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ARRANGEMENT OF SECTIONS
PART II
IMPOSITION OF INCOME TAX
PART III
INCOME TAX BASE
Division I - Calculating the Income Tax Base
Subdivision A - Total Income
Subdivision B - Chargeable Income
7. Income from an employment.
8. Income from a business.
9. Income from an investment.
Subdivision C - Exemption From Tax
10. Minister may exempt income from tax.
Subdivision D - Deductions
11. General principles of deductions.
14. Repair and maintenance expenditure.
15. Agriculture, research development and environmental expenditure.
16. Gifts to public and charitable institutions.
17. Depreciation allowances for depreciable assets.
18. Losses on realisation of business assets and liabilities.
19. Losses from a business or investment.
Division II: Rules Governing Amounts Used in Calculating the Income Tax Base
Subdivision A - Tax Accounting and Timing
21. Basis of accounting for income tax purposes.
22. Cash basis accounting.
23. Accrual basis accounting.
25. Reverse of amounts including bad debts.
Subdivision B - Quantification, Allocation and Characterisation of Amounts
27. Quantification according to market value.
28. Quantification in shillings.
30. Jointly owned investment.
31. Compensation and recovery payments.
32. Annuities, instalment sales and finance leases.
33. Transfer pricing and other arrangements between associates.
Division III: Assets and Liabilities
Subdivision A - Central Concepts
36. Calculation of gains and losses.
38. Incomings for an asset.
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.
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 contribution to approved retirement fund.
62. Taxation of retirement funds.
Division III: Charitable Organisations, Clubs and Trade Associations
65. Clubs and trade associations.
Division IV: Minerals
Subdivision A - Prospecting and Mining
65A. Application of the subdivision.
65B. Principles of taxation.
65C. Separate mining operations.
65D. Income from mining operations.
65E. Deduction from mining operations.
65F. Losses from mining operations.
65H. Realisation of mineral rights.
Subdivision B - Processing, Smelting 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.
65Q. Realisation of petroleum rights.
Subdivision B - Midstream and Downstream Activities
65S. Midstream and downstream activities.
Division VI: Transportation
65T. Persons engaged in transportation of passengers or goods.
PART VI
INTERNATIONAL
Division I: Residence and Source
67. Source of income and loss.
68. Source of directly included and deducted amounts.
69. Source of payments.
69A. Income accruing or arising in United Republic.
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.
PART VII
TAX PAYMENT PROCEDURE
Division I: General Obligations
78. Types of tax and methods of payment.
79. Time for payment of tax.
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. Withholding from agricultural, livestock and fisheries products.
Subdivision B - Procedure Applicable to Withholding
84. Statements and payments of tax withheld or treated as withheld.
86. Final withholding payments.
87. Credit for non-final withholding tax.
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.
Division IV: Income Tax Payable on Assessment
Subdivision A - Returns
91. Returns of income.
92. Return of income not required.
Subdivision B- Assessments
PART VIII
NON-COMPLIANCE
Division I: Interest and Penalties
Division II: Offences
Division III: Recovery of Tax from Tax Debtor
Division IV: Third Party Liability
Division V: Proceedings Under Divisions II, III and IV of this Part
PART IX
REMISSION AND REFUND
Division I: The Commissioner and Other Officers
Division II: Official Documentation and Registration
Division III: Audit and Information Collection
141. Repeal of Act No. 33 of 1973.
143. Agreements and certificates for fiscal stability.
144. Assets and liabilities at commencement.
CHAPTER 332
INCOME TAX ACT
An Act to make provision for the charge, assessment and collection of Income Tax, for the ascertainment of the income to be charged and for matters incidental thereto.
[1st July, 2004]
[s. 1]
Acts Nos.
11 of 2004
15 of 2004
13 of 2005
6 of 2006
1 of 2008
13 of 2008
27 of 2008
14 of 2009
15 of 2010
5 of 2011
8 of 2012
3 of 2013
2 of 2014
10 of 2015
16 of 2015
23 of 2015
2 of 2016
2 of 2017
4 of 2017
7 of 2017
4 of 2018
6 of 2019
8 of 2019
8 of 2020
3 of 2021
5 of 2022
9 of 2022
PART I
PRELIMINARY (ss 1-3)
This Act may be cited as the Income Tax Act.
This Act shall apply to Mainland Tanzania as well as Tanzania Zanzibar.
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;
"alternative financing arrangement" means any financial arrangement approved by the Bank of Tanzania other than conventional financial arrangements;
"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–
(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 its charitable business; and
(d) 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 section 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 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–
(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 25 per cent 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; 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;
"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 received substantial economic benefit from an entity or an arrangement directly or indirectly whether acting alone or together with other person;
(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;
"business" includes–
(a) a trade, concern in the nature of trade, manufacture, profession, vocation or isolated arrangement with a business character;
(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; and
(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 per cent 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 o ther non-resident persons controlling, controlled by, or subject to the same common control as that non-resident person, or for the beneficial owner; or
(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;
"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 Auditors and Accountants (Registrations) 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 I of the Third Schedule;
"Commission" means the Commission of Minerals established under section 20 of the Mining Act *;
"Commissioner" means the Commissioner General appointed under the Tanzania Revenue Authority Act;
"commuted pension" means a payment received by an 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, a public 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;
"debt obligation" means the obligation corresponding to a debt claim;
"decommissioning fund" with respect to petroleum operations means a fund established under the Petroleum Act *;
"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 shillings 250,000 and receives substantial support from the individual during the whole year of income for the necessities 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;
"distribution" by an entity–
(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 where the owner of the shares together with associates controls or within the previous five years controlled, either directly or indirectly, twenty-five per cent 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 *;
"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;
"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 conducted with respect to the right, as the case requires;
"final withholding payment" has the meaning ascribed to it by section 86;
"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;
"financial institution" means a bank or financial institution approved under the Bank of Tanzania Act or the Banking and Financial Institutions Acts;
"foreign currency debt claim" means a debt claim that is denominated in a currency other than Tanzanian shillings;
"foreign currency debt obligation" means a debt obligation 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;
(a) from an employment, business or investment has the meaning ascribed in sections 7, 8 or 9, as the case requires; and
(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;
(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;
"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 Division I of Part VIII;
"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 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 access of 15,000,000 shillings;
(c) an interest in land held by an individual that has a market value of less than shillings 10,000,000 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 by a non-resident person who either alone or with other associates controls less than twenty-five per cent 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;
"licenced dealer" has a meaning ascribed to it in the Mining Act *;
"license 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 conducted;
"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 paragraphs (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;
"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 minerals 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; natural resource" means minerals, petroleum, water or any other non-living or living resource that may be taken from land or the sea;
"money transfer commission" means a payment in respect of money transfer service paid or payable to a money transfer agent;
"money transfer agent" means any person rendering money transfer service on behalf of the money transfer service provider;
National Oil Company" has the meaning ascribed to it under the Petroleum Act;
"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 per cent 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 per cent 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 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 a gent 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) concludes contracts or issues invoice on behalf of that other person, unless his activities are limited to the purchase of goods or merchandise for that 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 of for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that of that other person;
(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 the Petroleum Act;
"petroleum operations" has the meaning ascribed to it under the Petroleum Act;
"petroleum right" means an exploration licence or a development 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;
"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;
"premium" has the meaning as defined in the definition of "insurance proceeds" has the meaning as defined in the definition of "insurance";
"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;
"realisation" of an asset has the meaning ascribed to it by section 39, and "liability" has the meaning ascribed to it under section 40;
"rehabilitation" with respect to a mineral operation 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 ot development agreement;
"rehabilitation bond" with respect of mining operation has the meaning ascribed to it by the Mining Act;
"rehabilitation fund" with respect to mining operations or with respect to 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;
"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 of 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;
"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 lamp 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 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;
"shareholder" means a person who is a member of a corporation;
"source" has the meaning ascribed to it under section 67, 68 or 69, as the case requires;
"special mining licence" has the meaning ascribed to it under the Mining Act *;
"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;
(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
(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 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 II;
"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 4(4) of the Third Schedule;
(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;
"year of income" has the meaning ascribed to it under section 20.
PART II
IMPOSITION OF INCOME TAX (s 4)
4. Charge of tax
(1) Income tax shall be charged and is payable for each year of 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;
(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.
(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)(a), (b) and (c).
(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 paragraphs 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 88(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 for in paragraph 2(3) 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(2) of the First Schedule to the permanent establishment's repatriated income for the year of 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 (ss 5-47)
Division I: Calculating the Income Tax Base (ss 5-19)
Subdivision A - Total Income
(1) The total income of a person shall be the sum of the person's 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
6. Chargeable income
(1) Subject to the provisions of subsection (2), the chargeable 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 the employment, business or investment for the year of income, but only to the extent that the income has a source in the United Republic;
(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.
(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).
7. Income from an employment
(1) An individual's income from an employment for a year of 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 the 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.
(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 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 an amount expended by him wholly and exclusively in the production of his income from his employment or services rendered;
(e) benefit 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 Retirement Benefits Act, 1999 *;
(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 an institution the budget of which 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 in 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 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.
8. Income from a business
(1) A person's income from a business for a year of income is 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–
(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 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 filial withholding payments; and
(b) amounts that are included in calculating the person's income from any employment.
9. Income from an investment
(1) A person's income from an investment for a year of income 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 persons 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.
Subdivision C - Exemption from Tax
10. Minister may exempt income from tax
(1) The Minister may, by order in the Gazette, provide–
(a) that any income or class of incomes accrued in or derived from the United Republic shall be exempt from tax to the extent specified in such order; or
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