Income Tax Act, CAP 332 Revised Edition 2006

1 1 THE UNITED REPUBLIC OF TANZANIA _____ THE Income tax act _____ CHAPTER 332 ____ Revised Edition 2008 This Revised Edition of 2008 of the Income tax act , Cap. 332 replaces the Revised Edition of 2006 and incorporates all amendments made to this Act up to and including 30th November, 2008 and is printed under the authority of Section 4 of the Laws Revision Act, and Published under Government Notice 2 CHAPTER. 332 _____ THE Income tax act _____ [PRINCIPAL LEGISLATION] ARRANGEMENT OF SECTIONS Section Title PART I PRELIMINARY 1.

2 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 . 3 subdivision B: Chargeable Income 6. Chargeable Income . 7. Income from an Employment. 8. Income from a Business. 9. Income from an Investment. subdivision C: Exemption From Tax 10. Minister may exempt Income from tax . subdivision D: Deductions 11. General principles of deductions. 12. Interest. 13.

3 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 a Business or Investment. Division II: Rules Governing Amounts Used in Calculating the Income Tax Base subdivision A: Tax Accounting and Timing 20. Year of Income . 21. Basis of accounting for Income tax purposes. 22. Cash Basis Accounting.

4 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. 32. Annuities, Instalment Sales and Finance Leases. 33. Transfer Pricing and Other Arrangements Between Associates. 4 34. Income Splitting. 35. Tax Avoidance Arrangements.

5 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.

6 47. Apportionment of Costs and Incomings. PART IV RULES APPLICABLE TO PARTICULAR TYPES OF PERSONS Division I: In General subdivision A: Partnerships 48. Principles of Taxation. 49. Partnership Income or Loss. 50. Taxation of Partners. 51. Cost and Incomings of Partner s Membership Interest in Partnership. subdivision B: Trusts 52. Taxation of Trusts. subdivision C: Corporations 53. Taxation of Corporations. 54. Taxation of Shareholders. 5 Division II: General Provisions Applicable to Entities 55. Asset Dealings Between Entity and Members.

7 56. Change in Control. 57. Income or Dividend Stripping. PART V SPECIAL INDUSTRIES Division I: Insurance Business 58. General Insurance Business. 59. 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. PART VI INTERNATIONAL Division I: Residence and Source 66.

8 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 6 73. Principles of Taxation. 74. Unallocated Income of Controlled Foreign Trust or Corporation. 75. Taxation of Members of Controlled Foreign Trusts and Corporations. 76.

9 Cost and Incomings of Member's Interest in Controlled Foreign Trust or Corporation. 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. Maintenance of Documentation. 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. subdivision B: Procedure Applicable to Withholding 84.

10 Statements and Payments of Tax Withheld or Treated as Withheld. 85. Withholding Certificates. 86. Final Withholding Payments. 87. Credit for Non-Final Withholding Tax. Division III: Income Tax Payable by Instalment 88. Payment of Income Tax by Quarterly Instalment. 89. Statement of Estimated Tax Payable. 90. Single Instalment at Time of Realisation or Receipt. Division IV: Income Tax Payable on Assessment subdivision A: Returns 7 91. Returns of Income . 92. Return of Income Not Required. 93. Extension of Time to File Return of Income .