Income Tax Payment Procedures in Tanzania

Procedures applicable to persons differs with regard to the method of payment that the person is required to use.

Part VII of ITA, 2004

Methods required to be used by persons are withholding method, Installment method and assessment method.
What determines the method you have to use for paying tax?
Generally every person is required to pay tax on installment and on assessment, this implies that the two methods are used by every person.The withholding method is only available to those who are required to withhold tax.These are (i) employers who make a payment that is to be included in calculating the chargeable income of an employee from the employment; (ii) persons paying investment returns (e.g. those paying dividends, interest, natural resource payment, rent or royalty); (iii) persons paying service fees and contract payments. However exceptions exist.
Follow the links below to get more understanding of each method and the procedures involved in each.
  • Income tax payable by withholding.
  • Income tax payable by installment.
  • Income tax payable on assessment.
However there are general obligations that must be fulfilled by every person. These obligations relate to (i) types of tax (ii) time for payment of tax and (iii) maintenance of proper documents.
Types of taxes [S. 78(1)]
Taxes payable under the income Tax Act are:
(i) Taxes imposed by S. 4(1); including the amounts payable by a withholding agent or withholdee, by an installment payer and on assessment. Taxes imposed by S. 4(1) are those taxes charged and payable by every person (a) who has total income for a year of income. S. 5(1) defines total income of a person as the sum of the person’s chargeable income for the year of income from each employment, business and investment less any reduction allowed for the year of income related to retirement contributions to approved retirement funds; (b) who has a domestic permanent establishment that has repatriated income for the year of income or (c) who receives final withholding payment during the year of income.
(ii) Interest and penalties imposed by assessment.
(iii) A tax debt.
(iv) A tax liability payable by a third party. The third party referred here may be an officer of an entity, a receiver, a person owing money to tax debtor, or an agent of non-resident tax debtor.Time for payment of Tax.
(a) Income tax payable by withholding is payable within seven days after the end of each calendar month.
(b) Income tax payable by installment is payable on or before the last day of the third, sixth, ninth and twelfth months of the year of income. But for the case of a single installment, the tax shall be paid before the title to an interest in land or building is transferred. Normally single installment method applies to a person who derives a gain in conducting an investment from the realisation of an interest in land or buildings situated in the United Republic.
(c) In the case of income tax payable on self assessments, on the date of filing a return of income which is not later than six months after the end of each year of income.
(d) In the case of income tax payable on jeopardy assessments, on the date specified in the notice of assessment.
(e) In the case of income tax payable on an adjusted assessment, within thirty days from the date on which the person assessed is served with a notice of assessment.
(f) In the case of interest and penalties, on the date specified in the notice of assessment.
(g) In the case of amounts to be paid by a tax debtor as charge and sale costs incurred by the commissioner, on the date set out in the notice served to the tax debtor relating to the charge over assets.
(h) In the case of amounts to be paid by a person owing money to the tax debtor, on the date set out in the notice served to the person.
(i) In the case of amounts to be paid by an agent of a non-resident, on the date set out in the notice served to the agent.
(j) In the case of amounts to be paid by a tax debtor of another country, on the date set out in the notice served to the person.
(k) In the case of a tax liability of an entity that has committed an offense and the Commissioner decides that the officers of the entity have to pay the liability, then it will be payable at the same time as the tax is payable by the entity.
(l) In the case of tax liability to be recovered from a receiver, seven days after the sale from which the amount is set aside or the failure to set aside.
However an extension may be granted by the commissioner on application.
Maintenance of proper documents.(S. 80)
Unless otherwise authorised by the Commissioner by notice in writing, every person liable to tax under the ITA shall maintain in the United Republic such documents –
(a) as are necessary to explain information to be provided in a return or in any other document to be filed with
the Commissioner under the Act;
(b) as are necessary to enable an accurate determination of the tax payable by the person; and
(c) as may be prescribed by the Commissioner.
The documents referred to here shall be retained for a period of at least five years from the end of the year of income or years of income to which they are relevant unless the Commissioner otherwise specifies by notice in writing.
Where any document referred to here is not in an official language of the United Republic, the Commissioner may, by notice in writing, require the person to provide, at the person’s expense, a translation into an official language by a translator approved by the Commissioner in the notice.
The Commissioner may, by service of a notice in writing, require a person, whether or not liable for tax under the Act to retain documents described with reasonable certainty in the notice for such period may specified in the notice.