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 taxpayer’s 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  turnover	Tax payable when records are incomplete	Tax payable when records are complete
Where turnovers does not exceed Tshs 4,000,000	NIL	NIL
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 exceed 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/=	NA	Tshs 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

Monthly Taxable Income	Tax Rate
Where total Income does not exceed Tshs. 270,000/=	NIL
Where the total Income exceeds Tshs. 270,000/= but does not exceed Tshs. 520,000/=	8% of the amount in excess of the amount in excess of Tshs. 270,000/=
Where total Income exceeds Tshs. 520,000/= but does not exceed Tshs. 760,000/=	Tshs. 20,000/= plus 20% of the amount in excess of Tshs. 520,000/=
Where total Income exceeds Tshs. 760,000/= but does not exceed Tshs. 1,000,000/=	Tshs. 68,000/= plus 25% of the amount in excess of Tshs. 760,000/=
Where total Income exceeds Tshs. 1,000,000/=	Tshs. 128,000/= plus 30% of the amount in excess of Tshs. 1,000,000/=
Note: Threshold per annum: Annual Income of Tshs 3,240,000/= is not taxable

 

Zanzibar

Monthly Taxable Income	Tax Rate
Where total Income does not exceed Tshs. 270,000/=	NIL
Where the total Income exceeds Tshs. 270,000/= but does not exceed Tshs. 520,000/=	8% of the amount in excess of the amount in excess of Tshs. 270,000/=
Where total Income exceeds Tshs. 520,000/= but does not exceed Tshs. 760,000/=	Tshs. 20,000/= plus 20% of the amount in excess of Tshs. 520,000/=
Where total Income exceeds Tshs. 760,000/= but does not exceed Tshs. 1,000,000/=	Tshs. 68,000/= plus 25% of the amount in excess of Tshs. 760,000/=
Where total Income exceeds Tshs. 1,000,000/=	Tshs. 128,000/= plus 30% of the amount in excess of Tshs. 1,000,000/=
Note: Threshold per annum: Annual Income of Tshs 3,240,000/= is not taxable

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 31^stMarch
• On or before 30^thJune
• On or before 30^thSeptember
• On or before 31^stDecember

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 1^st January and 30th June

Forms:  ITX201.01.E Return of Income – Individual

What records should be maintained by a taxpayer?

The Income Tax Act requires every individual who is liable to pay tax in the United Republic of Tanzania, to maintain all documents necessary to enable an accurate determination of the tax payable.

These documents shall be retained for a period of at least five years from the end of the year of income or years of income to which they are relevant, unless the Commissioner specifies otherwise by notice in writing.

Where any document is not written in an official language of the United Republic of Tanzania, the Commissioner may, by notice in writing, require the taxpayer to provide an official translation of communication or document within fourteen days, at the individual’s expense, a translation into an official language by a translator approved by the Commissioner in the notice

 

What are the contents of return form?

The return form consists of seven pages and there are other supplementary pages for calculation of the following types of income and gains:

• Gains from realization of shares and securities in a corporation
• Gains from realization of assets excluding shares, securities or trading stock
• Repatriated income of an individual’s domestic permanent establishment
• Income from general insurance business
• Income from life insurance business
• Income from mining operations

 

Submitting the return

Completing the figures in the return

Do not include cents – round down revenue figures, and round up tax credits and tax deductions to the nearest shilling.

Submitting the return

Do not delay submitting the return to TRA, even if you do not have all the information you need. Where some of the information is missing estimate the amount and indicates which information is estimated at the time of filing that needs confirmation.