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  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 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 TSHS11,000,000
Where turnover exceeds TSHS 14,000,000 but does not exceed TSHS 100,000,000	NOT APPLICABLE	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

Annual Taxable  Income	Tax Rate
Where Total Income does not exceed TSHS 2,040,000	NILL
Where Total Income exceeds TSHS  2,040,000 but does not exceed TSHS   4,320,000	9% of the amount in excess of TSHS 2,040,000
Where Total Income exceeds TSHS  4,320,000 but does not exceed TSHS  6,480,000	TSHS 205,200 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 8,640,000	TSHS 637,200 plus 25% of the amount in excess of TSHS 6,480,000
Where Total Income exceeds TSHS 8,640,000	TSHS 1,177,200 plus 30% of the amount in excess of TSHS 8,640,000

 

Zanzibar

Annual Taxable Income	Tax Rate
Where total income does not exceed TSHS 1,800,000	NIL
Where total income exceeds TSHS 1,800,000 but does not exceed  TSHS. 4,320,000	13% of the amount in excess of TSHS. 1,800,000
Where total income exceeds TSHS 4,320,000 but does not exceed TSHS. 6,480,000	TSHS. 327,600 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 8,640,000	TSHS. 759,600 plus 25% of the amount in excess of TSHS. 6,480,000
Where total income exceeds TSHS 8,640,000	TSHS. 1,299,600 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 31^st March

·         On or before 30^th June

·         On or before 30^th September

·         On or before 31^st 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 1^st January and 30th June

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