds Tshs 7,000,000/= but does not exceeds Tshs 11,000,000/= Tshs 250,000/=Tshs 90,000/= plus 3% of the turnover in excess of Tshs 7,000,000/=
Where turnovers exceeds Tshs. 11,000,000/= but does not exceed Tshs. 14,000,000/= Tshs 450,000/=Tshs 230,000/=plus 3% of the turnover in excess of Tshs 11,000,000/=
Where turnover exceeds Tshs 14,000,000/= but does not exceed Tshs 100,000,000/= NATshs 450,000/=plus 3.5% of the turnover in excess of Tshs 14,000,000/=

b)  Individuals who prepare audited accounts.

This is a group of taxpayers whose annual turnover is above Tshs 100,000,000 and are required to prepare audited accounts/financial statements in respect of their business.

Rates of tax for individuals who prepare Audited Accounts

Taxpayers under this category are taxed basing on their profits. The rates applicable for this category are as follows:

Tanzania Mainland

Annual Taxable  IncomeTax Rate
Where Total Income does not exceed Tshs. 3,240,000/=NILL
Where Total Income exceeds Tshs. 3,240,000/ but does not exceed Tshs. 6,240,000/=  9% of the amount in excess of Tshs. 3,240,000/=
Where Total Income exceeds Tshs.  6,240,000/= but does not exceed Tshs. 9,120,000/= Tshs. 270,000/= plus 20% of the amount in excess of Tshs. 6,240,000/=
Where Total Income exceeds Tshs 9,120,000/= but does not exceed Tshs 12,000,000/=Tshs. 846,000/= plus 25% of the amount in excess of Tshs. 9,120,000/=
Where Total Income exceeds Tshs. 12,000,000/=Tshs. 1,566,000/= plus 30% of the amount in excess of Tshs. 12,000,000/=

Zanzibar

Annual Taxable IncomeTax Rate
Where total income does not exceed Tshs 2,160,000NIL
Where total income exceeds Tshs 2,160,000/=  but does not exceed  Tshs 4,320,000/=9% of the amount in excess of Tshs. 2,160,000
Where total income exceeds TSHS 4,320,000/= but does not exceed Tshs.  6,480,000/=TSHS. 1,94,400 plus 20% of the amount in excess of TSHS. 4,320,000
Where total income exceeds Tshs 6,480,000 but does not exceed Tshs 8,640,000Tshs. 626,400 plus 25% of the amount in excess of T. 6,480,000
Where total income exceeds TSHS 8,640,000Tshs. 1,166,400/= plus 30% of the amount in excess of Tshs. 8,640,000/=


Filing of tax returns and payment of tax
.

The statement of estimated tax payable.

The statement of estimated tax payable is a provisional return which a taxpayer is required to complete and file to the Commissioner within three months from the beginning of the year of income (which for individuals shall be calendar year).

The taxpayer is supposed to pay the estimated tax in a maximum of four installments each falling due after three months. The Due dates are as follows:

·         On or before 31st March

·         On or before 30th June

·         On or before 30th September

·         On or before 31st December

Form: ITX200.01.E – Statement of Estimated assessment – Individual

Filing of Final returns.

·         A taxpayer must file a final tax return to TRA within six months after the end of each tax year. The taxpayer must file return in the period between 1st January and 30th June

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