Gains or profits included in calculating income from employment

The employment income includes;

1. 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
2. Payments providing any discharge or reimbursement of expenditure incurred by the individual or an associate of the individual
3. Payments for the individual's agreement to any conditions of the employment
4. Retirement contributions and retirement payments
5. Payment for redundancy or loss or termination of employment
6. Other payment made in respect of employment including benefits in kind quantified in accordance to the prescribed rules
7. Other amounts as may be required to be included
8. Annual director’s fees payable to a director other than a full time service director.

The following gains or profits from employment are excluded in calculating income from employment:

1. Exempt amounts and final withholding payments;
2. On premises cafeteria services that are available on a non-discriminatory basis;
3. 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; (ii) made available by the employer and any associate of the employer conducting a similar or related business on a nondiscriminatory basis
4.  Any subsistence, travelling, entertainment or other allowance that represents solely the reimbursement to the recipient of any amount expended by him wholly and exclusively in the production of his income from his employment or services rendered;
5.  Benefits 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;
6.  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;

         7. 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; 

         8. Retirement contributions and retirement payments exempted under the Public Service Retirement Benefits Act;

         9. Payment that it is unreasonable or administratively impracticable for the employer to account for or to allocate to their recipients;

       10. Allowance payable to an employee who offers intramural private services to patients in a public hospital; and

       11. 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.

These are non-cash benefits which employee may enjoy from the employer. Benefits in kind are quantified by the prescribed rules and included into taxable income of an employee.  They are quantified in the following rules:

a)Provision of Premises/Housing to an employee:                                                        

Benefit in kind related to premises/housing is taken as the lower of the Market Value Rent of the premises and the higher of the following:

• 15% of the employee’s total annual income and
• The expenditure claimed as deduction by the employer in respect of the premises.

Note:

If an employee contributes to part of rent paid on premises, the amount of quantified benefit will be reduced by the amount of rent paid by the employee.

b)Provision of Motor vehicle to an employee:

The quantifications for Benefits in kind from a motor vehicle are based on engine size and age of a vehicle provided. The following annual amounts are applied:

Note:

The Motor vehicle benefit is not applicable where the employer does not claim deduction in respect of the ownership, maintenance or operation of the vehicle

c)Provision of loan to an employee

When an employer provides a loan to an employee and the loan is at the interest rate below statutory rate, the amount of benefit in kind is taken as the difference of the following:

1. The amount of interest that would have been paid if the interest on loan would be charged at statutory rate, and
2. The amount of interest paid on the loan at the rate provided.

 Exception

Where an employer provides a loan whose term is less than twelve months and the aggregate amount of the loan and similar loans outstanding at any time during the previous twelve-month period do not exceed three months’ basic salary of an employee, then the amount of benefit in kind is nil.

d)Other benefits in kind

The market value will apply in determining other benefits in kind.

The applicable rates for Tanzania mainland are the same as those of Tanzania Zanzibar.  You can check PAYE calculators below:
 

https://www.tra.go.tz/calculators/paye.htm

https://www.tra.go.tz/calculators/payeznz.htm

https://www.tra.go.tz/domestic%20tax%20forms/ITX%20215.01.E%20-%20PAYE-%20Statement%20and%20Payment%20of%20Tax%20Withheld.doc

When a person is employed in more than one employment position then employment positions selected by an employee to be regarded as not the main source of income are called secondary employments.

All employers are supposed to withhold income tax but secondary employers are required to withhold in different manner from primary employer.

Responsibility of an employee with secondary employment:

(i)To select, among employment positions, which one will be a primary employment and the other ones are secondary employments.
(ii)To timely notify a primary employer and other employers that are the employee’s secondary employers.

Responsibility of the employer:

(i)To withhold tax at the highest rate of the individual income tax rates applicable.
(ii)Examine all employees within a period not less than six months, whether they have additional employment or not

Note:

If withholding at the highest personal income tax rate will cause hardship to the employee, he may apply to the Commissioner to allow a lower rate at which the secondary employer must withhold tax
 

In general High Commissions, Embassies and Diplomatic missions are not obliged to pay any tax, as covered under The Diplomatic and Consular Immunities and Privileges Act. In this regards those bodies are not bound to operate PAYE schemes. Although some other bodies opt to operate in order to keep their records properly and help their employees to avoid wasting time in complying with their tax affairs so as to enable them concentrate with their duties at their offices.

Some categories of employees have special treatment different from how normal employees, these are non-residents employee and directors other than full time service directors

Non-residents:
For nonresident employees (e.g. temporary employees from abroad) tax is withheld at a flat rate of 15% of the gross income from employment. This is effectively a final withholding and the amount withheld satisfies the employee’s income tax liability with respect to the employment.

Directors other than full time service directors:
Tax is withheld at a rate 15% to fees paid to directors other than full service director. The tax payable is non-final withholding tax.

Documents includes an account, assessment, book, certificate, claim, note, notice, order, record, return or ruling and may take an electronic form
The employer is required to keep the following documents: -
wage sheets and salary vouchers; and
any other books, documents and records whatsoever relating to the calculation or payment of amounts to employees or tax withheld from such payments.
The employer must maintain these documents for a period of five years from the end of the year of income or years of income to which it relates unless the Commissioner otherwise specifies by notice in writing.

Lump sum payments to employees may take the form of gratuities, leave pay, compensations, bonus, commissions etc. which may cover several months of the year or the whole of a year. Lump-sum payments other than terminal payments should be included in the year of payment and be taxed on the basis of the adjusted monthly pay for the year. 
Terminal Lump sum payments which include redundancy and other payments for loss or termination of office shall be spread over a period of six years or actual years of employment and shall be taxed as income for these years.

The amounts of contributions made by employee/employer to the approved retirement funds are reduced from the gross pay when calculating the PAYE.  The amount of this reduction is equal to the lower of-

• The total of the employee; or employer contributions where it is included in calculating the monthly pay made to approved retirement funds; and
• The statutory amount of the fund.