CHAPTER 332-THE INCOME TAX ACT

1 The INCOME Tax Act [CAP. 332 2019] 1 THE UNITED REPUBLIC OF TANZANIA CHAPTER 332 THE INCOME TAX ACT [PRINCIPAL LEGISLATION] revised edition 2019 This edition of the INCOME Tax Act, Cap. 332, has been revised up to and including 30th November, 2019 and is printed under the authority of section 4 of the Laws Revision Act, CHAPTER 4. Dodoma, ADELARDUS L. KILANGI 30th November, 2019 Attorney General PRINTED BY THE GOVERNMENT PRINTER, DAR ES SALAAM - TANZANIA The INCOME Tax Act [CAP.]

2 332 2019] 1 The INCOME Tax Act [CAP. 332 2019] 1 _____ CHAPTER 332 _____ THE INCOME TAX ACT [PRINCIPAL LEGISLATION] ARRANGEMENT OF SECTIONS Section Title PART I PRELIMINARY PROVISIONS 1. Short title. 2. Application. 3. Interpretation. PART II IMPOSITION OF INCOME TAX 4. Charge of tax. PART III INCOME TAX BASE Division I: Calculating the INCOME Tax Base Subdivision A: Total INCOME 5. Total INCOME . Subdivision B: Chargeable INCOME 6. Chargeable INCOME . 7. INCOME from employment. 8. INCOME from business. 9. INCOME from investment. The INCOME Tax Act [CAP.

3 332 2019] 2 Subdivision C: Exemption From Tax 10. Minister may exempt INCOME from tax. 10A. Limitation for exemption. Subdivision D: Deductions 11. General principles of deductions. 12. Interest. 13. Trading stock. 14. Repair and maintenance expenditure. 15. Agriculture, research development and environmental expenditure. 16. Gifts to public, charitable and religious institutions. 17. Depreciation allowances for depreciable assets. 18. Losses on realisation of business assets and liabilities. 19. Losses from business or investment. Division II: Rules Governing Amounts Used in Calculating INCOME Tax Base Subdivision A: Tax Accounting and Timing 20.

4 Year of INCOME . 21. Basis of accounting for INCOME tax purposes. 22. Cash basis accounting. 23. Accrual basis accounting. 24. Claim of right. 25. Reverse of amounts including bad debts. 26. Long-term contracts. Subdivision B: Quantification, Allocation and Characterisation of Amounts 27. Quantification according to market value. 28. Quantification in shillings. 29. Indirect payments. 30. Jointly owned investment. 31. Compensation and recovery payments. The INCOME Tax Act [CAP. 332 2019] 3 32. Annuities, instalment sales and finance leases. 33. Transfer pricing and other arrangements between associates.

5 34. INCOME splitting. 35. [Repealed.] Division III: Assets and Liabilities Subdivision A: Central Concepts 36. Calculation of gains and losses. 37. Cost of asset. 38. Incomings for an asset. 39. Realisation. 40. Application of this division to liabilities. 41. Reverse, quantification and compensation for costs and incomings. Subdivision B: Special Rules 42. Realisation with retention of asset. 43. Transfer of asset to spouse or former spouse. 44. Transfer of asset to an associate or for no consideration. 45. Involuntary realisation of asset with replacement. 46. Realisation by separation. 47. Apportionment of costs and incomings. PART IV RULES APPLICABLE TO PARTICULAR TYPES OF PERSONS Division I: In General Subdivision A: Partnerships 48.

6 Principles of taxation. 49. Partnership INCOME or loss. 50. Taxation of partners. 51. Cost and incomings of partner s membership interest in partnership. The INCOME Tax Act [CAP. 332 2019] 4 Subdivision B: Trusts 52. Taxation of trusts. Subdivision C: Corporations 53. Taxation of corporations. 54. Taxation of shareholders. Division II: General Provisions Applicable to Entities 55. Asset dealings between entity and members. 56. Change in control. 57. INCOME or dividend stripping. PART V SPECIAL INDUSTRIES Division I: Insurance Business 58. General insurance business. 59.

7 Life insurance business. 60. Proceeds from insurance. Division II: Retirement Savings 61. Retirement contributions to approved retirement fund. 62. Taxation of retirement funds. 63. Retirement payments. Division III: Charitable Organisations, Clubs and Trade Associations 64. Charitable organisations. 65. Clubs and trade associations. The INCOME Tax Act [CAP. 332 2019] 5 Division IV: Minerals Subdivision A: Prospecting and Mining 65A. Application of subdivision. 65B. Principles of taxation. 65C. Separate mining operations. 65D. INCOME from mining operations. 65E. Deductions for mining operations.

8 65F. Losses from mining operations. 65G. Bonus payments. 65H. Realisation of mineral rights. 65I. Rehabilitation fund. Subdivision B: Processing, smelling and refining 65J. Licensee conducting processing, smelting or refining. Division V: Petroleum Subdivision A: Petroleum Operations 65K. Principles of taxation. 65L. Separate petroleum rights. 65M. INCOME from petroleum rights. 65N. Deductions for petroleum rights. 65O. Losses from petroleum rights. 65P. Bonus payments. 65Q. Realisation of petroleum rights. 65R. Decommissioning funds. Subdivision: B Mid stream and downstream activities 65S. Midstream and downstream activities The INCOME Tax Act [CAP.]

9 332 2019] 6 PART VI INTERNATIONAL Division I: Residence and Source 66. Resident persons. 67. Source of INCOME and loss. 68. Source of directly included and deducted amounts. 69. Source of payments. Division II: Permanent Establishments 70. Principles of taxation. 71. Calculating the INCOME of a permanent establishment. 72. Repatriated INCOME of Domestic Permanent Establishment. Division III: Controlled Foreign Trusts and Corporations 73. Principles of taxation. 74. Unallocated INCOME of controlled foreign trust or corporation. 75. Taxation of members of controlled foreign trusts and corporations. 76. Cost and incomings of member's interest in controlled foreign trust or corporation.

10 Division IV: Foreign Tax Relief 77. Foreign Tax Relief. PART VII TAX PAYMENT PROCEDURE Division I: General Obligations 78. Types of tax and methods of payment. 79. Time for payment of tax. 80. Repealed. 80A. Repealed. The INCOME Tax Act [CAP. 332 2019] 7 Division II: INCOME Tax Payable by Withholding Subdivision A: Withholding Obligations 81. Withholding by employers. 82. Withholding from investment returns. 83. Withholding from service fees. 83A. Withholding of INCOME tax for goods. 83B. Repealed. Subdivision B: Procedure Applicable to Withholding 84. Statements and Payments of Tax Withheld or Treated as Withheld.