Tax Administration in Tanzania

Tax administration encompasses the procedures and requirements for filing returns, paying taxes, undergoing audits, and addressing disputes. Tanzania’s tax administration is governed primarily by the Tax Administration Act, 2015 (TAA) and is enforced by the Tanzania Revenue Authority (TRA). Understanding deadlines, penalties, and the audit/appeal process is vital for investors to remain compliant and manage tax risks.

Registration and Taxpayer Identification

Any person conducting business in Tanzania must register with TRA and obtain a Taxpayer Identification Number (TIN). Companies are typically required to have a TIN as part of business registration. Additionally, businesses register for specific taxes:

• VAT registration (if turnover exceeds TZS 200 million/year in Mainland, or required by nature of business – see section 3).
• PAYE/Withholding tax registration for employers.
• Sector-specific registrations (e.g. as an importer, you’d register in Customs systems). The TRA has an online portal where taxpayers can manage profiles and tax types.

Filing and Payment Deadlines

Key tax filing deadlines include:

• Corporate Income Tax: Final returns due within 6 months after the financial year-end (for most, by June 30 for December year-end​. The Finance Act 2023 extended this to 9 months for entities audited by the government’s Controller and Auditor General (like public corporations​, but private companies remain at 6 months. Along with the return, any final tax due must be paid by that date​.
• Provisional/Quarterly tax: Companies and individuals with business income must file a provisional tax return estimating annual income and tax, and pay in four instalments due by March 31, June 30, Sept 30, Dec 31 (for calendar year taxpayer. Each instalment is 25% of the annual estimate. Failure to pay instalments on time incurs interest. If the estimate is too low (less than 80% of actual tax), interest on underestimation applied​.
• Monthly PAYE/WHT/VAT:
  • PAYE and WHT on most payments are due by the *7th of the following month​.
  • VAT returns and payments are due by the *20th of the following month​.
  • SDL and WCF contributions follow the PAYE schedule (7th of next month).
• Excise duty returns (for manufacturers) are due by the 25th of the next month
• Annual individual returns: Where required (see section 2), due by June 30.

All payments can be made electronically through banks or mobile money by referencing a control number from the TRA system. The TRA’s online filing system (the Taxpayer Portal) allows electronic submission of returns for many taxes. This modernization eases compliance if used properly.

Keeping Records

Taxpayers must maintain records in Tanzania for at least 5 years from the end of the year of income to which they relate (or longer if an audit/appeal is ongoing). Records include books of account, invoices (including Electronic Fiscal Device (EFD) receipts for sales), purchase receipts, contracts, and bank statements. The Tax Administration Act has strict provisions requiring use of EFDs by businesses in retail/trading. Failure to issue an EFD receipt can lead to penalties (capped at 200 currency points ≈ TZS 4 million as of 2024​).

Records and accounts must generally be kept in English or Kiswahili and in Tanzanian Shillings, though TRA may allow foreign currency accounting for branches of foreign companies.

Audits and Assessments

The TRA periodically conducts tax audits to verify compliance. Audits may be comprehensive (covering all taxes) or specific (e.g. VAT refund audit, transfer pricing audit). During an audit:

• TRA officers issue information requests. By law, taxpayers should facilitate access to premises and documents. (The TAA even allows TRA to summon individuals to provide testimony or documents.)
• If an audit finds discrepancies, TRA will issue a tax assessment (additional tax due) or a revised assessment.
• Assessments can be self-assessments (filed returns are deemed self-assessed) or default assessments (if no return filed, TRA estimates income).
• TRA can raise assessments within the time bar: generally, within 5 years from the end of the assessed year, unless fraud/misrepresentation is suspected (then no time limit). So, 2019 can be audited and assessed up to end of 2024, for instance.

If a taxpayer disagrees with an assessment, they have the right to object.

Objections and Appeals

A taxpayer who is aggrieved by a tax decision (assessment, rejection of refund, etc.) can file a Notice of Objection with the Commissioner General of TRA within 30 days of the decision​. The objection must be in writing, stating grounds and providing supporting evidence.

Crucially, to validate an objection, the taxpayer must pay a deposit: the greater of the *undisputed amount of tax or 1/3 of the disputed tax​. If the taxpayer believes they have good cause, they can request a waiver or reduction of this deposit from the Commissioner. However, such waivers are granted sparingly. The Court of Appeal’s landmark ruling in PanAfrican Energy Tanzania Ltd v. TRA (2019) upheld that strict deposit requirements apply, and that TRA has discretion on what constitutes “good reason” for waive​. In that case, the company’s waiver was denied because the reasons given were not deemed sufficient​. The Court did permit a lower deposit (5% in that case via the Tax Tribunal) but reaffirmed that the objection clock starts only after deposit is pai​d. Indeed, Finance Act 2024 clarified an objection is *deemed admitted on the date the deposit is paid.

TRA then considers the objection and must respond with an Objection Decision (either confirming, reducing, or vacating the assessment) usually within 2-3 months (extendable). If the taxpayer is still dissatisfied, they can appeal to the independent Tax Revenue Appeals Board (TRAB) within 30 days of the objection decision, and further to the Tax Revenue Appeals Tribunal (TRAT), and ultimately to the Court of Appeal on points of la.

During appeals, generally the disputed tax not covered by the deposit is stayed (not collected) until final determination, provided the deposit was made. However, interest may accrue.

The appeals process can be lengthy (several years if it reaches Court of Appeal). Tanzania has in recent times resolved many disputes via negotiation or mediation before reaching final court, to reduce backlog.

Interest and Penalties

The Tax Administration Act provides for:

• Interest on late payment of tax: charged at the statutory rate (which is the Bank of Tanzania discount rate plus 5% points) and *compounded monthly​. Currently this rate floats around 12–15% annually. Interest applies to any tax not paid by due date (including underpaid instalments).
• Interest for underestimation of provisional tax: if you under-forecast your income by more than 20%, interest applies to the difference as if it were late paid (this effectively penalizes excessive underestimation​.
• Late filing penalty: For late submission of returns, a penalty up to TZS 225,000 or 2.5% of tax (whichever higher) per month for companies, and lower fixed amounts for individuals, can be imposed.
• Late payment penalty: Separate from interest, a one-time penalty of 1% to 5% of the unpaid tax may apply under certain circumstances (though interest is the main charge for late payment).
• Administrative penalties: e.g. failure to maintain proper records, failure to issue EFD receipts, etc., carry fines. As noted, failing to issue receipts can lead to fines up to 200 currency points (TZS 4,000,000); not using EFD at all could invite business closure until compliance.

Additionally, tax evasion or deliberate fraud is a criminal offense, potentially leading to prosecution, heavier fines, or imprisonment in severe cases. The TRA has a department focusing on large taxpayer audits and uses data matching to detect discrepancies (for instance, comparing VAT returns with income tax declarations, or cross-checking import values with reported sales).

Tax Treaties and International Matters

Tanzania’s tax admin cooperates with other countries on exchange of information under tax treaties. If an investor’s home country requests info on Tanzanian income, TRA can provide it, and vice versa. Tanzania has also implemented the EAC Mutual Assistance in tax matters.

There is no formal Advance Rulings mechanism yet for general tax issues. However, taxpayers can seek private clarifications from TRA in writing; responses are not binding in law but generally respected if full facts were disclosed.

Recent Administrative Reforms

• Electronic Filing and Payments: The TRA’s e-filing system has improved compliance ease. Large taxpayers are required to file electronically. Payment by mobile money or bank slip referencing a control number (from TRA portal) is now standard, reducing errors in allocation.
• Online Objection Filing: As of 2022, objections can be lodged via the TRA Portal. The Finance Act 2022 allowed applications for VAT refunds and interest/penalty remission to be done online​.
• Tax Calendar: TRA and firms like PwC publish tax calendars highlighting all due date​.
• Currency Points Increase: The Finance Act 2024 increased the value of a “currency point” from TZS 15,000 to 20,000. Many fines are defined in currency points, so effectively penalties increased by 33%. For example, the maximum fine for certain offenses rose from TZS 3 million to TZS 4 million.

Managing Audits and Disputes

Investors are advised to:

• Conduct self-audits annually or engage auditors to identify compliance gaps before TRA does.
• Maintain a tax risk register – e.g., flag if transfer pricing is a potential risk area, or if VAT refunds are large.
• When audited, respond timely and transparently to TRA queries. Provide organized documentation (which builds credibility).
• If assessed and it seems unjustified, use the objection process. However, be prepared to pay the 1/3 deposit. The PanAfrican Energy case demonstrates that appealing without paying deposit is not entertained (except in rare hardship scenarios). Budgeting for that contingency or obtaining a bank guarantee for it might be wise for large disputes.
• Use professional advisors or legal counsel especially at the TRAB/TRAT appeal stages; those forums follow formal court-like procedures.

Conclusion

Tanzania’s tax administration has modernized and become more stringent. Timely compliance with filing and payment obligations is rewarded by avoiding punitive interest and penalties. The TRA is known to be assertive but also increasingly accessible online and at taxpayer service centers for guidance. They even publish an annual Taxpayer’s Service Charter outlining expected response times and rights.

From an investor’s perspective, the keys are:

• Know your deadlines (maybe set automatic reminders for the 7th, 20th, 30th of various months).
• Pay taxes on time to avoid the steep interest.
• Keep honest, thorough records to survive any audit.
• Address disputes pragmatically: sometimes negotiating a resolution or settling minor issues can save time, versus fighting every point through the courts.
• Engage with TRA proactively – for example, if you realize an error in a return, the law allows you to submit an amended return or disclose and perhaps avoid some penalties.

The good news is that by adhering to the rules, investors can largely avoid surprises. TRA operates on clear laws and published regulations. Efforts like the one-stop centers at TIC for new investors and the use of technology reflect an administration aiming for efficiency. Still, the onus remains on the taxpayer to get it right. By integrating tax compliance into regular business processes (much like accounting and regulatory compliance), an investor will find Tanzania’s tax system manageable and can focus on growing their business in the country.

For more inquiries and information reach us out through info@auditaxinternational.co.tz