What is a security?

security is a tradable financial asset (investment assets) of any kind. Securities are broadly categorized into:-

  • Equity securities (e.g. Ordinary  and preference shares )
  • Debt securities, (e.g. bonds and debentures)
  • Derivative securities, (e.g., forwards, futures, options and swaps).

 

Taxation of net gains on sale of securities

The net gains on sale of securities is treated as investment income to be included in determining  the total income of the person during the year of income   as provided by the Income Tax Act, 2004. The total income of an entity is charged at the rate of 30% while the resident individual tax rates will be applied on the total income of resident individuals.

The total income is the sum of investment income, business income and employment income

What are the net gains from sale of investment assets?

Gain from the sale of investment asset is the excess of market value over the cost of asset

 

The net gain from the sale of investments assets is the sum of all gains from sale of investment assets reduced by:-

  • Total of all losses from sale of investment assets
  • Any unrelieved losses during the year and
  • Any unrelieved losses for the previous year

What is the cost of asset (Security)?

The cost of asset is the sum of expenditure incurred in acquiring the asset including 

 Exempted Securities

The Shares listed on the Dar es Salaam Stock Exchange provided that the shares are owned by a resident or a non-resident person who controls less than 25% of the controlling shares of the company

 

 Limits on investment losses

If a person makes a loss from any investment it can offset

Income from other investments and it cannot offset income from any business.

Limits on capital gains

If a person makes a loss when selling an investment asset, it can offset only gains from selling other investment assets.

Foreign investment losses can offset only foreign investment income, losses on the sale of investment assets can  offsetonly against the sale of foreign investment assets.