The Income Tax Act, Chapter 332 [Principal Legislation], Revised Edition 2023

1. Short title. w ed

2. Application. ut rib

3. Interpretation. st di or part ii ed uc IMPOSITION OF INCOME TAX od pr

4. Charge of tax. re be ay part iii m ok INCOME TAX BASE bo is th Division I: Calculating the Income Tax Base of rt pa Subdivision A: Total Income o .N

5. Total income. d ve r se Subdivision B: Chargeable Income re s

6. Chargeable income. ht rig

7. Income from employment. ll .A

8. Income from business. a ni 9. za Income from investment. an fT Subdivision C: Exemption from Tax to en

10. Minister may exempt income from tax. n m er ov Subdivision D: Deductions G 25

11. General principles of deductions. 20

12. Interest. ©

13. Trading stock. 545 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023]

14. Repair and maintenance expenditure.

15. Agriculture improvement, research development and environmental expenditure.

16. Gifts to public, charitable and religious institutions.

17. Depreciation allowances for depreciable assets. . AG

18. Losses on realisation of business assets and liabilities. O

19. Losses from business or investment. of n io s Division II: Rules Governing Amounts Used in Calculating the Income Tax Base is m er Subdivision A: Tax Accounting and Timing tp ou

20. Year of income. ith w

21. Basis of accounting for income tax purposes. ed 22. ut Cash basis accounting. rib

23. Accrual basis accounting. st di

24. Claim of right. or ed

25. Reverse of amounts including bad debts. uc od

26. Long-term contracts. re pr be Subdivision B: Quantification, Allocation and Characterisation of Amounts ay

27. Quantification according to market value. m ok

28. Quantification in shillings. bo is

29. Indirect payments. th of

30. Jointly owned investment. rt pa

31. Compensation and recovery payments. o .N

32. Annuities, instalment sales and finance leases. d ve

33. Transfer pricing and other arrangements between associates. r se

34. Income splitting. re s

35. Repealed. ht rig ll .A Division III: Assets and Liabilities a ni Subdivision A: Central Concepts za an

36. Calculation of gains and losses. fT to

37. Cost of asset. en m

38. Incomings for asset. n er

39. Realisation. ov G

40. Application of this Division to liabilities. 25 20

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. 546 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023]

44. Transfer of asset to associate or for no consideration.

45. Involuntary realisation of asset with replacement.

46. Realisation by separation.

47. Apportionment of costs and incomings. . AG part iv O RULES APPLICABLE TO PARTICULAR TYPES OF PERSONS of n io Division I: In General s is m Subdivision A: Partnerships er tp

48. Principles of taxation. ou ith

49. Partnership income or loss. w ed

50. Taxation of partners. ut rib

51. Cost and incomings of partner’s membership interest in partnership. st di or Subdivision B: Trusts ed uc

52. Taxation of trusts. od pr re Subdivision C: Corporations be

53. Taxation of corporations. ay m

54. Taxation of shareholders. ok bo is Division II: General Provisions Applicable to Entities th of

55. Asset dealings between entities and members. rt pa

56. Change in control. o .N

57. Income or dividend stripping. d ve r se part v re s SPECIAL INDUSTRIES ht rig ll Division I: Insurance Business .A a 58. ni General insurance business. za an

59. Life insurance business. fT

60. Proceeds from insurance. to en m Division II: Retirement Savings n er ov

61. Retirement contributions to approved retirement fund. G 25

62. Taxation of retirement funds. 20

63. Retirement payments. © 547 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Division III: Charitable Organisations, Clubs and Trade Associations

64. Charitable organisations.

65. Clubs and trade associations. Division IV: Minerals . AG Subdivision A: Prospecting and Mining O of

66. Application of subdivision. n io

67. Principles of taxation. s is m

68. Separate mining operations. er tp

69. Income from mining operations. ou

70. Deduction for mining operations. ith w

71. Losses from mining operations. ed ut

72. Bonus payments. rib st

73. Realisation of mineral rights. di or

74. Rehabilitation fund. ed uc od Subdivision B: Processing, Smelting and Refining pr re

75. Licensee conducting processing, smelting or refining. be ay Division V: Petroleum m ok Subdivision A: Petroleum Operations bo is

76. Principles of taxation. th of

77. Separate petroleum rights. rt pa

78. Income from petroleum rights. o .N

79. Deductions for petroleum rights. d ve

80. Losses from petroleum rights. r se 81. re Bonus payments. s ht

82. Realisation of petroleum rights. rig

83. Decommissioning funds. ll .A a ni Subdivision B: Midstream and Downstream Activities za an

84. Midstream and downstream activities. fT to en Division VI: Transportation n m er

85. Repealed. ov G 25 part vi 20 © INTERNATIONAL Division I: Residence and Source

86. Resident persons.

87. Source of income and loss. 548 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023]

88. Source of directly included and deducted amounts.

89. Source of payments.

90. Income accruing or arising in United Republic. Division II: Permanent Establishments . AG

91. Principles of taxation. O

92. Calculating income of permanent establishment. of n

93. Repatriated income of domestic permanent establishment. io s is m Division III: Controlled Foreign Trusts and Corporations er tp ou

94. Principles of taxation. ith

95. Unallocated income of controlled foreign trust and corporation. w ed

96. Taxation of members of controlled foreign trusts or corporations. ut rib

97. Cost and incomings of member’s interest in controlled foreign trust st di or corporation. or ed Division IV: Foreign Tax Relief uc od

98. Foreign tax relief. pr re

99. Tax credit for business or investment operating in both Mainland Tanzania and be Tanzania Zanzibar. ay m ok bo part vii is TAX PAYMENT PROCEDURE th of rt Division I: General Obligations pa o

100. Types of tax and methods of payment. d .N

101. Time for payment of tax. ve r se 102-103. Repealed. re s ht Division II: Income Tax payable by Withholding rig ll .A Subdivision A: Withholding Obligations a ni za

104. Withholding by employers. an fT

105. Withholding from investment returns. to

106. Withholding from service fees and contract payments. en m

107. Withholding of income tax for goods. n er ov

108. Repealed. G 25 20 Subdivision B: Procedure Applicable to Withholding ©

109. Statements and payments of tax withheld or treated as withheld.

110. Withholding certificates.

111. Final withholding payments.

112. Credit for non-final withholding tax. 549 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Division III: Income Tax Payable by Instalment

113. Payment of income tax by quarterly instalment.

114. Statement of estimated tax payable.

115. Single instalment at time of realisation or receipt.

116. Tax payment on income realised through digital market place. . AG O Division IV: Income Tax Payable on Assessment of n io Subdivision A: Returns s is m

117. Returns of income. er tp

118. Return of income not required. ou

119. Repealed. ith w ed Subdivision B: Assessments ut rib

120. Self-assessment. st di or 121–153. Repealed. ed uc od part x pr ADMINISTRATION re be Official Documentation and Registration ay m

154. International agreements. ok bo

155. Regulations. is th 156–166. Repealed. of rt pa part xi o .N TRANSITIONAL PROVISIONS d ver se

167. Repeal. re

168. Transition. s ht rig

169. Agreements and certificates for fiscal stability. ll .A

170. Assets and liabilities. a ni

171. Repealed. za an fT SCHEDULES to en n m er ov G 25 20 © 550 <!-- page break --> CHAPTER 332 THE INCOME TAX ACT An Act to make provisions for the charge, assessment and collection of . AG O Income Tax, for the ascertainment of the income to be charged and for of n matters incidental thereto. io s is [1st July, 2004] m er [s.1] tp ou Acts Nos. 5 of 2011 7 of 2017 ith 11 of 2004 8 of 2012 4 of 2018 w ed 15 of 2004 4 of 2013 6 of 2019 ut 13 of 2005 2 of 2014 8 of 2019 rib 6 of 2006 10 of 2015 8 of 2020 st di 16 of 2007 15 of 2015 3 of 2021 or 1 of 2008 23 of 2015 10 of 2021 ed uc 13 of 2008 2 of 2016 5 of 2022 od 14 of 2009 2 of 2017 9 of 2022 pr 15 of 2010 4 of 2017 7 of 2023 re be ay m ok PART I bo is th PRELIMINARY PROVISIONS of rt pa o

1. This Act may be cited as the Income Tax Act. .N Short title d rve se Application 2. This Act shall apply to Mainland Tanzania as well as Tanzania re s Zanzibar. ht rig ll .A

3. In this Act, unless the context requires otherwise- a Interpretation ni za Acts Nos. “adjusted assessment” means an assessment adjusted in an fT 13 of 2008 s. 13 accordance with section 59 of the Tax Administration to 8 of 2012 s. 19 en 4 of 2013 s. 18 Act; n m 2 of 2014 s. 32 “agent of a non-resident person or of a beneficial owner” er ov 10 of 2015 s. 113 includes any person in the United Republic- G 2 of 2016 s. 17 25 4 of 2017 s. 17 (a) who is employed by or on behalf of a non-resident 20 7 of 2017 s. 32A © 4 of 2018 s. 23 person or a beneficial owner; 8 of 2020 s. 25 3 of 2021 s. 20 (b) who has any business connection with a non-resident 5 of 2022 s. 59 person or a beneficial owner; Cap. 438 Cap. 438 551 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (c) from or through whom a non- resident person or a beneficial owner is in receipt of any income, whether directly or indirectly; or (d) who is a trustee of a non-resident person, and includes any other person who, whether a resident or non- . AG O resident, has acquired by means of a transfer, a capital of n asset situated in the United Republic; io s is “alternative financing arrangement” means any financial m er tp arrangement approved by the Bank of Tanzania other ou than the conventional financial arrangements; ith w “amount derived” means a payment received by a person or ed ut rib that the person is entitled to receive; st di “an entity of a public character” means an entity established or ed and functions solely for a public purpose and which uc od operates in such a way that- re pr (a) its membership is open to the general public or an be identifiable group of a community with common ay m interests; ok bo (b) it operates for purposes other than deriving profit or is th gain; of rt (c) it does not allow any distribution or deemed distribution pa o .N of profit generated out of its charitable business; and d ve (d) its profit is ploughed back and used solely for improving r se re or expansion of the original charitable purpose or s ht function; rig ll “approved retirement fund” means a resident retirement .A a ni fund having a ruling under section 11 of the Tax za an administration Act; fT to “arrangement” includes an action, agreement, course of en m conduct, dealing, promise, transaction, understanding or n er undertaking, whether express or implied, whether or not ov G enforceable by legal proceedings and whether unilateral 25 20 or involving more than one person; © “assessment” means an assessment made in terms of sections Cap.438 120 of this Act or sections 57, 58, 59 or 92 of the Tax Administration Act; 552 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “asset” means a tangible or intangible asset and includes currency, goodwill, know-how, property, a right to income or future income and a part of an asset; “associate” in relation to a person, means another person where the relationship between the two is- . AG O (a) that of an individual and a relative of the individual, of n unless the Commissioner is satisfied that it is not io s is reasonable to expect that either individual will act in m er tp accordance with the intentions of the other; ou (b) that of partners in the same partnership, unless the ith w Commissioner is satisfied that it is not reasonable to ed ut rib expect that either person will act in accordance with st di the intentions of the other; or ed (c) that of an entity and- uc od (i) a person who- re pr (aa) either alone or together with an associate or be associates under another application of this ay m definition; and ok bo (bb) whether directly or through one or more is th interposed entities, of rt controls or may benefit from 25 percent or more of the rights pa o to income or capital or voting power of the entity, except that d .N the Commissioner may, upon consideration of the nature of ver se business or investment of a person, determine the prescribed re s ht minimum percentage; or rig (ii) under another application of this definition, is an ll .A a associate of a person to whom subparagraph (i) ni za an applies; or fT (d) in any case not covered by paragraphs (a) to (c), such to en that one may reasonably be expected to act, other than n m er as employee, in accordance with the intentions of the ov G other whether or not they are in a business relationship 25 20 and whether such intentions are communicated or not; © “banking business” means business of a financial institution Cap. 342 approved under the Banking and Financial Institutions Act; 553 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “beneficial owner” means a natural person- (a) who directly or indirectly ultimately owns or exercises substantial control over an entity or an arrangement; (b) who has a substantial economic interest in or receives substantial economic benefit from an entity or an . AG O arrangement directly or indirectly whether acting of n alone or together with other persons; io s is (c) on whose behalf a transaction or arrangement is m er tp conducted; or ou (d) who exercises significant control or influence over a ith w person or arrangement through a formal or informal ed ut rib agreement; st di “business” includes- or ed (a) a trade, concern in the nature of trade, manufacture, uc od profession, vocation or isolated arrangement with a re pr business character; be (b) a transaction or activity carried out through the internet ay m or an electronic means including an electronic service ok bo or transaction conducted in the digital market place is th regardless of the manner in which such transaction is of rt carried out; and pa o .N (c) a past, present or prospective business, but excludes d ve employment; r se re “business asset” means an asset to the extent to which it s ht is employed in a business and includes a membership rig ll interest of a partner in a partnership but excludes- .A a ni (a) trading stock or a depreciable asset; za an (b) an interest in land held by an individual that has a fT to market value of less than ten million shillings at the en m time it is realised and that has been used for agricultural n er purposes for at least two of the three years prior to ov G realisation; 25 20 (c) the beneficial interest of a beneficiary in a resident © trust; (d) shares in a corporation where receipt of a dividend in respect of the shares is exempt in the hands of the shareholder under section 54(2); and 554 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (e) shares and securities listed on the Dar es Salaam Stock Exchange that are owned by a resident person or by a non-resident person who either alone or with other associates controls less than twenty five percent of the controlling shares of the issuer company; . AG O “business connection” includes any business activity carried of n out through a person who, acting on behalf of the non- io s is resident person or a beneficial owner- m er tp (a) has and habitually exercises in the United Republic, an ou authority to conclude contracts on behalf of the non- ith w resident person or a beneficial owner; ed ut rib (b) habitually concludes contracts or plays the principal st di role leading to conclusion of contracts by that non- or ed resident person or a beneficial owner, and the contracts, uc od whether or not in the name of the non-resident person re pr or the beneficial owner, are- be (i) for the transfer of the ownership of, or for the ay m granting of the right to use property owned by ok bo that non-resident person, or that non-resident is th person has the right to use; or of rt (ii) for the provision of services by the non-resident pa o .N person or the beneficial owner; d ve (c) has no such authority but habitually maintains in the r se re United Republic a stock of goods or merchandise from s ht which he regularly delivers goods or merchandise on rig ll behalf of the non- resident person or the beneficial .A a ni owner; za an (d) habitually secures orders in the United Republic, fT to mainly or wholly for the non-resident person or for en m that non-resident person and other non-resident n er persons controlling, controlled by, or subject to the ov G same common control as that non-resident person, or 25 20 for the beneficial owner; or © (e) carries out any business or investment in the United Republic through an entity or an arrangement for economic benefit of a non-resident person or beneficial owner, whether directly or indirectly; 555 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “capitalisation of profits” by an entity, includes a capitalisation by way of issuing bonus, membership interests or increasing the amount paid upon membership interests in the entity or otherwise crediting profits to a capital or premium account of the entity; . AG O “certified public accountant in public practice” has the of n meaning ascribed to it by the Accountants and Auditors io Cap. 286 s is (Registration) Act; m er tp “chargeable income” has the meaning ascribed to it by ou section 6; ith w “charitable organisation” has the meaning ascribed to it by ed ut rib section 64; st di “Class of depreciable assets” means a class determined in or ed accordance with the provisions of paragraph 1 of the uc od Third Schedule; re pr “Commission” means the Commission of Minerals be established under section 22 of the Mining Act; ay Cap. 123 m “Commissioner” means the Commissioner General ok bo Cap. 399 appointed under the Tanzania Revenue Authority Act; is th “commuted pension” means a payment received by an of rt individual on retirement of the individual for the pa o .N surrender of at least half of the individual’s pension rights d ve in respect of a retirement fund; r se re “corporation” means any company or body corporate s ht established, incorporated or registered under any rig ll law in force in the United Republic or elsewhere, an .A a ni unincorporated association or other body of persons, a za an Government, a political subdivision of a Government, a fT to public authority, public institution, public international en m organisation and a unit trust but does not include n er partnership; ov G “consumption expenditure” has the meaning ascribed to it 25 20 by section 11; © “controlled foreign trust” and “controlled foreign corporation” means a non-resident trust or corporation in which a resident person owns a membership interest, 556 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] whether directly or indirectly through one or more interposed non-resident entities, and where- (a) the person is associated with the trust or corporation; or (b) there exist between one and four other resident persons which, if associated with the person, would cause the . AG O person to be associated with the trust or corporation; of n “cost of an asset” has the meaning ascribed to it by io s is section 37; m er tp “debt claim” means an asset representing a right of one ou person to receive a payment from another person and ith w includes a deposit with a financial institution, account ed ut rib receivable, note, bill of exchange or bond; st di “decommissioning fund” with respect to petroleum operations or ed Cap. 392 means a fund established under the Petroleum Act; uc od “debt obligation” means the obligation corresponding to a re pr debt claim; be “dependant of an individual” with respect to a year of ay m income, means a relative of the individual who has ok bo total income that does not exceed two hundred fifty is th thousand shillings and receives substantial support from of rt the individual during the whole year of income for the pa o .N necessities of life; d ve “depreciable asset” means an asset employed wholly and r se re exclusively in the production of income from a business, s ht and which is likely to lose value because of wear and tear, rig ll obsolescence or the passage of time but excludes goodwill, .A a ni mineral or petroleum rights and other interest in land, a za an membership interest in an entity and trading stock; fT to “depreciation basis” at the end of a year of income with en m respect to a pool of depreciable assets, has the meaning n er ascribed to it by paragraph 3 of the Third Schedule; ov G “development area” has the meaning ascribed to it under the 25 20 Petroleum Act; © “development licence” has the meaning ascribed to it under Cap. 392 the Petroleum Act; 557 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “development operations” has the meaning ascribed to it Cap. 392 under the Petroleum Act; “digital market place” means a platform which enables direct interaction between buyers and sellers of electronic services; . AG O “distribution” by an entity: of n (a) means- io s is (i) a payment made by the entity to any of its m er tp members, in any capacity to the extent that the ou amount of the payment exceeds the amount of ith w any payment made by the member to the entity in ed ut rib return for the entity’s payment; st di (ii) any re-investment of dividends which enhances or ed the value of shares; or uc od (iii) any capitalisation of profits; re pr (b) includes a payment made by the entity to one of its be members on cancellation, redemption or surrender ay m of a membership interest in the entity, including as a ok bo result of liquidation of the entity or as a result of the is th entity purchasing a membership interest in itself; of rt (c) excludes a payment of the type referred to in paragraph pa o .N (a) (i) or (b)- d ve (i) to the extent to which the payment is directly r se re included in calculating the member’s income or s ht in calculating a final withholding payment, other rig ll than by reason of being a distribution; and .A a ni (ii) without limiting any amount treated as a za an distribution by paragraph (a)(ii), that consists of fT to the issue of further membership interests in the en m entity to the entity’s members in approximate n er proportion to the members’ existing rights to ov G share in dividends of the entity; and 25 20 (d) in the case of a controlled foreign trust or corporation, © is interpreted in accordance with section 96; “dividend of an entity” means a distribution by the entity to the extent that it is not a repayment of capital; 558 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “domestic asset” means- (a) an asset owned by a resident person (other than foreign land or buildings or an asset held by a foreign permanent establishment of the person) or held by a domestic permanent establishment; . AG O (b) an interest in land or a building situated in the United of n Republic; and io s is (c) shares in a resident corporation whether the owner of m er tp the shares together with associates controls or within ou the previous five years controlled, either directly or ith w indirectly, twenty-five percent or more of the voting ed ut rib power in the corporation; st di “domestic liability” means a liability owed by a resident or ed person, other than a liability attributable to a foreign uc od permanent establishment of the person, or attributable to re pr a domestic permanent establishment; be “domestic permanent establishment” means all permanent ay m establishments of a non-resident individual, partnership, ok bo trust or corporation situated in the United Republic; is th “downstream activities” has the meaning ascribed to it under of rt the Petroleum Act; pa Cap. 392 o .N “electronic service” has the meaning ascribed to it under d ve Cap. 148 section 51 of the Value Added Tax Act; r se re “employee” means an individual who is the subject of an s ht employment conducted by an employer; rig ll “employer” means a person who conducts, has conducted .A a ni or has the prospect of conducting the employment of an za an individual; fT to “employment” means- en m (a) a position of an individual in the employment of n er another person; ov G (b) a position of an individual as manager of an entity 25 20 other than as partner of a partnership; © (c) a position of an individual entitling the individual to a periodic remuneration in respect of services performed; or (d) a public office held by an individual, and includes a past, present and prospective employment; 559 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “entity” means a partnership, trust or corporation; “entity of a public character” means an entity established and functions solely for a public purpose and which operates in such a way that- (a) its membership is open to the general public or an . AG O identifiable group of a community with common of n interests; io s is (b) it operates for purposes other than deriving profit or m er tp gain; ou (c) it does not allow any distribution or deemed distribution ith w of profit generated out of its charitable business; and ed ut rib (d) its profit is ploughed back and used solely for improving st di or expansion of the original charitable purposes or or ed function; uc od “excluded expenditure” has the meaning ascribed to it by re pr section 11; be “exempt amount” means an amount exempt from income ay m tax by reason of sections 10, 52, 60 or 63; ok bo “exploration area” has the meaning ascribed to it under the is th Petroleum Act; of Cap. 392 rt “exploration licence” has the meaning ascribed to it under pa o .N Cap. 392 the Petroleum Act; d ve “exploration operations” has the meaning ascribed to it r se re Cap. 392 under the Petroleum Act; s ht “farm-out arrangement” with respect to a mineral right rig ll or a petroleum right includes an arrangement for the .A a ni transfer of part of the right in return for consideration za an that includes in whole or in part an obligation on the part fT to of the transferee to meet a disproportionate amount of en m future expenditure with respect to mineral operations n er or petroleum operations conducted with respect to the ov G right, as the case requires; 25 20 “financial cost” means any amount payable under a financial © instrument or a loss from the realisation of a financial instrument, includes the payment of interest but excludes a distribution by an entity; 560 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “final withholding payment” has the meaning ascribed to it by section 111; “financial institution” means a bank or financial institution Cap. 197 approved under the Bank of Tanzania Act or the Banking and Financial Institutions Act; . AG Cap. 342 O “foreign currency debt claim” means a debt claim that of n is denominated in a currency other than Tanzanian io s is shillings; m er tp “foreign income tax” means income tax imposed by a foreign ou country and includes a final withholding tax or branch ith w profits tax imposed by a foreign country; ed ut rib “foreign permanent establishment” means all permanent st di establishments of an individual, partnership, trust or or ed corporation that are situated in any one country that is uc od not the country in which the individual, partnership, re pr trust or corporation is resident but excludes a domestic be permanent establishment; ay m “foreign source” means an amount that is not treated as ok bo having a source in the United Republic by section 87, 88 is th or 89, as the case requires; of rt “full time service director” means a person at a managerial pa o .N position and is in full time service in a corporation; d ve “gain” from the realisation of an asset or liability has the r se re meaning ascribed to it by section 36; s ht “general insurance business” means any insurance that is not rig ll life insurance; .A a ni “gift” means a payment without consideration or a payment za an with consideration to the extent that the market fT to value of the payment exceeds the market value of the en m consideration; n er “incapacitated individual” means a minor or any individual ov G who is substantially blind or physically crippled or 25 20 substantially mentally retarded or who is adjudged under © any law, whether of the United Republic or of any other country, to be of unsound mind; “income” - 561 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) from an employment, business or investment has the meaning ascribed in sections 7, 8 or 9, as the case requires; (b) when used without a reference to employment, business or investment, means a person’s income . AG O from any employment, business or investment and an of n aggregation of such income as calculated in accordance io s is with this Act, as the case requires; and m er tp (c) in the case of corporation with unrelieved losses ou referred to under section 4(1)(a), the turnover of that ith w corporation for the year of income; ed ut rib “income tax” has the meaning ascribed to it by section 4; st di “incomings for an asset” has the meaning ascribed to it by or ed section 38; uc od “individual” means a natural person; re pr “insurance business” means the business of an insurer in be effecting, issuing and carrying out insurance; ay m “interest” means a payment for the use of money and includes ok bo a payment made or accrued under a debt obligation that is th is not a repayment of capital, any gain realised by way of of rt a discount, premium, swap payment or similar payment, pa o .N amounts treated as interest under section 32, amounts d ve recognised as interest under section 92(6) (b)(ii) and r se re Cap. 438 interest imposed under Part XI of the Tax Administration s ht Act; rig ll “investment” means the owning of one or more assets of a .A a ni similar nature or that are used in an integrated fashion, on za an similar terms and subject to similar conditions, including fT to as to location and includes a past, present and prospective en m investment, but does not include a business, employment n er and the owning of assets, other than investment assets, ov G for personal use by the owner; 25 20 “investment asset” means shares and securities in a © corporation, a beneficial interest in a trust and an interest in land and buildings but does not include- (a) business assets, depreciable assets and trading stock; 562 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) a private residence of an individual that has been owned continuously for three years or more and lived in by the individual continuously or intermittently for a total of three years or more, other than a private residence that is realised for a gain in excess of fifteen million . AG O shillings; of n (c) an interest in land held by an individual that has a io s is market value of less than ten million shillings at the m er tp time it is realised and that has been used for agricultural ou purposes for at least two of the three years prior to ith w realisation; and ed ut rib (d) shares or securities listed on the Dar es Salaam Stock st di Exchange that are owned by a resident person or a or ed non-resident person who either alone or with other uc od associate controls less than twenty five percent of the re pr controlling shares of the issuer company; be “lease” means an arrangement providing a person with a ay m temporary right in respect of an asset of another person, ok bo other than money, and includes a licence, profit-a- is th prendre, option, rental agreement, royalty agreement of rt and tenancy; pa o .N “licence area”- d ve (a) with respect to mining operations, means the area r se re covered by the mineral right in question; and s ht (b) with respect to petroleum operations, means the rig ll exploration or development area with respect to which .A a ni the operations are conducted; za an Cap. 123 “licenced dealer” has a meaning ascribed to it in the Mining fT to Act; en m “life insurance” means insurance of any of the following n er classes: ov G (a) insurance where the specified event is the death of an 25 20 individual who is the insured or an associate of the © insured; (b) insurance where- 563 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (i) the specified event is an individual who is the insured or an associate of the insured sustaining personal injury or becoming incapacitated; and (ii) the insurance agreement is expressed to be in effect for at least five years or without limit of . AG O time and is not terminable by the insurer before of n the expiry of five years except in circumstances io s is prescribed by the regulations; m er tp (c) insurance under which an amount or series of amounts ou is to become payable to the insured in the future; and ith w (d) re-insurance of insurance referred to under paragraphs ed ut rib (a) to (c); st di “life insurance business” means the business of an insurer in or ed effecting, issuing and carrying out life insurance; uc od “loss from any business or investment” has the meaning re pr ascribed to it by section 19 and from the realisation of an be asset or liability, has the meaning ascribed to it by section 36; ay m “manager” in relation to an entity- ok bo (a) means any councillor, director, manager, member, is th officer or other person who participates or may of rt participate, whether alone or jointly with other persons, pa o .N in making senior management decisions on behalf of d ve the entity; and r se re (b) includes a partner of a partnership, a trustee of a trust s ht and a person in accordance with whose directions rig ll and instructions the entity or a person described in .A a ni paragraph (a) is required or accustomed to act; za an “market value” means a market value determined under fT to section 27; en m “member” in relation to an entity, means any person who n er owns a membership interest in the entity; ov G “membership interest” in an entity means a right, including a 25 20 contingent right and whether of a legal or equitable nature, © to participate in any income or capital of the entity and includes the interest of a partner in a partnership, the interest of a beneficiary in a trust and shares in a corporation; 564 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “midstream activities” has the meaning ascribed to it under Cap. 392 the Petroleum Act; Cap. 123 “mineral” has the meaning ascribed to it under the Mining Act; “mineral rights” has the meaning ascribed to it under the . AG O Cap. 123 Mining Act; of n “mining” means intentionally winning minerals and every io s is method or process by which mineral is won; m er tp “mining licence” means special mining licence, mining ou licence or primary mining licence defined as such under ith w the Mining Act; ed Cap. 123 ut rib “mining operations” means prospecting, mining or st di operations connected with prospecting or mining carried or ed Cap. 123 out pursuant to mineral rights granted under the Mining uc od Act; re pr “Minister” means the Minister responsible for finance; be “minor” with respect to a year of income means an individual ay m under the age of eighteen years at the end of the year of ok bo income; is th “money transfer agent” means any person rendering money of rt transfer service on behalf of the money transfer service pa o .N provider; d ve “money transfer commission” means a payment in respect r se re of money transfer service paid or payable to a money s ht transfer agent; rig ll “National Oil Company” has the meaning ascribed to it .A a ni Cap. 392 under the Petroleum Act; za an “natural resource” means minerals, petroleum, water or any fT to other non-living or living resource that may be taken en m from land or the sea; n er “natural resource payment” means any payment, including ov G a premium or like amount, for the right to take natural 25 20 resources from land or the sea or calculated in whole © or part by reference to the quantity or value of natural resources taken from land or the sea; “net cost” for an asset or liability to a particular time means - 565 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) in the case of a depreciable asset, its share of the written down value of the pool to which it belongs at that time apportioned according to the market value of all the assets in the pool; and (b) in the case of any other asset or a liability, the amount . AG O by which cumulative costs for the asset or liability of n exceed cumulative incomings for the asset or liability io s is to the time; m er tp “net gains” from the realisation of investment assets of ou an investment of a person for a year of income has the ith w meaning ascribed to it by section 36; ed ut rib “parastatal organisation” means - st di (a) a local authority of the United Republic; or ed (b) a body corporate established by or under any Act or uc od Ordinance of the United Republic other than the re pr Cap. 212 Companies Act, and any company registered under the be Companies Act where - ay Cap. 212 m (i) in the case of a company limited by shares, not ok bo less than fifty percent of the issued share capital is th of the company is owned by the Government or of rt an organisation which is a parastatal organisation pa o .N under this definition; or d ve (ii) in the case of a company limited by guarantee- r se (aa) the members of the company include the re s ht Government or an organisation which is a rig ll parastatal organisation under this definition; .A a and ni za an (bb) such members have undertaken to contribute fT not less than fifty percent of the amount to be to en contributed by members in the event of the n m er company being wound up; ov G “partnership” means any association of individuals or bodies 25 20 corporate carrying on business jointly, irrespective of © whether the association is recorded in writing; “payment” includes the transfer of assets or money, the transfer or decrease of a liability, the provision of services, 566 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] the use or availability for use of money or an asset and the creation of an asset in another person; “permanent establishment” means a place where a person carries on business and includes - (a) a place where a person is carrying on business through . AG O an agent, other than a general agent of independent of n status acting in the ordinary course of business as io s is such: m er tp Provided that, where an agent other than an independent ou agent is acting on behalf of another person, that other person ith w shall be deemed to have a permanent establishment where- ed ut rib (i) the agent other than independent agent has and st di habitually exercises authority to conclude contracts or ed or issues invoice on behalf of that other person, uc od unless his activities are limited to the purchase of re pr goods or merchandise for that other person; be (ii) the agent other than independent agent has no ay m authority to conclude contracts, but habitually ok bo maintains stock of goods or merchandise from is th which he regularly delivers goods or merchandise of rt on behalf of that other person; or pa o .N (iii) the agent other than independent agent habitually d ve secures orders, wholly or almost wholly for that other r se re person or for the enterprise and other enterprises s ht controlling, controlled by, or subject to the same rig ll common control, as that of that other person; .A a ni (b) a place where a person has used or installed, or is za an using or installing substantial equipment or substantial fT to machinery; and en m (c) a place where a person is engaged in a construction, n er assembly or installation project for six months or ov G more, including a place where a person is conducting 25 20 supervisory activities in relation to such a project; © “perpetual loss corporation rules” means those rules set up by the definition of “income” in section 3 and sections 4(1) (a) and 6(1)(c) and paragraph 3(3) of the First Schedule; 567 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “person” means an individual or an entity; Cap. 392 “petroleum” has the meaning ascribed to it under Petroleum Act; “petroleum operations” has the meaning ascribed to it under the Petroleum Act; . AG Cap. 392 O “petroleum right” means an exploration licence or a of n development licence granted under the Petroleum Act io Cap. 392 s is and includes- m er tp (a) separately, the interest of a contractor under a ou Production Sharing Agreement with respect to each ith w exploration licence granted with respect to the contract ed ut rib area; st di (b) separately, the interest of a contractor under a or ed Production Sharing Agreement with respect to each uc od development licence granted with respect to the re pr contract area; and be (c) data or information pertaining to petroleum operations; ay m “production operations” has the meaning ascribed to it ok bo Cap. 392 under the Petroleum Act; is th “Production Sharing Agreement” means- of rt (a) an agreement concluded under section 47 of the pa o .N Cap. 392 Petroleum Act between the Government of the United d ve Republic, the National Oil Company and another r se re person “the contractor”; and s ht (b) a tripartite agreement between the Government of rig ll the United Republic, the National Oil Company and .A a ni a contractor under which the National Oil Company za an engages the contractor to carry out on its behalf fT to petroleum operations in an exploration or development en m area with respect to an exploration or development n er licence held by the National Oil Company; ov G “prospecting” with respect to mineral right, means 25 20 prospecting operations as provided for under section 4 © Cap. 123 of the Mining Act and includes retention under retention licence; 568 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “pool of depreciable assets of a person for a year of income” has the meaning ascribed to it by paragraph 1 of the Third Schedule; “realisation” of an asset has the meaning ascribed to it by section 39, and of liability has the meaning ascribed to it . AG O under section 40; of n “rehabilitation” with respect to a mineral operations or io s is with respect to processing, smelting or refining minerals m er tp means abandonment activities and includes reclamation, ou rehabilitation, restoration and closure of the operation as ith w required by law or under the terms of the relevant mineral ed ut rib right or development agreement; st di “rehabilitation fund” with respect to mining operations or or ed with respect to processing, smelting or refining minerals uc od means a fund- re pr (a) required by law, a mineral right or under a development be agreement and approved for that purpose by the ay m Minister responsible for mining; ok bo (b) which is established to meet expenses to be incurred in is th the course of rehabilitation of the operations including of rt expenses under an approved mine closure plan; and pa o .N (c) where contributions to the fund are placed beyond the d ve control of the person conducting the operations; r se re “rehabilitation bond” with respect of mining operation, has s ht the meaning ascribed to it by the Mining Act; rig Cap. 123 ll “relative” means the individual’s child, spouse, parent, .A a ni grandparent, grandchild, sibling, aunt, uncle, nephew, za an niece or first cousin, including by way of marriage or fT to adoption; en m “religious organisation” means a resident entity of a public n er character established for the advancement of religion that ov G has been issued with ruling by the Commissioner under 25 20 section 11 of the Tax Administration Act currently in © Cap. 438 force stating that, it is a religious organisation; “rent” means any payment made by the lessee under a lease of a tangible asset including any premium and any other 569 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] payment for the granting of the lease but excludes a natural resource payment and a royalty; “repatriated income” has the meaning ascribed to it under section 93; “representative assessee” means an agent of a non-resident . AG O person or of a beneficial owner; of n “residence” or “resident” with respect to a person has the io s is meaning ascribed to it under section 86; m er tp “retention licence” has the meaning ascribed to it under the ou Mining Act; ith Cap. 123 w “retirement contribution” means a payment made to a ed ut rib retirement fund for the provision or future provision of st di retirement payments; or ed “retirement fund” means any entity established and uc od maintained solely for the purposes of accepting and re pr investing retirement contributions in order to provide be retirement payments to individuals who are beneficiaries ay m of the entity; ok bo “retirement payment” means a payment, by way of a lump is th sum, pension or commuted pension, made by a person of rt to- pa o .N (a) an individual in the event of the individual’s d ve retirement; or r se re (b) a relative of an individual in the event of the individual’s s ht death; rig ll “return of income” has the meaning ascribed to it by section .A a ni 117; za an “royalty” means any payment made by the lessee under a fT to lease of an intangible asset and includes payments for - en m (a) the use of, or the right to use, a copyright, patent, design, n er model, plan, secret formula or process or trademark; ov G (b) the supply of know-how including information 25 20 concerning industrial, commercial or scientific © equipment or experience; (c) the use of, or right to use, a cinematography film, videotape, sound recording or any other like medium; 570 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (d) the use of, or right to use, industrial, commercial or scientific equipment; (e) the supply of assistance ancillary to a matter referred to in paragraphs (a) to (d); or (f) a total or partial forbearance with respect to a matter . AG O referred to in paragraphs (a) to (e), of n but excludes a natural resource payment; io s is “separate mining operation” has the meaning ascribed to it m er tp under section 68; ou “separate petroleum operation” has the meaning ascribed to ith w it under section 77; ed ut rib “service” has the meaning ascribed to it under sections 40 st di Cap. 438 and 41 of the Tax Administration Act; or ed “service fee” means a payment to the extent to which, uc od based on market values, it is reasonably attributable to re pr services rendered by a person through a business of that be person or a business of any other person and includes ay m a payment for any theatrical or musical performance, ok bo sports or acrobatic exhibition or any other entertainment is th performed, conducted, held or given; of rt “service rendered” means transmitting or delivering of pa o .N service in the United Republic irrespective of the place of d ve performance of service; r se re “special mining licence” has the meaning ascribed to it s ht under the Mining Act; rig Cap. 123 ll “shareholder” means a person who is a member of a .A a ni corporation; za an “source” has the meaning ascribed to it under sections 87, 88 fT to or 89, as the case requires; en m “statutory rate” in relation to calendar year means the n er prevailing discount rate determined by the Bank of ov G Tanzania; 25 20 “strategic investor” means an investor who has been © Cap. 38 determined as such under the Tanzania Investment Act; “tax” has the meaning ascribed to it under section 100; “technical service” in respect of mining or petroleum operations, means services in respect of earthmoving, 571 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] engineering and construction and includes geological, geotechnical and metallurgical services, seismic survey, data interpretation, drilling or any such services; “total income” has the meaning ascribed to it under section 5; . AG O “trading stock” means assets owned by a person that are of n sold or intended to be sold in the ordinary course of a io s is business of the person, work in progress on such assets m er tp and inventories of materials to be incorporated into such ou assets and includes, in the case of a person carrying on a ith w banking business, loans made in the ordinary course of ed ut rib that business; st di “trust” means an arrangement under which a trustee holds or ed assets but excludes a partnership and a corporation; uc od “trustee” - re pr (a) means an individual or body corporate holding assets be in a fiduciary capacity for the benefit of identifiable ay m persons or for some object permitted by law and ok bo whether or not the assets are held alone or jointly with is th other persons or the individual or body corporate of rt is appointed or constituted trustee by personal acts, pa o .N by will, by order or declaration of a court or by other d ve operation of the law; and r se re (b) includes- s ht (i) any executor, administrator, tutor or curator; rig ll (ii) any liquidator, receiver, trustee in bankruptcy or .A a ni judicial manager; za an (iii) any person having the administration or control fT to of assets subject to a usufruct, fideicommissum or en m other limited interest; n er (iv) any person who manages the assets of an ov G incapacitated individual; and 25 20 (v) any person who manages assets under a private © foundation or other similar arrangements; “turnover” in relation to a business by a resident person for the year of income, means an amount to be included in 572 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] calculating the person’s income under section 8 without deducting any amount under Subdivision D of Division I of Part III; “unapproved retirement fund” means a retirement fund that is not an approved retirement fund; . AG O “underlying ownership”- of n (a) in relation to an entity, means membership interests io s is owned in the entity, directly or indirectly through m er tp one or more interposed entities, by individuals or by ou entities in which no person has a membership interest; ith w or ed ut rib (b) in relation to an asset owned by an entity, means the asset st di owned by the persons having underlying ownership of or ed the entity in proportion to that ownership of the entity; uc od “unit trust” means - re pr (a) an arrangement under which a trustee holds assets for be the benefit of at least twenty persons; and ay m (b) where the entitlements of the persons to participate in ok bo the income or capital of the arrangement are divided is th into units such that the entitlements are determined by of rt the number of units owned; pa o .N “upstream activities” has the meaning ascribed to it under d ve Cap. 392 the Petroleum Act; r se re “withholdee” means a person receiving or entitled to receive s ht a payment from which income tax is required to be rig ll withheld under Subdivision A of Division II of Part VII; .A a ni “withholding agent” means a person required to withhold za an income tax from a payment under Subdivision A of fT to Division II of Part VII; en m “written down value” of a pool of depreciable assets- n er (a) at the end of a year of income has the meaning ascribed ov G to it under paragraph 3(4) of the Third Schedule; and 25 20 (b) at a particular time (“the time”) during a year of income © means- (i) the written down value of the pool at the end of the previous year of income; plus 573 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (ii) expenditure incurred prior to the time, which is added to the depreciation basis of the pool during the year of income or to be added during the following year of income under paragraph 3(5) of the Third Schedule; less . AG O (iii) incomings derived during the year of income or to of n be derived with respect to a realisation occurring io s is prior to the time in respect of assets that are or m er tp have been in the pool; and ou “year of income” has the meaning ascribed to it under ith w section 20. ed ut rib st di PART II or ed IMPOSITION OF INCOME TAX uc od pr re Charge of tax 4.–(1) Income tax shall be charged and is payable for each year be Act Nos. ay of income in accordance with the procedure in Part VII by m 13 of 2008 s. 14 ok 8 of 2012 s. 20 every person - bo 8 of 2020 s. 26 (a) who has total income for the year of income or is a is th 7 of 2023 s. 22 of corporation which has a perpetual unrelieved loss rt pa determined under section 19 for the year of income o .N and the previous two consecutive years of income; d ve (b) who has a domestic permanent establishment that has r se re repatriated income for the year of income; s ht rig (c) who receives a final withholding payment during the ll .A year of income; or a ni (d) who is a representative assessee from or through whom za an a non-resident person is in receipt of any income, fT to whether directly or indirectly. en m (2) The amount of income tax payable by a person for a year n er ov of income shall be equal to the sum of the income tax payable G 25 with respect to subsection (1). 20 © (3) Subject to the provisions of subsections (4) and (5), the income tax payable by a person with respect to subsection (1) (a) is calculated by- 574 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) applying the relevant rates of income tax determined under paragraph 1, 3(1) or 3(3) of the First Schedule, as the case may be, to the person’s total income or turnover for the year of income; and (b) subtracting from the resulting amount any tax credit that the . AG O person may claim for the year of income under section 98. of n (4) The income tax payable with respect to subsection (1)(a) io s is by a resident individual who is not required to file a return of m er tp income under section 118(a)(ii) (and who does not elect to file a ou return) shall be equal to the sum of the amounts to be withheld ith w under section 104 by the individual’s employer or employers ed ut rib from payments made to the individual during the year of income st di and the sum of instalments paid by the person under section or ed 90(1) with respect to gains realised during the year of income. uc od (5) Where a resident individual meets the requirements of re pr paragraph 2(1) of the First Schedule with respect to a year of be income, the income tax payable by the individual with respect ay m to subsection (1)(a) for the year of income shall be equal to the ok bo amount of presumptive income tax provided in paragraph 2(3) is th or 2(5) of the First Schedule. of rt (6) The income tax payable by a person with respect to pa o .N subsection (1)(b) shall be calculated by applying the rate of d ve income tax mentioned in paragraph 3(4) of the First Schedule r se re to the permanent establishment’s repatriated income for the s ht year of income. rig ll (7) Subjec to the provisions of section 111(4), the income .A a ni tax payable by a person with rspect to subsection (1)(c) shall za an be the sum of the amounts calculated by applying the relevant fT to rates of income tax determined under paragraph 4 of the First en m Schedule to the amount of each final withholding payment n er received by the person during the year of income. ov G (8) The income tax payable by a corporation with perpetual 25 20 unrelieved loss for three consecutive years of income under © subsection (1)(a) shall not apply to a corporation conducting agricultural business or engaged in the provision of health or education. 575 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] PART III INCOME TAX BASE Division I: Calculating the Income Tax Base Subdivision A: Total Income . AG O of Total income 5.–(1) The total income of a person shall be the sum of the n io person’s chargeable income for the year of income from each s is m employment, business and investment less any reduction er tp allowed for the year of income under section 61 relating to ou ith retirement contributions to approved retirement funds. w ed (2) The total income of each person shall be determined ut rib separately. st di or ed Subdivision B: Chargeable Income uc od pr

6.–(1) Subject to the provisions of subsection (2), the chargeable re Chargeable be income income of a person for a year of income from any employment, ay Acts Nos. m 8 of 2012 s. 21 business or investment shall be- ok bo 8 of 2020 s. 27 (a) in the case of a resident person, the person’s income is th from employment, business or investment for the year of rt of income irrespective of the source of the income; pa o (b) in the case of a non-resident person, the person’s income d .N from employment, business or investment for the year ver se of income, but only to the extent that the income has a re s ht source in the United Republic; rig (c) in the case of a resident corporation which has perpetual ll .A a unrelieved losses referred to in section 4(1)(a), the ni za an turnover of such corporation for a year of income; and fT (d) in the case of a representative assessee, the income of to en a non-resident or beneficial owner from business or n m er investment for the year of income deemed to accrue or ov G arise in the United Republic. 25 20 (2) The chargeable income of a resident individual who at © the end of a year of income has been resident in the United Republic for two years or less in total during the whole of the individual’s life shall be determined under subsection (1)(b). 576 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Income from 7.–(1) An individual’s income from an employment for a year employment Acts Nos. of income shall be the individual’s gains or profits from the 6 of 2006 s. 13 employment of the individual for the year of income. 5 of 2011 s. 14 2 of 2014 s. 33 (2) Subject to the provisions of subsections (3), (4) and (5) in calculating an individual’s gains or profits from an . AG O employment for a year of income the following payments of n made to or on behalf of the individual by the employer or an io s is associate of the employer during that year of income shall be m er tp included- ou (a) payments of wages, salary, payment in lieu of leave, ith w fees, commissions, bonuses, gratuity or any subsistence ed ut rib travelling entertainment or other allowance received in st di respect of employment or service rendered; or ed (b) payments providing any discharge or reimbursement of uc od expenditure incurred by the individual or an associate re pr of the individual; be (c) payments for the individual’s agreement to any ay m conditions of the employment; ok bo (d) retirement contributions and retirement payments; is th (e) payment for redundancy or loss or termination of of rt employment; pa o .N (f) other payment made in respect of employment d ve including benefits in kind quantified in accordance r se re with section 27; s ht (g) other amounts as may be required to be included under rig ll Division II of this Part; and .A a ni (h) annual director’s fees payable to a director other than a za an full time service director. fT to (3) In calculating an individual’s gains or profits from an en m employment, the following shall be excluded: n er (a) exempt amounts and final withholding payments; ov G (b) on premises cafeteria services that are available on a 25 20 non-discriminatory basis; © (c) medical services, payment for medical services, and payments for insurance for medical services to the extent that the services or payments are - 577 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (i) available with respect to medical treatment of the individual, spouse of the individual and up to four of their children; and (ii) made available by the employer and any associate of the employer conducting a similar or related . AG O business on a non-discriminatory basis; of n (d) any subsistence, travelling, entertainment or other io s is allowance that represents solely the reimbursement to m er tp the recipient of any amount expended by him wholly ou and exclusively in the production of his income from ith w his employment or services rendered; ed ut rib (e) benefits derived from the use of motor vehicle where st di the employer does not claim any deduction or relief in or ed relation to the ownership, maintenance or operation of uc od the vehicle; re pr (f) benefit derived from the use of residential premises be by an employee of the Government or any institution ay m whose budget is fully or substantially out of Government ok bo budget subvention; is th (g) payment providing passage of the individual, spouse of rt of the individual and up to four of their children to or pa o .N from a place of employment which correspond to the d ve actual travelling cost where the individual is domiciled r se re more than twenty miles from the place of employment s ht and is recruited or engaged for employment solely in rig ll the service of the employer at the place of employment; .A a ni (h) retirement contributions and retirement payments za an Cap. 371 exempted under the Public Service Social Security fT to Fund Act; en m (i) payment that it is unreasonable or administratively n er impracticable for the employer to account for or to ov G allocate to their recipients; 25 20 (j) allowance payable to an employee who offers intramural © private services to patients in a public hospital; and (k) housing allowance, transport allowance, responsibility allowance, extra duty allowance, overtime allowance, 578 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] hardship allowance and honoraria payable to an employee of the Government or its institution whose budget is fully or substantially paid out of Government budget subvention. (4) In calculating an individual’s gains or profit from . AG O payment for redundancy or loss or termination of employment, of n any payment received in respect of a year of income which io s is expired earlier than five years prior to the year of income in m er tp which it was received, or which the employment or services ou ceased, if earlier, such payment shall, for the purposes of ith w calculation of the tax payable thereon, be allocated equally ed ut rib between the years of income in which it is received or, if the st di employment or services ceased in an earlier year between or ed such earlier year of income and the five years immediately uc od preceding such year of income in which such payment is so re pr received or as the case may be, such earlier year of income be in which the employment or services ceased, and each such ay m portion allocated to any such year of income shall be deemed ok bo to be income of that year of income in addition to any other is th income in that year of income. of rt (5) Where amount received as compensation for the pa o .N termination of any contract of employment or services, d ve whether or not provision is made in such contract for the r se re payment of such compensation where- s ht (a) the contract is for a specified term, the amount included rig ll in gains or profits shall not exceed the amount which .A a ni would have been received in respect of the unexpired za an period of such contract and shall be deemed to have fT to accrued evenly in such unexpired period; en m (b) the contract is for an unspecified term and provides n er for compensation on the termination thereof, such ov G compensation shall be deemed to have accrued in the 25 20 period immediately following such termination at a © rate equal to the rate per annum of the gains or profits from such contract received immediately prior to such termination; and 579 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (c) the contract is for an unspecified term and does not provide for compensation on the termination thereof, any compensation paid on the termination thereof shall be deemed to have accrued in the period immediately following such termination at a rate equal to the rate . AG O per annum of the gains or profits from such contract of n received immediately prior to such termination, but io s is the amount so included in gains or profits shall not m er tp exceed the amount of three years’ remuneration at ou such rates. ith w ed ut

8.–(1) A person’s income from a business for a year of income rib Income from st business is the person’s gains or profits from conducting the business di or Act No. for the year of income. ed 7 of 2017 s.33 uc (2) Subject to the provisions of subsection (3), there shall od pr be included in calculating a person’s gains or profits from re be conducting a business for a year of income the following ay m amounts derived by the person from conducting the business ok bo during the year of income - is th (a) service fees; of rt (b) incomings for trading stock; pa o (c) gains from the realisation of business assets or liabilities d .N of the business as calculated under Division III of this ver se Part; re s ht (d) amounts required to be included under paragraph 4 rig of the Third Schedule on the realisation of the person’s ll .A a depreciable assets of the business; ni za an (e) amounts derived as consideration for accepting a fT restriction on the capacity to conduct the business; to en (f) gifts and other ex gratia payments received by the n m er person in respect of the business; ov G (g) amounts derived that are effectively connected with 25 20 the business and that would otherwise be included in © calculating the person’s income from an investment; and 580 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (h) the amount of tax benefit or advantage quantified under section 27 or other amounts required to be included under Division II of this Part, Parts IV, V or VI. (3) The following are excluded in calculating a person’s gains or profits from conducting a business: . AG O (a) exempt amounts and final withholding payments; and of n (b) amounts that are included in calculating the person’s io s is income from any employment. m er tp ou Income from 9.–(1) A person’s income from an investment for a year of ith w investment income is the person’s gains or profits from conducting the ed Act No. ut investment for the year of income. rib 15 of 2004 s. 27 st 7 of 2017 s. 33B (2) Subject to the provisions of subsection (3), in calculating di or a person’s gains or profits from conducting an investment for ed uc a year of income the following amounts derived by the person od pr from conducting the investment during that year of income re be shall be included, namely- ay m (a) any dividend, distribution of a trust, gains of an insured ok bo from life insurance, gains from an interest in an is th unapproved retirement fund, interest, natural resource of rt payment, rent or royalty; pa o (b) net gains from the realisation of investment assets of d .N the investment as calculated under Division III of this ver se Part; re s ht (c) amounts derived as consideration for accepting a rig restriction on the capacity to conduct the investment; ll .A a and ni za an (d) the amount of tax benefit or advantage quantified under fT section 27 or other amounts required to be included to en under Division II of this Part, Parts IV, V or VI. n m er (3) In calculating a person’s gains and profits from ov G conducting an investment, the amounts shall be excluded, 25 20 namely – © (a) exempt amounts and final withholding payments; and (b) amounts that are included in calculating the person’s income from any employment or business. 581 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Subdivision C: Exemption from Tax Minister may 10.–(1) The Minister may, by order published in the Gazette, exempt income from tax provide- Acts Nos. (a) that any income or class of incomes accrued in or . AG 2 of 2017 s. 26 derived from the United Republic shall be exempt from O 4 of 2018 s. 24 of 8 of 2020 s. 28 tax to the extent specified in such order; or n io 3 of 2021 s. 21 (b) that any exemption under the Second Schedule shall s is 5 of 2022 s. 60 m cease to have effect either generally or to such extent as er 9 of 2022 s. 7 tp may be specified in such order. ou ith (2) The Minister may, by order published in the Gazette, w ed amend, vary or replace the Second Schedule. ut rib (3) Notwithstanding any law to the contrary, an exemption st di or shall not be provided from tax imposed by this Act and an ed agreement shall not be concluded that affects or purports to uc od affect the application of this Act, except as provided for- pr re (a) by the provisions of this Act; or be ay (b) by an agreement: m ok (i) on a strategic project; bo is (ii) on public interest; and th of (iii) for a strategic investment or special strategic rt pa investment approved by the National Investment o .N Steering Committee under the Tanzania d Cap. 38 ver Investment Act, se re (4) The exemption granted under this section shall cease to s ht rig have effect and the income tax shall become due and payable ll .A as if the exemption has not been granted if such exemption a ni za has been enjoyed in any way by another person not entitled to an fT enjoy similar privileges as are conferred under this Act. to en (5) The requirement under subsection (3)(b) shall not n m apply to-. er ov (a) a strategic project with a total tax payable not exceeding G 25 one billion shillings for the entire project period; or 20 © (b) grant agreement, non-concessional or concessional loan agreement between the Government of the United Republic and a donor or lender where such agreement provides for income tax exemption. 582 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Subdivision D: Deductions General 11.–(1) For purposes of calculating a person’s income principles of deductions deduction shall not be allowed- Acts Nos. (a) for consumption expenditure incurred by the person . AG 15 of 2010 s. 13 or excluded expenditure incurred by the person; or O 4 of 2013 s. 19 of 2 of 2016 s. 18 (b) otherwise, except as provided for by this Act. n io 4 of 2017 s. 18 (2) Subject to this Act, for purposes of calculating a person’s s is m income for a year of income from any business or investment, er tp there shall be deducted all expenditure incurred during the ou ith year of income, by the person wholly and exclusively in the w ed production of income from the business or investment. ut rib (3) Deduction is not allowed under subsection (2) for st di or expenditure of a capital nature. ed (4) For purposes of this section - uc od “consumption expenditure” means any expenditure incurred pr re by any person in the maintenance of himself, his family be ay or establishment, or for any other personal or domestic m ok purpose; bo is “excluded expenditure” means - th of (a) tax payable under this Act; rt pa (b) bribes and expenditure incurred in corrupt practice; o .N (c) fines and similar penalties payable to a Government or d ver a political subdivision of a Government of any country se re for breach of any law or subsidiary legislation; s ht rig (d) expenditure to the extent to which incurred by a person ll .A in deriving exempt amounts or final withholding a ni za payments; an fT (e) distributions by an entity; or to en (f) withholding tax paid by a withholder; and n m “expenditure of a capital nature” means expenditure that er ov secures a benefit lasting longer than twelve months. G 25 20 © Interest 12.–(1) For the purposes of section 11(2), interest incurred Acts Nos. 15 of 2010 s. 14 by a person during a year of income under a debt obligation 8 of 2012 s. 22 shall be incurred wholly and exclusively in the production of 8 of 2020 s. 29 5 of 2022 s. 61 income from a business or investment where- 583 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) the debt obligation was incurred in borrowing money, the money is employed during the year of income or was used to acquire an asset that is employed during the year of income wholly and exclusively in the production of income from the business or investment; or . AG O (b) in any other case, the debt obligation was incurred of n wholly and exclusively in the production of income io s is from the business or investment. m er tp (2) The total amount of interest that an exempt-controlled ou resident entity may deduct in accordance with section 11(2) ith w for a year of income shall not exceed the sum of interest ed ut rib equivalent to debt-to-equity ratio of 7 to 3. st di (3) In this section, an entity is an exempt-controlled resident or ed entity for a year of income if it is resident and at any time uc od during the year of income twenty five percent or more of the re pr underlying ownership of the entity is held by entities exempt be under the Second Schedule, approved retirement funds, ay m charitable organisations, non-resident persons or associates of ok bo such entities or persons. is th (4) Where there is a change of the amount of debt or equity, of rt the amount of equity or debt shall be the average of balances of pa o .N amount of debt or equity at the end of each period. d ve (5) For purposes of this section- r se re “debt” means any debt obligation excluding: s ht (i) a non-interest bearing debt obligation; rig ll (ii) a debt obligation owed to a resident financial .A a ni institution; and za an (iii) a debt obligation owed to a non-resident bank fT to or financial institution on whose interest tax is en m withheld in the United Republic; n er “equity” means paid up share capital at the end of the year ov G of income; 25 20 “period” means a month or part of a month. © (6) Notwithstanding any other provision to the contrary, the amount of deductible realised foreign exchange loss on interest free debt obligation shall be the amount of loss attributable to not more than seventy percent of such obligation. 584 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Trading stock 13.–(1) For purposes of calculating a person’s income for a year of income from any business, there shall be deducted in respect of the trading stock of the business the allowance determined under subsection (2). (2) The allowance shall be calculated as - . AG O (a) the opening value of trading stock of the business for of n the year of income; plus io s is (b) expenditure incurred by the person during the year of m er tp income that is included in the cost of trading stock of ou the business; less ith w (c) the closing value of trading stock of the business for the ed ut rib year of income. st di (3) The opening value of trading stock of a business for a or ed year of income shall be the closing value of trading stock of the uc od business at the end of the previous year of income. re pr (4) The closing value of trading stock of a business for a year be of income shall be the lower of- ay m (a) the cost of the trading stock of the business at the end ok bo of the year of income; or is th (b) the market value of the trading stock of the business at of rt the end of the year of income. pa o .N (5) Where the closing value of trading stock is determined d ve in accordance with subsection (4)(b), the cost of the trading r se re stock shall be reset to that value. s ht rig

14.–(1) For purposes of calculating a person’s income for a ll Repair and .A a maintenance year of income from any business, there shall be deducted all ni za expenditure an Act No. expenditure to the extent incurred during the year of income, fT 4 of 2017 s. 19 by the person and in respect of the repair or maintenance to en of depreciable assets owned and employed by the person n m er wholly and exclusively in the production of income from the ov G business. 25 20 (2) Deductions shall not be allowed under subsection (1) © for expenditure in improving an asset, but that expenditure may be included in the cost of the asset if the requirements of section 37 are met. 585 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Agriculture 15.–(1) For the purposes of calculating a person’s income for improvement, research a year of income from any business, there shall be deducted development and agricultural improvement, research and development and environmental expenditure environmental expenditure to the extent incurred by the person during the year of income in conducting the business. . AG Acts Nos. 10 of 2015 s. 114 O (2) For the purposes of this section - of 2 of 2016 s. 19 n “agricultural improvement expenditure” means expenditure io s is incurred by the owner or occupier of farm land in m er tp conducting an agriculture, livestock farming or fish ou farming business where the expenditure is incurred in - ith w (a) clearing the land and excavating irrigation channels; or ed ut rib (b) planting perennial crops or trees bearing crops; st di “environmental expenditure” means expenditure incurred or ed by the owner or occupier of farmland for prevention of uc od soil erosion; and re pr “research and development expenditure” means expenditure be incurred by a person in the process of developing the ay m person’s business and improving business products or ok bo process and includes expenditure incurred by a company is th for the purposes of an initial public offer and first listing of rt on the Dar es Salaam Stock Exchange but excludes any pa o .N expenditure incurred that is otherwise included in the cost d ve of any asset used in the use in any such process, including r se re an asset referred to in paragraph 1(3) of the Third Schedule. s ht rig

16.–(1) For purposes of calculating a person’s income for a ll Gifts to public, .A a charitable year of income from any business, there shall be deducted- ni za and religious an institutions (a) amounts contributed during the year of income to a fT Acts Nos. charitable institution referred to in section 64(8) or to 13 of 2005 s. 9 en social development project; m 6 of 2006 s. 14 n er 8 of 2020 s. 30 (b) any donation made under section 12 of the Education ov Cap. 412 G Fund Act; 25 20 (c) amount paid to local government authority, which © are statutory obligations to support community development projects; (d) contribution made to the AIDS Trust Fund established Cap. 379 under the Tanzania Commission for AIDS Act; and 586 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (e) contribution made to the Government in the fight against Coronavirus disease (COVID-19). (2) The provisions of subsection (1)(e) shall cease to have effect on such date as the Minister may, by notice published in the Gazette, determine. . AG O (3) The deduction available under subsection (1)(a) for a of n year of income shall not exceed two percent of the person’s io s is income from the business calculated without a deduction m er tp under that subsection. ou (4) For purposes of calculating a person’s income for a year ith w of income from any employment, there shall be deducted any ed ut rib Cap. 412 donation made under section 13 of the Education Fund Act. st di (5) Subject to subsection (4), an employee who makes or ed a donation to the Fund may apply to the Commissioner for uc od deduction. re pr be Depreciation 17. For the purposes of calculating a person’s income for a year ay m allowances for of income from any business, there shall be deducted in respect ok depreciable assets bo of depreciation of depreciable assets owned and employed by is th the person during the year of income wholly and exclusively of rt in the production of the person’s income from the business the pa o allowances granted under the Third Schedule. d .N ver se Losses on 18. For purposes of calculating a person’s income for a year of re realisation of s income from any business, there shall be deducted any loss of ht business assets rig and liabilities the person, as calculated under Division III of this Part, from ll .A the realisation during the year of income of – a ni za (a) a business asset of the business that is or was employed an fT wholly and exclusively in the production of income to en from the business; n m er (b) a debt obligation incurred in borrowing money, where ov G the money is or was employed or an asset purchased with 25 20 the money is or was employed wholly and exclusively © in the production of income from the business; or (c) a liability of the business other than a debt obligation incurred in borrowing money, where the liability was 587 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] incurred wholly and exclusively in the production of income from the business. Losses from 19.–(1) For purposes of calculating the income of a person, business or other than a partnership or a foreign permanent establishment, . AG investment for a year of income from a business or investment, there shall O Acts Nos. of 15 of 2004 s. 28 be deducted- n io 4 of 2013 s. 20 s is 2 of 2016 s. 20 (a) any unrelieved loss of the year of income of the person m er 4 of 2017 s. 20 from any other business or investment; and tp 8 of 2020 s. 31 ou (b) any unrelieved loss of a previous year of income of the ith w person from any business or investment; ed ut (2) Income of a person for the year of income having rib st chargeable income and unrelieved losses for the four previous di or consecutive years of income may, subject to other limitations ed uc imposed by this section, be reduced by reason of use of the od pr unrelieved losses which shall not be below thirty per centum re be of that income before any reduction for losses: ay m Provided that, the requirement under this subsection shall ok bo not apply to a corporation undertaking agricultural business is th or providing health or education services. of rt (3) For purposes of subsection (1), a person may deduct an pa o unrelieved loss- d .N (a) in the case of a foreign source loss from an investment, ver se only in calculating the person’s foreign source income re s ht from an investment; rig (b) in the case of other losses from an investment, only in ll .A a calculating the person’s income from an investment; ni za an (c) in the case of other foreign source losses, only in fT calculating the person’s foreign source income; to en (d) in the case of loss incurred on agricultural business, n m er only in calculating the person’s income derived from ov G agricultural business; and 25 20 (e) in the case of loss incurred in dealing with a speculative © transaction, only in calculating the person’s income derived from a speculative transaction. (4) Where a person calculates income for a year of income from more than one business or investment of the person, and 588 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] deducts an unrelieved loss in more than one such calculation, the person may choose the calculation or calculations in which the loss or part of the loss is deducted. (5) For the purposes of this section - “agricultural business” means the practice of rearing of crops . AG O or animals including forestry, beekeeping, aqua-culture of n and farming with a view to deriving a profit, but excludes io s is processing of agricultural produce other than preparing m er tp such produce for the purpose of sale in its original form; ou “loss” of a year of income of a person from any business or ith w investment shall be calculated as the excess of amounts ed ut rib deducted in calculating the person’s income from st di the business or investment over amounts included in or ed calculating such income; uc od “speculative transaction” means- re pr (a) a transaction which is a contract for sale or purchase be of a commodity including stocks and shares settled ay m otherwise than actual delivery or transfer of the ok bo commodity; or is th (b) any agreement for repurchase or resale, forward sale of rt or purchase, futures contract, option or swap contract; pa o .N and d ve “unrelieved loss” means the amount of a loss that has not r se re been deducted in calculating a person’s income under s ht subsection (1) or section 26(3). rig ll .A a ni Division II: Rules Governing Amounts Used za an in Calculating the Income Tax Base fT to Subdivision A: Tax Accounting and Timing en n m er Year of income 20.–(1) Subject to the provisions of this section, the year of ov G income for every person shall be the calendar year. 25 20 (2) Subject to the provisions of subsections (6), (7) and © (8), an entity may apply, in writing, to the Commissioner for approval to change the entity’s year of income from - (a) the calendar year; or 589 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) a twelve-month period previously approved by the Commissioner under subsection (3), to another twelve-month period. (3) Where, in an application under subsection (2), the entity shows a compelling need to change the entity’s year of . AG O income, the Commissioner may, by notice in writing, approve of n the application subject to any conditions as the Commissioner io s is prescribes. m er tp (4) The Commissioner may, by notice in writing, revoke an ou approval granted to an entity under subsection (3). ith w (5) Where an entity’s year of income changes, the period ed ut rib between the end of its previous year of income and the st di beginning of its new year of income shall be another year of or ed income of length of up to twelve months, or to eighteen months uc od subject to the approval of the Commissioner. re pr (6) The year of income for every person’s foreign permanent be establishment shall be the same as the year of income of its ay m owner. ok bo (7) The year of income for every non-resident partnership, is th trust or corporation shall be the period, not exceeding twelve of rt months, for which the entity makes up its accounts or, if it has pa o .N no such period, the calendar year. d ve (8) The initial year of income of a person shall be the r se re period of twelve months or less or subject to the approval s ht of Commissioner eighteen months or less from the time the rig ll person starts to exist until the end of the person’s year of a.A ni income as calculated according to the foregoing subsections. za an fT

21.–(1) Subject to this Act, a person shall account for his to Basis of en accounting for income according to generally accepted accounting principles. n m income tax er purposes (2) Notwithstanding the provisions of subsection (1), an ov G Act No. individual shall account for income tax purposes on a cash basis 25 10 of 2015 s. 115 20 in calculating the individual’s income from an employment or © investment. (3) A corporation shall account for income tax purposes on an accrual basis. 590 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (4) Unless the Commissioner prescribes otherwise by notice in writing, individuals in calculating income from a business, partnerships and trusts shall account for income tax purposes on either a cash or accrual basis according to the method that most clearly reflects the person’s gains or profits. . AG O (5) Subject to the provisions of subsections (2) and (3), a of n person may apply in writing for a change in the person’s basis io s is of accounting for income tax purposes and the Commissioner m er tp may by notice in writing approve the application but only ou if satisfied that the change is necessary to clearly reflect the ith w person’s gains and profits. ed ut rib (6) Where any aspect of a person’s basis of accounting for st di income tax purposes is changed, adjustments shall be made in or ed the year of income of the change so that no item is omitted or uc od taken into account more than once. re pr (7) In this section, “generally accepted accounting be principles” means the principles adopted by the National ay m Board of Accountants and Auditors. ok bo is th Cash basis 22. Subject to this Act, a person who accounts for income tax of accounting rt purposes on a cash basis- pa o (a) derives an amount and, therefore, shall include the d .N amount in calculating the person’s income or otherwise ver se account for the amount as required by this Act when re s ht payment is received or made available to the person; rig and ll a.A (b) incurs expenditure and, therefore, may deduct the ni za an expenditure in calculating the person’s income or fT otherwise account for the expenditure as required by to en this Act when payment is made. n m er ov G Accrual basis 23.–(1) Subject to this Act, a person who accounts for income 25 accounting 20 tax purposes on an accrual basis- © (a) derives an amount when it is receivable by the person; and (b) incurs expenditure when it is payable by the person. 591 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) Subject to this Act, an amount is receivable by a person when the person becomes entitled to receive it, even if the time for discharge of the entitlement is postponed or the entitlement is payable by instalments. (3) Subject to this Act, an amount shall be treated as payable . AG O by a person when all the events that determine liability have of n occurred and the amount of the liability can be determined with io s is reasonable accuracy, but not before economic performance m er tp with respect to the amount occurs. ou (4) For purposes of subsection (3), economic performance ith w occurs - ed ut rib (a) with respect to the acquisition of services or property, st di at the time the services or property are provided; or ed (b) with respect to the use of an asset, at the time the asset uc od is used; or re pr (c) in any other case, at the time the person makes payment be in full satisfaction of the liability. ay m (5) Where in calculating income on an accrual basis - ok bo (a) a person includes a payment of a particular quantity to is th which the person is entitled or deducts a payment of a of rt particular quantity that the person is obliged to make; pa o .N and d ve (b) subsequently that entitlement or obligation is satisfied r se re by a payment received or made by the person, as the s ht case requires, of a different quantity, including by rig ll reason of a change in currency valuations, .A a ni then appropriate adjustments shall be made at the time the za an payment is received or made so as to remedy the inaccuracy. fT to en

24. For purposes of sections 22 and 23, an amount shall m Claim of right n er be treated as derived or expenditure incurred by a person ov G notwithstanding that the person is not legally entitled to receive 25 20 the amount or liable to make the payment, if the person claims © to be legally entitled to receive, or legally obliged to pay the amount. 592 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Reverse of 25.–(1) Where a person has deducted expenditure in amounts including bad calculating the person’s income and the person later recovers the debts expenditure, the person shall, at the time of recovery, include Act No. 2 of 2014 s. 34 the amount recovered in calculating the person’s income. (2) Where a person has included an amount in calculating . AG O the person’s income and, because of a legal obligation to do so, of n the person later refunds the amount, the person may, at the io s is time of refund, deduct the amount refunded in calculating the m er tp person’s income. ou (3) Where in calculating income on an accrual basis a ith w person deducts expenditure that the person shall be obliged to ed ut rib make and the person later disclaims an obligation to incur the st di expenditure, the person shall, at the time of disclaimer, include or ed the amount disclaimed in calculating the person’s income. uc od (4) Subject to the provisions of subsection (5), where in re pr calculating income on an accrual basis a person includes an be amount to which the person is entitled and the person later- ay m (a) disclaims an entitlement to receive the amount; or ok bo (b) in the case where the amount constitutes a debt claim is th of the person, the person writes off the debt as bad, of rt the person may, at the time of disclaimer or writing off, pa o .N deduct the amount disclaimed or written off in calculating d ve the person’s income. r se re (5) A person may disclaim the entitlement to receive an s ht amount or write off as a bad debt claim of the person - rig ll (a) in the case of a debt claim of a financial institution, after .A a ni the debt claim has become a bad debt as determined za an in accordance with the relevant standards established fT to by the Bank of Tanzania and that such institution has en m taken all reasonable steps in pursuing payment and the n er institution reasonably believes that debt claim will not ov G be satisfied; and 25 20 (b) in any other case, only after the person has taken all © reasonable steps in pursuing payment and the person reasonably believes that the entitlement or debt claim will not be satisfied. 593 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Long-term 26.–(1) In the case of a person accounting for income tax contracts purposes on an accrual basis, amounts to be included or deducted in calculating income that relate to a long-term contract shall be taken into account on the basis of the percentage of the contract completed during each year of income. . AG O (2) The percentage of completion shall be determined by of n comparing the total expenditure allocated to the contract io s is and incurred before the end of the year of income with the m er tp estimated total contract expenditure as determined at the time ou of commencement of the contract. ith w (3) Where for the year of income in which a long-term ed ut rib contract is completed, the person has an unrelieved loss st di determined under section 19 for the year of income or a or ed previous year of income that is attributable to the long-term uc od contract, the Commissioner may allow the loss to be- re pr (a) carried back to a previous year of income; and be (b) treated as an unrelieved loss for that year. ay m (4) The amount treated as an unrelieved loss for a year of ok bo income under subsection (3)(b) shall not exceed the amount is th by which amounts included in calculating income for that year of rt of income under the contract exceed deductions under the pa o .N contract for the year. d ve (5) An unrelieved loss for a year of income shall be r se re attributable to a long-term contract to the extent that s ht deductions in calculating the income from the business that rig ll relate to the contract exceed inclusions in that calculation that a.A ni relate to the contract. za an (6) For purposes of this section, “long-term contract”- fT to (a) means a contract for manufacture, installation, or en m construction, or, in relation to each, the performance n er of related services, which is not completed within ov G the year of income in which work under the contract 25 20 commences; but © (b) excludes a contract estimated to be completed within six months of the date on which work under the contract commenced. 594 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (7) The regulations may apply the percentage of completion method to other types of contracts that span more than one year of income where the contract may accelerate expenditure in early years or delay income until later years of the contract. . AG O Subdivision B: Quantification, Allocation of and Characterisation of Amounts n io s is m Quantification 27.–(1) A payment or amount to be included or deducted in er tp according to calculating income shall be quantified as follows: ou market value ith (a) for payments consisting of the availability for use or use w Act No. ed 7 of 2017 s.32(c) of a motor vehicle during a year of income provided ut rib in return for services whether by way of employment st di or otherwise or provided by an entity to a member or or ed manager of the entity, the amount of the payment shall uc od be as prescribed in the Fifth Schedule; pr re (b) for payments consisting of a loan provided in return for be ay services whether by way of employment or otherwise m ok or by an entity to a member or manager of the entity- bo is (i) where the loan is made by an employer to an th of employee, the term of the loan is less than twelve rt pa months and the aggregate amount of the loan and o .N any similar loans outstanding at any time during d ver the previous twelve months does not exceed three se re months basic salary, the quantity of the payment s ht rig is nil; and ll .A (ii) in any other case, the amount by which - a ni za (aa) the interest that would have been paid by the an payee during the year of income of the payee fT to in which the payment is made if interest were en m payable under the loan at the statutory rate n er ov for the year of income, exceeds; G 25 (bb) the interest paid by the payee during the year 20 of income under the loan, if any; © (c) for payments consisting of the provision of premises including any furniture or other contents by an employer for residential occupation by an employee 595 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] during a year of income, (i) or (ii), whichever is less, reduced by any rent paid for the occupation by the employee, where - (i) is the market value rental of the part of the premises occupied by the employee for the period . AG O occupied during the year of income; and of n (ii) is the greater of - io s is (aa) fifteen percent of the employee’s total income m er for the year of income, calculated without tp ou accounting for the provision of the premises ith w and, where the premises are occupied for ed ut only part of the year of income, apportioned rib st as appropriate; and di or (bb) expenditure claimed as a deduction by the ed uc employer in respect of the premises for the od pr period of occupation by the employee during re be the year of income; ay (d) for purposes of tax benefit or advantage, the amount of m ok tax benefit or advantage shall be three hundred thirty bo is percent of the actual tax benefit or advantage: th of Provided that, for the purpose of this paragraph, tax benefits rt pa or advantage means benefit or advantage obtained by a person o d .N by shifting an obligation to pay income tax to another person; ver se and re s (e) in any other case, the amount prescribed by the ht rig regulations or, in the absence of regulations, the market ll .A value. a ni za (2) The amount of a payment is quantified without an fT reduction for any income tax withheld from the payment to en under Subdivision A of Division II of Part VII. n m er (3) The market value of an asset shall be determined without ov G regard to any restriction on transfer of the asset or the fact that 25 20 the asset is not otherwise convertible into a payment of money © or money’s worth. Quantification in 28.–(1) Subject to the provisions of subsection (4), for purposes shillings of this Act, a person’s tax payable, income and amounts to 596 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] be included and deducted in calculating income shall be quantified in Tanzania shillings. (2) Subject to subsection (3), where an amount to be included or deducted in calculating income is quantified in a currency other than Tanzania shillings, the amount shall be . AG O converted at the exchange rate quoted by the Bank of Tanzania of n and applying between the currency and the shilling at the time io s is the amount is taken into account for income tax purposes. m er tp (3) For purposes of subsection (2) and where the ou Commissioner permits, by notice in writing, a person may use ith w the average exchange rate applying during the year of income ed ut rib as determined by the Commissioner. st di (4) The Commissioner may, by notice in writing, for a or ed specified period of time and on such terms and conditions uc od as he thinks fit, permit an entity to quantify amounts to be re pr included and deducted in calculating income in any foreign be currency that is convertible into Tanzania shillings. ay m ok bo Indirect 29.–(1) Subsection (2) shall apply where a person indirectly is th payments benefits from a payment or directs who is to be the payee of rt of the payment and the payer, an associate of the payer or a pa o third person under an arrangement with the payer or with an d .N associate of the payer intends the payment to benefit the person. ver se (2) Where this subsection applies, the Commissioner may, re s ht by practice note generally or by notice in writing served on the rig person, treat the person as the- ll .A a (a) payee of the payment; ni za an (b) payer of the payment; or fT (c) payee of the payment and as making an equal payment to en to the person who would be considered the payee of n m er the payment if this subsection were ignored. ov G 25 20 Jointly owned 30.–(1) For purposes of calculating a person’s income from © investment an investment that is jointly owned with another person, amounts to be included and deducted in that calculation shall be apportioned among the joint owners in proportion to their respective interests in the investment. 597 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) Where the interests of joint owners cannot be ascertained they shall be treated as equal. Compensation 31. Subject to the provisions of section 25, where a person or an and recovery associate of the person derives an amount “the compensation . AG payments amount” which compensates for or represents recovery of- O of (a) income or an amount to be included in calculating n io s is income, which the person expects or expected to m er derive; or tp ou (b) a loss or an amount to be deducted in calculating ith w income, which the person has incurred or which the ed ut person expects or expected to incur, rib st the compensation amount shall be included in calculating di or income of the person and takes its character from the amount ed uc compensated for. od pr re be Annuities, 32.–(1) Payments made by a person under a finance lease or ay instalment sales in acquiring an asset under an instalment sale, other than an m and finance leases ok instalment sale that provides for commercial periodic interest bo Act No. is 5 of 2022 s. 62 payable on balance outstanding, shall be treated as interest and th of a repayment of capital under a loan made by the lessor or seller rt pa to the lessee or buyer, as the case requires. o d .N (2) Payments made to a person under an annuity shall be ver se treated as interest and a repayment of capital under a loan re s made by the person to the payer of the annuity. ht rig (3) The interest and repayment of capital under subsections ll .A (1) and (2) shall be calculated as if the loan were a blended a ni za loan with interest compounded six monthly. an fT (4) Where an asset is leased under a finance lease, the lessor to en shall be treated as transferring ownership of the asset to the lessee. n m er (5) Subject to section 44, where a person transfers an asset ov G under an instalment sale or, by reason of subsection (4), under 25 20 a finance lease - © (a) the person shall be treated as deriving an amount in respect of the transfer equal to the market value of the asset immediately before the transfer; and 598 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) the person who acquires the asset shall be treated as incurring expenditure of an equal amount in acquiring the asset. (6) Where the lessee under a finance lease returns the asset to the lessor before ownership passes to the lessee, other . AG O than by reason of subsection (4), the lessee shall be treated as of n transferring ownership of the asset back to the lessor. io s is (7) For the purpose of this section, where an alternative m er tp financing arrangement approved by the Bank of Tanzania is ou payable as cost plus margin, the margin shall be treated in the ith w same manner as interest. ed ut rib (8) For purposes of this section - st di “blended loan” means a loan under which payments by the or ed borrower represent in part a payment of interest and uc od in part a repayment of capital where the interest part re pr is calculated on capital outstanding at the time of each be payment and the rate of interest is uniform over the term ay m of the loan; ok bo “finance lease” means a lease where - is th (a) the lease agreement provides for transfer of ownership of rt following the end of the lease term or the lessee has an pa o .N option to acquire the asset after expiry of the lease term d ve for a fixed or presupposed price; r se re (b) the lease term exceeds seventy-five percent of the useful s ht life of the asset; rig ll (c) the estimated market value of the asset after expiry of .A a ni the lease term is less than twenty percent of its market za an value at the start of the lease; fT to (d) in the case of a lease that commences before the last en m twenty five percent of the useful life of the asset, the n er present value of the minimum lease payments equals ov G or exceeds ninety percent of the market value of the 25 20 asset at the start of the lease term; or © (e) the asset is custom-made for the lessee and after expiry of the lease term the asset will not be of practical use to any person other than the lessee; and 599 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “lease term” includes an additional period for which the lessee has an option to renew a lease. Transfer pricing 33.–(1) In any arrangement between persons who are associates, and other the persons shall quantify, apportion and allocate amounts . AG arrangements to be included or deducted in calculating income between O between of associates the persons as is necessary to reflect the total income or tax n io Act No. s is 2 of 2016 s. 21 payable that would have arisen for them if the arrangement m er had been conducted at arm’s length. tp ou (2) Where, in the opinion of the Commissioner, a person ith w has failed to comply with the provisions of subsection (1), ed ut the Commissioner may make adjustments consistent with rib st subsection (1) and in doing so the Commissioner may- di or (a) re-characterise the source and type of any income, loss, ed uc amount or payment; or od pr (b) apportion and allocate expenditure, including that re be referred to in section 92(2) incurred by one person ay m in conducting a business that benefits an associate in ok bo conducting a business to the person and the associate is th based on the comparability analysis of the businesses. of rt pa

34.–(1) Where a person attempts to split income with another o Income splitting d .N person, the Commissioner may, by notice in writing, ver se (a) adjust amounts to be included or deducted in re s calculating the income of each person; or ht rig (b) re-characterise the source and type of any income, loss, ll .A amount or payment, a ni za to prevent any reduction in tax payable as a result of the an fT splitting of income. to en (2) Subject to the provisions of subsection (3), a reference in n m er subsection (1) to a person attempting to split income includes ov G a reference to a transfer, either directly or indirectly, between 25 20 the person and an associate of the person of- © (a) amounts to be derived or expenditure to be incurred; or (b) an asset with the result that the transferee receives or enjoys amounts derived from owning the asset. 600 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (3) Subsection (2) applies only where the reason or one of the reasons for the transfer is to lower the tax payable by the person or the associate. (4) In determining under subsection (2) whether a person is seeking to split income, the Commissioner shall consider . AG O the market value of any payment made for the transfer. of n io s 35. [Repealed by Act No.10 of 2015 s.116.] is Repealed m er tp ou Division III: Assets and Liabilities ith w ed Subdivision A: Central Concepts ut rib st Calculation of 36.–(1) A person’s gain from the realisation of an asset or di or gains and losses liability is the amount by which the sum of the incomings for ed uc the asset or liability exceeds the cost of the asset or liability at od the time of realisation. pr re be (2) The loss of a person from the realisation of an asset or ay liability is the amount by which the cost of the asset or liability m ok exceeds the sum of the incomings for the asset or liability at bo is the time of realisation. th of (3) Subject to the provisions of subsection (4), net gains rt pa from the realisation of investment assets of an investment of a o .N person for a year of income are calculated as the sum of all gains d ver se from the realisation of investment assets of the investment re during the year reduced by - s ht rig (a) the total of all losses from the realisation of investment ll .A assets of the investment during the year; a ni za (b) any unrelieved net loss of any other investment of the an fT person for the year; and to en (c) any unrelieved net loss for a previous year of income of n m the investment or any other investment of the person. er ov G (4) A person may claim a reduction under subsection (3) 25 with respect to a foreign source loss on the realisation of an 20 © asset or liability only to the extent that the amount, which the loss is to reduce, includes gains on the realisation of an asset or liability with a foreign source. 601 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (5) Where a person may use an unrelieved net loss of an investment in more than one calculation under subsection (3), the person may choose the calculation or calculations in which the loss or part of the loss is used, and is limited to one such use. (6) For purposes of this section, “unrelieved net loss of an . AG O investment for a year of income” means the excess of losses of n over gains from the realisation of investment assets of the io s is investment during the year of income reduced by any amount m er tp of the excess that has previously been taken into account under ou subsection (3)(b) or (c). ith w ed ut

37.–(1) Subject to this Act, the cost of an asset of a person is rib Cost of asset st Act No. the sum of - di or 2 of 2016 s. 22 (a) expenditure incurred by the person in acquiring ed uc the asset including, where relevant, expenditure of od pr construction, manufacture or production of the asset; re be (b) expenditure incurred by the person in altering, ay m improving, maintaining and repairing the asset; ok bo (c) expenditure incurred by the person in realising the asset; is th (d) incidental expenditure incurred by the person in of rt acquiring and realising the asset; and pa o (e) any amount required- d .N (i) by Subdivision B of Division I of this Part to be directly ver se included in calculating the person’s income; or re s ht (ii) that is an exempt amount or final withholding rig payment of the person, ll .A a but excludes consumption expenditure, excluded expenditure ni za an and expenditure to the extent to which it is directly deducted fT in calculating the person’s income or included in the cost of to en another asset. n m er (2) For purposes of determining the cost of trading stock of ov G a business of a person - 25 20 (a) an amount shall not be included in respect of the repair, © improvement or depreciation of depreciable assets; and (b) subject to paragraph (a) but without otherwise limiting amounts to be included under subsection (1), the person shall use the absorption-cost method. 602 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (3) Where assets owned by a person, being - (a) trading stock; or (b) any other type of asset prescribed by the regulations, are fungible and not readily identifiable, the person may elect for the cost of the assets to be determined according to the . AG O first-in-first-out method or the average-cost method but, once of n chosen, the method may only be changed with the written io s is permission of the Commissioner. m er tp (4) Where a person inherits an asset from a deceased, that ou person shall be treated as having incurred expenditure equal ith w to the market value of that asset at the time of such acquisition. ed ut rib (5) Subject to the provisions of subsection (6), where a st di person becomes a resident of the United Republic for the first or ed time, the net cost of an asset held by the person immediately uc od before becoming resident is equal to the market value of the re pr asset at that time. be (6) Subsection (5) does not apply to an asset that was a ay m domestic asset of the person immediately before becoming ok bo resident. is th (7) For purposes of this section - of rt “absorption-cost method” means the generally accepted pa o .N accounting principle under which the cost of trading d ve stock is the sum of direct asset costs, direct labour costs r se re and factory overhead costs; s ht “average-cost method” means the generally accepted rig ll accounting principle under which costs are allocated to .A a ni fungible assets of a particular type owned by a person za an based on a weighted average cost of all assets of that type fT to owned by the person; en m “direct labour costs” means expenditure incurred by a n er person on labour that directly relates to the production ov G of trading stock; 25 20 “direct asset costs” means expenditure incurred by a person © in acquiring any asset or assets, as described in subsection (1)(a), that constitutes trading stock or becomes an integral part of trading stock produced; 603 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “factory overhead costs” means all expenditure incurred by a person in producing trading stock except direct labour and direct asset costs; “first-in-first-out method” means the generally accepted accounting principle under which costs are allocated to . AG O a fungible asset of a particular type owned by a person of n based on the assumption that assets of that type owned by io s is the person are realised in the order of their acquisition; m er tp and ou “incidental expenditure” incurred by a person in acquiring ith w or realising an asset includes- ed ut rib (a) advertising expenditure, taxes, duties and other st di expenditure of transfer; and or ed (b) expenditure of establishing, preserving or defending uc od ownership of the asset, re pr and the expenditure referred to in paragraphs (a) and (b) be includes any related remuneration for the services of an ay m accountant, agent, auctioneer, broker, consultant, legal ok bo advisor, surveyor or valuer. is th of rt

38. Subject to this Act, incomings for an asset of a person pa Incomings for o asset means - d .N (a) amounts derived by the person in respect of owning ver se the asset including- re s ht (i) amounts derived from altering or decreasing the rig value of the asset; and ll .A a (ii) amounts derived under the asset including by way ni za an of covenant to repair or otherwise; and fT (b) amounts derived or to be derived by the person in to en respect of realising the asset, n m er but excludes any amount to the extent that it is an exempt ov G amount, a final withholding payment or, other than in the 25 20 case of trading stock, an amount to be directly included in © calculating the person’s income under Subdivision B of Division I of this Part. 604 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Realisation 39. A person who owns an asset shall be treated as realising Acts Nos. 15 of 2004 s. 29 the asset- 8 of 2012 s. 23 (a) subject to paragraph (b), when the person parts with 2 of 2014 s. 35 2 of 2016 s. 23 ownership of the asset including when the asset is sold, exchanged, transferred, distributed, cancelled, . AG O redeemed, destroyed, lost, expired or surrendered; of n (b) in the case of an asset of a person who ceases to exist, io s is excluding a deceased individual, immediately before m er tp the person ceases to exist; ou (c) in the case of an asset other than a Class 1, 2, 3, 5, 6 ith w or 8 depreciable asset or trading stock, where the sum ed ut rib of the incomings for the asset exceeds the cost of the st di asset; or ed (d) in the case of an asset that is a debt claim owned by uc od a financial institution, when the debt claim becomes re pr a bad debt as determined in accordance with the be relevant standards established by the Bank of Tanzania ay m and the institution writes the debt off as bad after such ok bo institution had taken all reasonable steps in pursuing is th payment and the institution reasonably believes that of rt the debt claim will not be satisfied; pa o .N (e) in the case of an asset that is a debt claim owned d ve by a person other than a financial institution, the r se re person reasonably believes the debt claim shall not s ht be satisfied, the person has taken all reasonable steps rig ll in pursuing the debt claim and the person writes the .A a ni debt off as bad; za an (f) in the case of an asset that is a business asset, depreciable fT to asset, investment asset or trading stock; en m (g) in the case of a foreign currency debt claim when such n er debt is actually paid; or ov G (h) in the case of an asset owned by an entity, in the 25 20 circumstances referred to in section 56(1). © 605 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Application of 40.–(1) The costs and incomings of a liability of a person shall this Division to liabilities be determined consistently with sections 37 and 38 as though Act No. a reference to an asset were a reference to a liability and the 8 of 2012 s. 24 following shall be included: (a) in the costs, expenditure incurred in realising the . AG O liability; and of n (b) in the incomings, amounts derived in respect of io s is incurring the liability. m er tp (2) A person who owes a liability shall be treated as realising ou the liability- ith w (a) subject to paragraph (b), when the person ceases to owe ed ut rib the liability including when the liability is transferred, st di satisfied, cancelled, released or expired; or ed (b) in the case of a liability of a person who ceases to exist, uc od excluding a deceased individual, immediately before re pr the person ceases to exist; be (c) in the case of a foreign currency debt obligation, when ay m such debt is actually paid; ok bo (d) in the case of a liability of an entity, in the circumstances is th referred to in section 56 (1); and of rt (e) subject to the provisions of subsection (3), in the case pa o .N of a liability owed by a resident person, immediately d ve before the person becomes a non-resident person, r se re other than liabilities owed by the person through s ht a permanent establishment situated in the United rig ll Republic immediately after becoming non-resident. .A a ni (3) Subject to the provisions of any regulations, the za an provisions of Subdivision B shall apply, with any necessary fT to adaptations, to liabilities in a manner similar to that in which en m they apply to assets. n er ov G Reverse, 41.–(1) Subject to the provisions of section 25, where a person 25 20 quantification has included expenditure in the cost of an asset or liability and © and compensation later recovers the expenditure, the person shall include the for costs and incomings amount recovered in the incomings for the asset or liability, as the case requires. 606 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) Subject to the provisions of section 25, where a person has included an amount derived in the incomings for an asset or liability and, because of a legal obligation to do so, later refunds the amount, the person may include the amount refunded in the cost of the asset. . AG O (3) Section 28 applies to the cost of and incomings for an of n asset or liability in the same manner as it applies to amounts to io s is be included and deducted in calculating income. m er tp (4) Subject to any or other adjustment under this Act, where ou a person or an associate of a person derives an amount “the ith w compensation amount” which compensates for or represents ed ut rib recovery of actual or expected costs or incomings for an asset st di or liability or a loss in value of an asset or increase in a liability, or ed the compensation amount shall be included in the incomings uc od for the asset or liability, as the case requires. re pr be Subdivision B: Special Rules ay m ok Realisation with 42. Where a person realises an asset in any of the manners bo retention of asset is described in section 39(d) to (h), the person shall be treated as- th of (a) having parted with ownership of the asset and deriving rt pa an amount in respect of the realisation equal to the o .N market value of the asset at the time of the realisation; d ver and se re (b) reacquiring the asset and incurring expenditure of the s ht rig amount referred to in paragraph (a) in the acquisition. ll a .A ni

43. Where on divorce settlement or bona fide separation za Transfer of asset an to spouse or agreement an individual transfers an asset to a spouse or fT former spouse to former spouse and an election for this subsection to apply is en m made by the spouse or former spouse in writing- n er ov (a) the individual is treated as deriving an amount in G 25 respect of the realisation equal to the net cost of the 20 © asset immediately before the realisation; and (b) the spouse or former spouse is treated as incurring expenditure of the amount referred to in paragraph (a) in acquiring the asset. 607 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Transfer of asset 44.–(1) Subject to the provisions of this section and section 43, to associate or for no consideration where a person realises an asset by way of transfer of ownership of the asset to an associate of the person or by way of transfer to any other person by way of gift- (a) the person shall be treated as deriving an amount in . AG O respect of the realisation equal to the greater of the of n market value of the asset or the net cost of the asset io s is immediately before the realisation; and m er tp (b) the person who acquires ownership of the asset shall be ou treated as incurring expenditure of the amount referred ith w to in paragraph (a) in the acquisition. ed ut rib (2) Where a person realises an asset, being a business st di asset, depreciable asset or trading stock, by way of transfer of or ed ownership of the asset to an associate of the person and the uc od requirements of subsection (4) are met -re pr (a) the person shall be treated as deriving an amount in be respect of the realisation equal to the net cost of the ay m asset immediately before the realisation; and ok bo (b) the associate shall be treated as incurring expenditure is th of the amount referred to in paragraph (a) in acquiring of rt the asset. pa o .N (3) For purposes of subsection (2), the net cost of a d ve depreciable asset at the time of its realisation is equal to its r se re share of the written down value of the pool to which it belongs s ht at that time apportioned according to the market value of all rig ll the assets in the pool. a .A ni (4) The requirements specified in subsection (2) shall be - za an (a) either the person or the associate is an entity; fT to (b) the asset or assets are business assets, depreciable assets en m or trading stock of the associate immediately after n er transfer by the person; ov G (c) at the time of the transfer- 25 20 (i) the person and the associate are residents; and © (ii) the associate or, in the case of an associate partnership, none of its partners is exempt from income tax; 608 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (d) there is continuity of underlying ownership in the asset of at least fifty percent; and (e) an election for subsection (2) to apply is made by both the person and the associate in writing. . AG

45.–(1) This section shall apply where a person involuntarily O Involuntary of realisation realises an asset in any of the manners described in section n io of asset with s is replacement 39(a), acquires a replacement asset of the same type within one m er year of the realisation and elects in writing for this subsection tp ou to apply. ith w (2) Where this section applies, the person shall be treated as - ed ut (a) deriving an amount in respect of the realisation equal rib st to- di or (i) the net cost of the asset immediately before the ed uc realisation; plus od pr (ii) the amount, if any, by which amounts derived re be in respect of the realisation exceed expenditure ay m incurred in acquiring the replacement asset, ok bo calculated ignoring this section; and is th (b) incurring expenditure in acquiring the replacement of rt asset equal to - pa o (i) the amount referred to in paragraph (a)(i); plus d .N (ii) the amount, if any, by which expenditure incurred ver se in acquiring the replacement asset exceed amounts re s ht derived in respect of the realisation calculated rig ignoring this section. ll .A a (3) For purposes of this section, the net cost of a depreciable ni za an asset at the time of its realisation is equal to its share of the fT written down value of the pool to which it belongs at that time to en apportioned according to the market value of all the assets in n m er the pool. ov G (4) The regulations may prescribe the circumstances in 25 20 which the replacement of one security in a corporation with © another security in a corporation, including as a result of reconstruction, constitutes an involuntary realisation. 609 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Realisation by 46. Subject to the provisions of section 32, where rights or separation obligations with respect to an asset owned by one person are created in another person, including by way of lease of an asset or part thereof, then – (a) where the rights or obligations are permanent, the . AG O person shall be treated as realising part of the asset but of n is not treated as acquiring any new asset or liability; and io s is (b) where the rights or obligations are temporary or m er tp contingent, the person is not treated as realising part of ou the asset or liability but as acquiring a new asset. ith w ed ut

47.–(1) Where a person acquires one or more assets by way of rib Apportionment st of costs and transfer at the same time or as part of the same arrangement, di or incomings the expenditure incurred in acquiring each asset shall be ed uc apportioned between the assets according to their market od pr values at the time of acquisition. re be (2) Where a person realises one or more assets by way of transfer ay m at the same time or as part of the same arrangement, the amounts ok bo derived in realising each asset shall be apportioned between the is th assets according to their market values at the time of realisation. of rt (3) Where a person who owns an asset realises part of it, the pa o net cost of the asset immediately before the realisation shall be d .N apportioned between the part of the asset realised and the part ver se retained according to their market values immediately after re s ht the realisation. rig ll .A a PART IV ni za an RULES APPLICABLE TO PARTICULAR fT to TYPES OF PERSONS en n m Division I: In General er ov G Subdivision A: Partnerships 25 20 © Principles of 48.–(1) Notwithstanding section 4 but subject to the rest of taxation this Act, a partnership shall not be liable to pay income tax with respect to its total income and shall not be entitled to any tax credit with respect to that income. 610 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) Partnership income or a partnership loss of a partnership shall be allocated to the partners in accordance with this Subdivision. (3) Amounts derived and expenditure incurred by partners in common shall be treated as derived or incurred by . AG O partnership and not the partners. of n (4) Assets owned and liabilities owed by partners in io s is common shall be treated as owned or owed by the partnership m er tp and not the partners and shall be treated as- ou (a) in the case of assets, acquired when they begin to be so ith w owned; ed ut rib (b) in the case of liabilities, incurred when they begin to be st di so owed; and or ed (c) realised when they cease to be so owned or owed. uc od (5) All activities of a partnership shall be treated as re pr conducted in the course of the partnership business. be (6) Subject to this Part and Division II of Part III, ay m arrangements between a partnership and its partners shall ok bo be recognised other than the following, which are taken into is th account in determining a partner’s share under section 50(4) - of rt (a) loans made by a partner to a partnership and any pa o .N interest paid with respect thereto; and d ve (b) services provided by a partner to a partnership, r se re including by way of employment, and any service fee or s ht income from employment payable with respect thereto. rig ll (7) Subject to any consequences under section 56, if on .A a ni the change of partners in a partnership at least two existing za an partners continue, the partnership shall be treated as the same fT to entity both before and after the change. en n m er Partnership 49.–(1) Partnership income from a business of a resident or ov G income or loss non-resident partnership for a year of income shall be the 25 20 chargeable income of the partnership for the year of income © from the business calculated as if the partnership were a resident partnership. (2) A partnership loss from a business of a resident or non- resident partnership for a year of income shall be the loss 611 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] of the partnership for the year of income from the business calculated under section 19(4). Taxation of 50.–(1) For purposes of calculating a partner’s income from a partners partnership for a year of income of the partner there shall be - . AG (a) included the partner’s share of any partnership income O of under section 49(1); and n io s is (b) deducted the partner’s share of any partnership loss m er under section 49(2), tp ou for a year of income of the partnership ending on the last day ith w of or during the year of income of the partner. ed ut (2) Partnership income or a partnership loss allocated to rib st partners under subsection (1)- di or (a) shall retain its character as to type and source; ed uc (b) shall be treated as an amount derived or expenditure od pr incurred, respectively, by a partner at the end of the re be partnership’s year of income; and ay m (c) shall be allocated to the partners proportionately to ok bo each partner’s share, unless the Commissioner, by is th notice in writing, permits otherwise. of rt (3) At the time partnership income is treated as derived pa o by partners under subsection (2)(b), any income tax under d .N this Act or foreign income tax paid or treated as paid by the ver se partnership with respect to the partnership income shall be re s ht allocated to the partners, proportionately to each partner’s rig share, and treated as having been paid by them. ll a .A (4) For purposes of this section and subject to section 48(6), ni za an a “partner’s share” is equal to the partner’s percentage interest fT in any income of the partnership as set out in the partnership to en arrangement. n m er ov G Cost and 51.–(1) The following costs and incomings shall be included 25 incomings 20 in the cost of a partner’s membership interest in a partnership, © of partner’s membership namely- interest in partnership (a) amounts included in calculating the partner’s income under section 50 (1)(a), at the time of that inclusion; and 612 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) the partner’s share determined under section 50(4) of exempt amounts and final withholding payments derived by the partnership at the time the amount or payment is derived. (2) The following shall be included in the incomings for a . AG O partner’s membership interest in a partnership- of n (a) amounts deducted in calculating the partner’s income io s is under section 50(1)(b), at the time of deduction; m er tp (b) distributions made by the partnership to the partner, at ou the time of distribution; and ith w (c) the partner’s share determined under section 50(4) of ed ut rib consumption or excluded expenditure incurred by the st di partnership, at the time the expenditure is incurred. or ed uc od Subdivision B: Trusts re pr

52.–(1) A trust or unit trust shall be liable to tax separately be Taxation of trusts ay Acts Nos. from its beneficiaries and separate calculations of total income m 10 of 2015 s. 117 ok 8 of 2020 s. 32 shall be made for separate trusts regardless of whether they bo is have the same trustees. th of (2) Distributions of a trust or unit trust shall be included in rt pa calculating the income of the trust’s beneficiary. o .N (3) For purposes of subsection (2), in the case of an d ver individual’s testamentary trust incorporated for purposes se re of social protection of settlor’s surviving minor dependants, s ht rig distributions shall not include the trust’s discharge of its ll .A primary obligations. a ni za (4) Amounts derived and expenditure incurred by a trust an fT or a trustee in the capacity of trustee other than as a bare to agent, whether or not derived or incurred on behalf of another en n m person and whether or not any other person is entitled to such er ov an amount or income constituted by such an amount, shall be G 25 treated as derived or incurred by the trust and not any other 20 © person. (5) Assets owned and liabilities owed by a trust or a trustee in the capacity of trustee other than as a bare agent shall be treated as owned or owed by the trust and not any other person. 613 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Cap. 438 (6) Where a receiver referred to in section 77(5) of the Tax Administration Act is a trustee - (a) the trust shall be treated as conducting or continuing the activities of the person whose assets come into the possession of the receiver; and . AG O (b) amounts derived and expenditure incurred by the trust of n shall be included in calculating the income of the trust io s is in the same manner as they would have been included m er tp in calculating the income of the person if they were ou derived or incurred by the person prior to the event ith w resulting in the appointment of the receiver. ed ut rib (7) Subject to this Part and Division II of Part III, st di arrangements between a trust and its trustees or beneficiaries or ed shall be recognised. uc od pr re Subdivision C: Corporations be ay Taxation of 53.–(1) A corporation shall be liable to tax separately from its m ok corporations shareholders. bo is (2) Amounts derived and expenditure incurred jointly or in th of common by the managers or shareholders for the purposes of a rt pa corporation that lacks legal capacity, shall be treated as derived o .N or incurred by the corporation and not any other person. d ver (3) Assets owned and liabilities owed jointly or in common se re by the managers or shareholders for the purposes of a s ht rig corporation that lacks legal capacity shall be treated as owned ll .A or owed by the corporation and not any other person. a ni za (4) Subject to this Part and Division II of Part III, an fT arrangements between a corporation and its managers or to shareholders shall be recognised. en n m er ov Taxation of 54.–(1) Dividends- G 25 shareholders (a) distributed by a resident corporation shall be taxed in 20 Acts Nos. © 8 of 2012 s. 25 the hands of the corporation’s shareholders in the form 2 of 2014 s. 36 2 of 2016 s. 24 of a final withholding tax; and (b) distributed by a non-resident corporation shall be included in calculating the income of the shareholders. 614 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) A dividend distributed by a resident corporation to another resident corporation shall be taxed at the rate provided for in the First Schedule where the corporation receiving the dividend holds twenty five percent or more of the shares in the corporation distributing the dividend and controls, either . AG O directly or indirectly, twenty five percent or more of the voting of n power in the corporation. io s is m er Division II: General Provisions Applicable to Entities tp ou ith

55. Subject to the provisions of section 44(2), where an asset w Asset dealings ed between entities is realised by way of transfer of ownership of the asset by an ut and members rib entity to one of its members or vice versa - st di or (a) the transferor shall be treated as deriving an amount in ed respect of the realisation equal to the market value of uc od the asset immediately before the realisation; and pr re (b) the transferee shall be treated as incurring expenditure be ay of the amount referred to in paragraph (a) in the m ok acquisition. bo is th

56.–(1) Where the underlying ownership of an entity changes of Change in control rt pa Acts Nos. by more than fifty percent as compared with that ownership o 8 of 2012 s. 26 .N 2 of 2014 s. 37 at any time during the previous three years, the entity shall be d ve 16 of 2015 s. 17 treated as realising any assets owned and any liabilities owed r se 2 of 2016 s. 25 re 7 of 2023 s. 56 by it immediately before the change. s ht (2) Subject to the provisions of subsection (4), where there rig ll .A is a change in ownership of the type referred to in subsection a ni (1), after the change the entity shall not be permitted- za an (a) to deduct a loss under section 19(1) that was incurred fT to by the entity prior to the change; en m (b) in a case where the entity has, prior to the change, n er ov included an amount in calculating income in terms G 25 of section 25(2) or (4), claim a deduction under those 20 © provisions after the change; (c) to carry back a loss under section 26(3) that was incurred after the change to a year of income occurring before the change; 615 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (d) to reduce under section 36(3) gains from the realisation of investment assets after the change by losses on the realisation of investment assets before the change; or (e) to carry forward foreign income tax under section 98(3) that was originally paid with respect to foreign source . AG O income derived by the entity prior to the change. of n (3) Where there is a change in ownership of the type referred io s is to in subsection (1) during a year of income of the entity, the m er tp parts of the year of income before and after the change shall be ou treated as separate years of income. ith w (4) The provisions of subsection (2) shall not apply where ed ut rib for a period of two years after a change of the type mentioned st di in subsection (1), the entity - or ed (a) conducts the business or, where more than one business uc od was conducted, all of the businesses that it conducted re pr at any time during the twelve month period before be the change and conducts them in the same manner as ay m during the twelve month period; and ok bo (b) conducts no business or investment other than those is th conducted at any time during the twelve month period of rt before the change. pa o .N (5) The preceding provisions of this section shall not d ve apply where change of underlying ownership referred to in r se re subsection (1)- s ht (a) is a result of allotment of new membership interest of rig ll the entity; or a.A ni (b) is a sole result of transfer of membership interest of a za an resident entity to another resident person.” fT to (6) An entity referred to under this section shall have the duty en m to report to the Commissioner immediately before and after the n er changes referred to under subsection (1) have occurred. ov G 25 20 Income or 57.–(1) Where a distribution is made by an entity to an acquirer © dividend stripping in the course of an income or dividend stripping arrangement, the arrangement shall be treated as though- 616 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) the payment referred to in subsection (2) is a distribution made by the entity to the original member of the entity; and (b) the distribution made by the entity to the acquirer is an amount equal to the distribution less the amount of the . AG O payment. of n (2) For the purpose of subsection (1) “income or dividend io s is stripping arrangement” means an arrangement under which - m er tp (a) an entity has accumulated, current or expected income ou “the “income”; ith w (b) a person “the acquirer” acquires a membership interest ed ut rib in the entity and the acquirer or an associate of the st di acquirer makes a payment “the payment”, whether or or ed not in respect of the acquisition and whether or not the uc od payment is at the time of acquisition, to another person re pr who is or was a member in the entity “the original be member” or an associate of such another person; ay m (c) the payment reflects, in whole or in part, the income of ok bo the entity; and is th (d) after the acquirer acquires the interest in the entity, of rt the entity makes a distribution to the acquirer that pa o .N represents, in whole or in part, the income. d ver se PART V re s ht rig SPECIAL INDUSTRIES ll .A Division I: Insurance Business a ni za an General insurance 58.–(1) For purposes of this Act, a person’s activities in fT to business conducting a general insurance business shall be treated as a en m business separate from any other activity of the person and n er ov the person’s income or loss from the business for any year of G 25 income shall be calculated separately. 20 (2) For purposes of calculating the income of a person for a © year of income from a general insurance business- (a) there shall be included, together with any other amounts to be included under other provisions of this Act- 617 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (i) premiums derived during the year of income by the person as insurer, including as re-insurer, in conducting the business; and (ii) proceeds derived during the year of income by the person under any contract of re-insurance in . AG O respect of proceeds referred to in paragraph (b) of n (i); and io s is (b) there shall be deducted, together with any other m er tp amounts deductible under other provisions of this ou Act - ith w (i) proceeds incurred during the year of income by ed ut rib the person as insurer, including as re-insurer, in st di conducting the business; and or ed (ii) premiums incurred during the year of income by uc od the person under any contract of re-insurance in re pr respect of proceeds referred to in subparagraph be (i). ay m ok bo Life insurance 59.–(1) For purposes of this Act, a person’s activities in is th business conducting a life insurance business shall be treated as a of rt business separate from any other activity of the person and pa o the person’s income or loss from the business for any year of d .N income shall be calculated separately. ver se (2) For purposes of calculating the income of a person for a re s ht year of income from a life insurance business - rig (a) there shall be included any amounts to be included ll .A a under other provisions of this Act but the following ni za an amounts shall not be included and not be an income of fT the person- to en (i) premium derived during the year of income by n m er the person as insurer, including as re-insurer, in ov G conducting the business; and 25 20 (ii) proceeds derived during the year of income by © the person under any contract of re-insurance in respect of proceeds referred to in paragraph (b) (i); and 618 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) there shall be deducted only the expenses of managing the business’s investments including commission that are deductible under other provisions of this Act but the following amounts shall not be deductible and not be included in the cost of any asset or liability of the person- . AG O (i) proceeds incurred during the year of income by of n the person as insurer, including as re-insurer, in io s is conducting the business; and m er tp (ii) premiums incurred during the year of income by ou the person under any contract of re-insurance in ith w respect of proceeds referred to in subparagraph (i). ed ut rib st

60.–(1) Subject to subsection (2) and sections 58 and 59, for di Proceeds from or insurance purposes of calculating the income of a person, the treatment ed uc of proceeds derived by the person from insurance shall be od pr determined in accordance with section 31. re be (2) Subject to the provisions of sections 58 and 59 , gains of ay m an insured from life insurance shall be- ok bo (a) in the case where the proceeds are paid by a resident is th insurer, exempt in the hands of the insured; and of rt (b) in the case where the proceeds are paid by a non- pa o resident insurer, included in calculating the income of d .N the insured. ver se (3) For purposes of this section, “gains of an insured from re s ht life insurance” means the extent to which proceeds from life rig insurance paid by an insurer exceed premiums paid to the ll .A a insurer with respect to the insurance. ni za an fT Division II: Retirement Savings to en m

61.–(1) Subject to the provisions of subsection (2), an n Retirement er ov contributions individual may claim a reduction in calculating total income G to approved 25 retirement fund for a year of income equal to retirement contributions made 20 © during the year of income by- (a) the individual; or (b) an employer of the individual where the contribution is included in calculating the individual’s income from the employment, 619 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] to an approved retirement fund in respect of an interest of the individual or a spouse of the individual in the fund. (2) The reduction claimed by an individual under subsection (1) for any year of income shall be the actual contribution or the statutory amount required whichever is lesser. . AG O of

62.–(1) Subject to the provisions of this section, the provisions n Taxation of io s retirement funds is of Parts III and IV shall apply to a retirement fund and the m Act No. er calculation of income of a retirement fund. tp 15 of 2004 s. 30 ou (2) For purposes of calculating the income of a retirement ith w fund- ed ut (a) retirement contributions received by the fund shall rib st not be included in the calculation and shall not be an di or incoming of the fund; and ed uc (b) retirement payments shall not be deductible and are od pr not included in the cost of any asset or liability of the re be fund. ay m (3) Where an approved retirement fund ceases to be an ok bo approved retirement fund during a year of income, its income is th tax payable under section 4(1)(a) for the year of income shall be of rt increased by an amount equal to the income tax rate applicable pa o to corporations applied to - d .N (a) all retirement contributions received by the fund from ver se or on behalf of resident individuals and total income re s ht of the fund during the period from its most recent rig approval as an approved retirement fund to when it ll .A a ceased to be so approved, less; ni za an (b) all retirement payments made by the fund from its fT most recent approval as an approved retirement fund to en to when it ceased to be so approved in respect of n m er individuals who were resident during that period. ov G 25 20 Retirement 63.–(1) Gains from an interest in an unapproved retirement © payments Act No. fund shall be- 15 of 2004 s. 31 (a) in the case where the retirement payments are paid by a resident fund, exempt in the hands of the payee; and 620 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) in the case where the retirement payments are paid by a non-resident fund, included in calculating the income of the payee. (2) For purposes of this section, “gain from an interest in an unapproved retirement fund” means the extent to which . AG O retirement payments made by an unapproved retirement of n fund in respect of an interest in the fund exceed retirement io s is contributions paid to the fund in respect of the interest. m er tp ou Division III: Charitable Organisations, ith w Clubs and Trade Associations ed ut rib

64.–(1) A charitable organisation or religious organisation st Charitable di organisations shall be treated as conducting a business with respect to its or Act No. ed functions referred to in subsection (8) as the “charitable uc 10 of 2015 s. 118 business”. od pr re (2) For purposes of calculating the income of a charitable be ay organisation or religious organisation for any year of income m ok from its charitable business - bo is (a) there shall be included, together with any other amounts th of required to be included under other provisions of this rt pa Act, all gifts and donations received by the organisation; o .N and d ve (b) there shall be deducted, together with any other r se re amounts deductible under other provisions of this Act - s ht rig (i) amounts applied in pursuit of the organisation or ll .A religious organisation’s functions referred to in a ni za subsection (8) by providing reasonable benefits an fT to resident persons or, where the expenditure on to the benefits has a source in the United Republic, en m persons resident anywhere; and n er ov (ii) twenty five percent of the organisation or G 25 religious organisation’s income from its charitable 20 © business calculated without any deduction under subparagraph (i) and any investments. (3) This subsection shall apply to any amount applied by a charitable organisation or religious organisation during a year 621 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] of income other than in the manner referred to in subsection (2)(b)(i) or as a reasonable payment to a person for assets or services rendered to the organisation by the person. (4) Where subsection (3) applies- (a) the organisation or religious organisation shall . AG O be treated as conducting a business other than its of n charitable business; and io s is (b) the sum of amounts to which that subsection applies for m er tp the year of income less any income of the organisation ou or religious organisation from a business other than its ith w charitable business or business referred to in paragraph ed ut rib (a) shall be treated as income of the organisation or st di religious organisation that has a source in the United or ed Republic derived during the year of income from the uc od business referred to in paragraph (a). re pr (5) Notwithstanding the provision of section 19, a charitable be organisation or religious organisation - ay m (a) may not set any loss from its charitable business against ok bo its income from any other business; and is th (b) may only set losses from any other business against of rt income from any such other business. pa o .N (6) Where a charitable organisation or religious organisation d ve ceases to be a charitable organisation or religious organisation r se re during a year of income - s ht (a) the organisation or religious organisation shall be rig ll treated as conducting a business other than its previous .A a ni charitable business; and za an (b) there shall be included in calculating the organisation fT to or religious organisation’s income for the year of en m income from the business referred to in paragraph (a) n er any amounts claimed as a deduction under subsection ov G (2)(b)(ii) during that year of income or any prior year of 25 20 income during which the organisation was a charitable © organisation or religious organisation. (7) Where a charitable organisation or religious organisation wishes to save funds for a project that is detailed in material 622 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] particulars and which the organisation is committed to, the organisation or religious organisation may apply to the Commissioner and the Commissioner may approve the saving as meeting the requirements of subsection (2)(b)(i). (8) For purposes of this section, “charitable organisation” . AG O means a resident entity of a public character that satisfies the of n following conditions: io s is (a) the entity was established and functions solely as an m er tp organisation for- ou (i) the relief of poverty or distress of the public; ith w (ii) the advancement of education; or ed ut rib (iii) the provision of general public health, education, st di water or road construction or maintenance; and or ed Cap.438 (b) the entity has been issued with a ruling by the uc od Commissioner under section 11 of the Tax Administration re pr Act currently in force stating that it is a charitable be organisation or religious organisation. ay m ok bo Clubs and trade 65.–(1) Subject to subsection (2), the activities of a club, trade is th associations association or similar institution shall be treated as a business of rt and for the purposes of calculating the club, association or pa o institution’s income for a year of income from that business d .N there shall be included, together with any other amounts to ver se be included under other provisions of this Act, entrance fees, re s ht subscriptions and other amounts derived from members rig during the year of income. ll .A a (2) Where three-quarters or more of the amounts to be ni za an included in calculating the income of a members’ club or trade fT association for a year of income from the business referred to en to in subsection (1) are derived from members of the club or n m er association, the income from that business shall be exempt and ov G shall not constitute chargeable income of the club or association. 25 20 (3) For purposes of this section - © “members club” means a club or similar institution all the assets of which are owned in common by, tested ignoring section 53(3) or held in trust for the members thereof; 623 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] “member” means - (a) in the case of a club or similar institution, a person who, while a member, is entitled to an interest in all the assets of the club or institution in the event of its liquidation or who is entitled to vote at a general meeting of the . AG O club or institution; and of n (b) in the case of a trade association, a person who is entitled io s is to vote at a general meeting of the association; and m er tp “trade association” means any association of persons- ou (a) that are all separately engaged in a particular type of ith w business; and ed ut rib (b) formed with the main object of safeguarding or st di promoting the business interests of such persons. or ed uc od Division IV: Minerals1 re pr Subdivision A: Prospecting and Mining be ay m Application of 66. This subdivision applies where a person is conducting ok subdivision bo Act No. mining operations without a separate license solely for is th 2 of 2016 s. 26 processing, smelting or refining of minerals. of rt [s. 65A] pa o .N

67.–(1) A person conducting mining operations shall be d Principles of ver taxation se subject to income tax with respect to those operations as re Acts Nos. provided by this Act, and as modified by this subdivision. s 2 of 2016 s. 26 ht rig 4 of 2018 s. 25 (2) The income tax payable in respect of mining operations ll .A for a year of income shall be calculated by applying the rate set a ni za out in paragraph 1(5) of the First Schedule to a person’s total an fT income from mining operations for the year of income. to en (3) Subject to subsection (2), where a person has other total n m income, that income shall be charged at the appropriate rate er ov G under the First Schedule. 25 20 © 1 This Division was added by Act No. 20 of 2016. 624 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (4) For purposes of calculating a person’s total income from mining operations- (a) all mining operations conducted by a person shall be treated as business activities save as arrangement referred to under section 73 of this Act; . AG O (b) each separate mining operation shall be treated as an of n independent business and the person must prepare io s is accounts for that business separate from any other m er tp activity of the person; and ou (c) the person shall calculate chargeable income and ith w income tax liability for the business independently for ed ut rib each year of income. st di (5) The provisions of section 33 shall apply- or ed (a) to arrangements between a separate mining operation uc od and other activities of the person conducting the re pr mining operation including mining operations under be a different mineral rights or processing, smelting or ay m refining operations of the person; ok bo (b) as though the arrangements were conducted between is th associated persons; and of rt (c) so as to treat the transfer of an asset to or from a separate pa o .N mining operation as an acquisition and disposal of the asset. d ve (6) Where subsection (5) applies, section 33 shall apply to r se re arrangements between the persons with respect to the mining s ht operations as though they were associated persons. rig ll [s. 65B] .A a ni za

68.–(1) Subject to this section, each mineral right shall an Separate mining fT operations constitute a separate mining operation. to Act No. en (2) Where a person holding a prospecting licence is granted m 2 of 2016 s. 26 n er a mining licence and the mining licence area falls wholly ov G within the prospecting licence area, the following conditions 25 20 shall apply- © (a) mining operations conducted by the person with respect to the prospecting licence to the date of grant of the mining licence shall be treated as conducted with respect to the separate mining operation; and 625 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) from the date of grant of the mining licence, mining operations conducted with respect to the new prospecting licence outside the mining licence area shall be treated as a new separate mining operation. (3) Where a person holds a mining licence in relation . AG O to mining area and such mining area is extended mining of n operations conducted by the person with respect to the mining io s is licence in both the original area and the extended area shall m er tp be treated as conducted with respect to the same mining ou operation. ith w (4) For purposes of clarity, the prospecting and mining ring ed ut rib fencing set up by this section and section 67- st di (a) starts with the grant of a prospecting licence and or ed prospecting operations conducted with respect to that uc od licence; re pr (b) may, subject to the limitations in this section, continue be into a mining licence granted with respect to the ay m prospecting licence and mining operations conducted ok bo with respect to that licence; and is th (c) ends at the point minerals from the mining operations of rt are sufficiently processed to produce a first saleable pa o .N product. d ve (5) The Minister may, after consultation with the Minister r se re responsible for mining, make regulations as may be necessary s ht for the better carrying out the provisions of this section. rig ll [s. 65C] .A a ni za

69. In calculating a person’s income from a separate mining an Income fT from mining operations for a year of income, there shall be included, to operations en together with any other amounts required to be included m Act No. n er 2 of 2016 s. 26 under other provisions of this Act, the following: ov G (a) incomings derived from the disposal of minerals 25 20 produced from the licence area; © (b) amounts received in respect of the sale of data or information pertaining to the operations or mineral reserves; 626 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (c) amounts required to be included under paragraph 5 of the Third Schedule including from the assignment or other disposal of an interest in the mineral right with respect to which the operation is conducted after commencement of production: and . AG O (d) amounts required to be included under section 74 in of n respect of a surplus in a rehabilitation fund. io s is [s. 65D] m er tp ou Deduction 70.–(1) In calculating a person’s income from a separate ith w for mining mining operation for a year of income, there shall be deducted, ed operations ut together with any other amounts deductible under other rib Acts Nos. st 2 of 2016 s. 26 provisions of this Act, the following- di or 7 of 2017 s. 34 (a) annual charges incurred by the person under the ed Cap. 123 uc Mining Act or Mining Development Agreements with od pr respect to the mineral rights; re be (b) depreciation allowances granted with respect to the ay m mining operation and calculated in accordance with ok bo paragraph 5 of the Third Schedule; is th Provided that, depreciation basis for purposes of of rt depreciation allowance shall not exceed the cost of investment pa o as determined by the Commission under section 22 of the d .N Mining Act; ve Cap. 123 r se (c) contributions to and other expenses incurred in respect re s ht of a rehabilitation fund for the operation as required rig by the law or approved under Mining Development ll .A a Agreements by the Minister responsible for mining; ni za an and fT (d) expenses incurred in respect of acquisition of to en rehabilitation bond. n m er (2) Deduction shall not be allowed in calculating income ov G from separate mining operations- 25 20 (a) under sections 15, 16, 17 or 26; © (b) for an unrelieved loss under section 19, except as permitted by section 71; (c) for a bonus payment referred to in section 72; or 627 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (d) for expenses incurred by the person implementing an approved mine closure fund in excess of the amount contributed to the approved rehabilitation fund. [s. 65E] . AG

71.–(1) The provisions of section 19 shall apply to unrelieved O Losses from of mining losses of a person from a separate mining operation with the n io operations s is Act No. following conditions: m er 2 of 2016 s. 26 (a) losses from the separate mining operations may be tp ou deducted only in calculating future income from that ith w operation and not income from any other activity ed ut whether a mining operation under a different mineral rib st right, processing, smelting, refining or a non-mining di or activity; ed uc (b) income from the separate mining operations may not be od pr reduced by a loss from any other activity whether a mining re be operation under a different mineral rights, processing, ay m smelting, refining or a non-mining activity; and ok bo (c) income from the separate mining operation for any is th year of income may be reduced by reason of the use of of rt unrelieved losses from that operation subject to other pa o limitations imposed by section 19 but not below thirty d .N percent of that income before any reduction for losses. ver se (2) The perpetual loss making corporation rules shall not re s ht apply in conducting mining operations under a prospecting rig licence. ll .A a [s. 65F] ni za an fT Bonus payments 72.–(1) Bonus payments for the grant, transfer or assignment of to en Act No. a mineral rights, whether in form of a lump sum or dependent m 2 of 2016 s. 26 n er on or calculated by reference to specific production targets, are ov G not deductible in calculating income from a separate mining 25 20 operation. © (2) In this section, “bonus payment” shall not include Cap. 123 annual charges and royalties paid under the Mining Act or Mining Development Agreements. [s. 65G] 628 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Realisation of 73.–(1) Mineral rights shall be an asset which is separate mineral rights Act No. from any other interest in the land that constitutes the license 2 of 2016 s. 26 area and separate from any other asset employed in mining operations. (2) For purposes of farm-out, arrangement mineral rights . AG O shall be deemed as investment asset when realised before of n commencement of production. io s is (3) Where mineral right is realised in terms of subsection m er tp (2), relevant provisions under this Act in respect of realisation ou of investment or business asset shall apply. ith w (4) Where mineral right is realised together with other ed ut rib assets used in mining operations or where a mineral right is st di realised in part, the provisions of section 47 shall apply for or ed purposes of apportionment of expenditure, costs and amounts uc od derived from the realisation. re pr (5) Incomings from the realisation of mineral rights include be amounts derived by the holder of the right from the realisation ay m and also include amounts to be derived in the future from the ok bo realisation in accordance with section 38(b). is th (6) For purposes of section 38(b), an amount including any of rt form of payment or benefit to be derived in the future from pa o .N the realisation of an asset shall be taken into account as an d ve incoming at its market value at the time of the realisation or in r se re any other case, in accordance with section 27(1)(d). s ht (7) In calculating the market value of an obligation to pay a rig ll future amount, there shall apply present value of a reasonable .A a ni estimate of the amount of the future payment. za an (8) An amount taken into consideration under subsections fT to (6) and (7) as incoming from the realisation of mineral rights en m shall be included in the cost of the asset for the acquirer. n er (9) The right to receive a future amount shall be realised in ov G a different amount to the extent that the provisions of sections 25 20 25 and 41 shall apply to make adjustments. © (10) The provisions of this section shall apply to the realisation of mineral rights where the incomings from the realisation include an overriding royalty. [s. 65H] 629 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Rehabilitation 74.–(1) Rehabilitation fund shall be exempt from tax. fund Act No. (2) Amounts paid from a rehabilitation fund to meet 2 of 2016 s. 26 expenses of activities authorised by an approved mine closure plan for which the fund was established are not income of the mineral right holder which is otherwise required to meet those . AG O expenses. of n (3) An amounts in a rehabilitation fund which are paid to io s is or come under the control of a mineral right holder and which m er tp are not referred to in subsection (2) are included in calculating ou income of the mineral rights holder from the associated ith w mineral operations. ed ut rib [s. 65I] st di or ed Subdivision B: Processing, Smelting and Refining uc od

75.–(1) A licensee conducting processing, smelting or refining Licensee pr re conducting with respect to minerals shall be subject to income tax with be processing, ay smelting or respect to the activities as provided by this Act, and as modified m ok refining by this subdivision to the extent that there is no modification, bo Act No. is 2 of 2016 s. 26 the standard rules in this Act shall apply. th of (2) In calculating a licensee’s income from a business rt pa which includes processing, smelting or refining of minerals, o .N there shall be deducted amounts deposited in respect of a d ver rehabilitation fund established for the licence. se re (3) There shall be no deduction allowed in calculating s ht rig income from a separate mining operation- ll .A (a) under section 15, 16, 17 or 26; a ni za (b) for an unrelieved loss under section 19, except as an fT permitted by section 71; or to (c) expenses incurred by the person in implementing en n m the rehabilitation plan for the operation in excess of er ov deposits in the rehabilitation fund. G 25 (4) Unrelieved losses of a licensee arising from conducting 20 © a business that includes processing, smelting or refining may be deducted under section 19 so as to reduce total income of the licensee but not below thirty percent of total income before any deduction for such an unrelieved loss. 630 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (5) The provisions of section 74 shall apply to a rehabilitation fund established for a processing, smelting or refining licence as though a reference to “mineral rights holder” were a reference to the “holder of that licence.” (6) For purposes of this section, “licence” means a licence . AG O granted in respect to processing, smelting or refining under of n Mining Act. io Cap. 123 s is [s. 65J] m er tp ou Division V: Petroleum2 ith w ed Subdivision A: Petroleum Operations ut rib st

76.–(1) A person conducting petroleum operations pursuant di Principles of or taxation to licence granted under the Petroleum Act shall be subject to ed Acts Nos. uc 2 of 2016 s.26 income tax with respect to those operations as prescribed by od 4 of 2018 s. 26 pr this Act and as modified by this Division. re Cap. 392 be (2) Income tax payable in respect to petroleum right for ay m a year of income shall be calculated by applying the rate set ok bo out in paragraph 1(6) of the First Schedule to a person’s total is th income from petroleum right for the year of income. of rt (3) Subject to subsection (2), where a person has other total pa o income, that income shall be charged at the appropriate rate d .N under the First Schedule. ver se (4) For purposes of calculating a person’s total income from re s petroleum right- ht rig (a) all petroleum right conducted by a person shall be ll .A a treated as business activities save as arrangement ni za referred to under section 82; an fT (b) each separate petroleum right shall be treated as an to en independent business and the person shall prepare n m er accounts for that business separate from any other ov G activity of the person; and 25 20 (c) a person shall calculate chargeable income and income © tax liability for the business independently for each year of income. 2 This Division is added by Act No. 2 of 2016. 631 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (5) The provisions of section 33 shall apply- (a) to arrangements between a separate petroleum right and other activities of the person conducting the petroleum right including other petroleum right or midstream or downstream activities of the person; . AG O (b) as though the arrangements were conducted between of n associated persons; and io s is (c) so as to treat the transfer of an asset especially petroleum m er tp to or from a separate petroleum right as an acquisition ou and disposal of the asset. ith w (6) Where subsection (5) applies, section 33 shall apply ed ut rib to arrangements between the persons with respect to the st di petroleum right as though they were associated persons. or ed (7) The Minister may, after consultation with the Minister uc od responsible for mining, make regulations as may be necessary re pr for the better carrying out the provisions of this section. be [s. 65K] ay m ok bo Separate 77.–(1) Subject to this section, petroleum operations pertaining is th petroleum rights to each petroleum right shall constitute a separate petroleum of Act No. rt operation. pa 2 of 2016 s. 26 o (2) Where a person holding an exploration petroleum right d .N which is partly converted into a development petroleum right, ver se the following conditions shall apply: re s ht (a) petroleum operations conducted by the person in rig respect of the exploration licence to the date of grant ll a.A of development licence are treated as conducted with ni za an respect to the development licence, and so are treated fT as conducted with respect to the same petroleum to en right; and n m er (b) from the date of grant of the development licence ov G referred to in paragraph (a), exploration operations 25 20 conducted with respect to the area outside the © development area but within the exploration right shall be treated as separate petroleum operation. 632 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (3) For purposes of subsection (2), a person holds an exploration petroleum right that is partly converted into a development petroleum right, where- (a) the person holds a petroleum right which is, or dependent on an exploration licence including by . AG O reason of a Production Sharing Agreement; of n (b) a development licence is subsequently granted and the io s is development area falls wholly within the exploration m er tp area; and ou (c) as a consequence, the person holds a different petroleum ith w right with respect to the development area. ed ut rib (4) For purposes of this section and section 76 the upstream st di ring fencing set up- or ed (a) all petroleum rights held by a person who conducts uc od petroleum operations shall be treated as business re pr activities save as arrangement referred to under be section 82; ay m (b) subject to the limitations in this section, may continue ok bo into a development licence granted with respect to the is th exploration licence and development and production of rt rights conducted with respect to that licence; and pa o .N (c) ends at the delivery point identified in the Production d ve Sharing Agreement. r se re [s. 65L] s ht rig

78.–(1) Subject to this section, in calculating a person’s income ll Income from a.A petroleum rights from a separate petroleum rights for a year of income, there ni za Acts Nos. an 2 of 2016 s. 26 shall be included, together with any other amounts required to fT 7 of 2017 s. 35 be included under other provisions of this Act, the following: to en (a) incomings derived from the disposal of petroleum n m er obtained from the licence area valued at the delivery ov G point identified in the Production Sharing Agreement; 25 20 (b) amounts received in respect of the sale of data or © information pertaining to the operations or petroleum reserves; and 633 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (c) amounts required to be included under paragraph 5 of the Third Schedule including from the assignment or other disposal of an interest in the petroleum right with respect to which the operation is conducted after commencement of production. . AG O (2) In the case of a contractor under a Production Sharing of n Agreement, in calculating inclusions under subsection (l)(a), io s is include the contractor’s full share of petroleum from profit oil m er tp or profit gas. ou [s. 65M] ith w ed ut

79.–(1) In calculating a person’s income from a separate rib Deductions for st petroleum rights petroleum right for a year of income, there shall be deducted, di or Acts Nos. together with any other amounts deductible under other ed 2 of 2016 s. 26 uc 7 of 2017 s. 36 provisions of this Act, the following: od 3 of 2021 s. 22 pr (a) annual fees incurred by the person with respect to the re Cap. 392 be petroleum right under section 114 of the Petroleum ay m Act; ok bo (b) depreciation allowances in respect of depreciable assets is th other than the assets whose costs are recouped from of rt the cost oil or cost gas under a Production Sharing pa o Agreement granted with respect to the operations and d .N calculated in accordance with paragraph 6 of the Third ver se Schedule: re s ht Provided that, assets owned and employed by a person rig on international pipeline shall be treated as depreciable ll a.A assets of class 6 pool of depreciable assets; and ni za an (c) amounts deposited in respect of the decommissioning fT fund for the petroleum operation. to en (2) For purposes of subsection (1), n m er “international pipeline” means a cross border pipeline for ov G transportation of crude oil from a foreign country to a 25 20 port facility in the United Republic in which such crude © oil is exported to another foreign country. (3) There shall be no deduction allowed in calculating income from a separate petroleum right- 634 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) under section 15, 16, or 26; (b) any expenditure and depreciation allowance in respect of assets covered by cost petroleum under a Production Sharing Agreement; (c) for unrelieved loss under section 19, except as permitted . AG O by section 80; of n (d) any bonus payment; and io s is (e) expenses incurred by the person in implementing the m er tp decommissioning plan for the operation in excess of ou deposits in the decommissioning fund. ith w [s. 65N] ed ut rib st

80.–(1) The provision of section 19 shall apply to unrelieved di Losses from or petroleum rights losses of a person from a separate petroleum right with the ed Act No. uc following modifications: od 2 of 2016 s. 26 pr (a) losses from the separate petroleum right may be re be deducted only in calculating future income from that ay m operation and not income from any other activity, ok bo whether an upstream, midstream or downstream is th petroleum activity or a non-petroleum activity; of rt (b) income from the separate petroleum right may not pa o be reduced by a loss from any other activity whether d .N an upstream, midstream or downstream petroleum ver se activity or a non-petroleum activity; and re s ht (c) income from the separate petroleum right for any rig year of income may be reduced by reason of the use of ll a.A unrelieved losses from that operation, subject to other ni za an limitations imposed by section 19 but not below thirty fT percent of that income before any reduction for losses. to en (2) The perpetual loss corporation rules shall not apply to a n m er person conducting exploration operations. ov G [s. 65O] 25 20 © Bonus payments 81. Bonus payments made with respect to a petroleum right, Act No. 2 of 2016 s. 26 whether in form of a lump sum or otherwise, shall not be deductible in calculating income from a separate petroleum right: 635 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Provided that, bonus payments shall neither be included in the cost of the petroleum right nor depreciated over the term of the right. [s. 65P] . AG

82.–(1) A petroleum right shall be an asset separate from O Realisation of of petroleum rights any other interest in the land that constitutes the licence area n io Act No. s is 2 of 2016 s. 26 and separate from any other asset employed in petroleum m er operations. tp ou (2) For purposes of farm-out arrangement, petroleum ith w rights shall be deemed as investment asset when realised ed ut before commencement of production. rib st (3) Where petroleum rights is realised in terms of subsection di or (2), relevant provisions under this Act in respect of realisation ed uc of investment or business asset shall apply. od pr (4) Where a petroleum rights is realised together with other re be assets used in petroleum operations or where a petroleum ay m rights is realised in part, the rules in section 47 shall apply for ok bo purposes of apportionment expenditure, costs and amounts is th derived from the realisation. of rt (5) The incomings from the realisation of a petroleum pa o rights which include amounts derived by the holder of the d .N right from the realisation, shall include amounts to be derived ver se in the future from the realisation. re s ht (6) For purposes of section 38(b), an amount including any rig form of payment or benefit to be derived in the future from ll a.A the realisation of an asset, shall be taken into account as an ni za an incoming at its market value at the time of the realisation or in fT any other case, in accordance with section 27(1)(d). to en (7) In calculating the market value of an obligation to pay a n m er future amount, there shall apply present value of a reasonable ov G estimate of the amount of the future payment. 25 20 (8) An amount taken into consideration under subsections © (6) and (7) as incomings from the realisation of a petroleum rights shall be included in the cost of the asset for the acquirer. 636 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (9) The right to receive a future amount shall be realised in a different amount to the extent that the provisions of sections 25 and 41 shall apply to make adjustments. (10) The provisions of this section shall apply to the realisation of a petroleum rights where the incomings from the . AG O realisation include an overriding royalty. of n [s. 65Q] io s is m er

83.–(1) A decommissioning fund shall be exempt from tax. tp Decommissioning ou funds (2) Amounts paid from a decommissioning fund to meet ith Act No. w expenses of activities authorised by the decommissioning plan ed 2 of 2016 s. 26 ut for which the fund was established shall not be an income of rib st the petroleum rights holder which otherwise required to meet di or those expenses. ed uc (3) Amounts in a decommissioning fund which are paid to od pr or come under the control of a petroleum rights holder and re be which are not referred to in subsection (2) shall be included ay m in calculating income of the petroleum rights holder from the ok bo associated petroleum rights. is th [s. 65R] of rt pa o Subdivision B: Midstream and Downstream Activities d .N ver se

84.–(1) A licensee conducting midstream or downstream re Midstream and s ht downstream activities with respect to petroleum shall be subject to income rig activities ll tax with respect to the activities as prescribed by this Act, and .A Act No. a 2 of 2016 s. 26 ni as modified by this Subdivision. za an (2) In calculating a licensee’s income from a business which fT to includes conducting midstream or downstream activities en m with respect to petroleum, there shall be deducted amounts n er deposited in and other expenses incurred in respect of the ov G decommissioning fund established for the licence. 25 20 (3) There shall be no deduction allowed in calculating © income from a separate petroleum rights- (a) under sections 15, 16, 17 or 26; (b) for unrelieved losses under section 19, except as permitted by section 80; or 637 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (c) expenses incurred by the person in implementing the decommissioning plan for the operation in excess of the amount contributed in the decommissioning fund. (4) Unrelieved losses of a licensee arising from conducting a business that includes midstream or downstream activities . AG O may be deducted under section 19 so as to reduce total income of n of the licensee but not below thirty percent of total income io s is before any deduction for such an unrelieved loss. m er tp (5) The provisions of section 83 applies to a decommissioning ou fund established under section 197 of the Petroleum Act as ith Cap. 392 w though a reference to “petroleum rights holder” were a reference ed ut rib to the “holder of a midstream or downstream licence.” st di (6) In this section, “licence” means a licence granted in respect or ed Cap. 392 to midstream and downstream activities under the Petroleum Act. uc od re pr [s. 65S] be Division VI: Transportation3 ay m ok Repealed 85.[Repealed by The Finance Act, No. 7 of 2023 s. 24] bo Acts Nos. is th 5 of 2022 s. 63 of 7 of 2023 s. 24 rt PART VI pa o .N INTERNATIONAL d ver se Division I: Residence and Source re s ht

86.–(1) An individual is resident in the United Republic for a rig Resident persons ll Act No. .A 5 of 2022 s. 64 year of income if the individual- a ni (a) has a permanent home in the United Republic and is za an present in the United Republic during any part of the fT to year of income; en m (b) is present in the United Republic during the year of n er ov income for a period or periods amounting in aggregate G 25 to one hundred eighty three days or more; 20 (c) is present in the United Republic during the year © of income and in each of the two preceding years of 3 This Division is repealed by Act No. 7 of 2023 638 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] income for periods averaging more than one hundred twenty two days in each such year of income; or (d) is an employee or an official of the Government of the United Republic posted abroad during the year of income. . AG O (2) A partnership is a resident partnership for a year of of n income if at any time during the year of income a partner is a io s is resident of the United Republic. m er tp (3) A trust is a resident trust for a year of income where- ou (a) it was established in the United Republic; ith w (b) at any time during the year of income, a trustee of the ed ut rib trust is a resident person; or st di (c) at any time during the year of income a resident person or ed directs or may direct senior managerial decisions of the uc od trust, whether the direction is or may be made alone or re pr jointly with other persons or directly or through one or be more interposed entities. ay m (4) A corporation is a resident corporation for a year of ok bo income where- is th (a) it is incorporated or formed under the laws of the of rt United Republic; or pa o .N (b) at any time during the year of income the management d ve and control of the affairs of the corporation are r se re exercised in the United Republic whether physically or s ht through any electronic means. rig ll [s. 66] a.A ni za

87.–(1) A person shall calculate his income or loss from any an Source of income fT and loss employment, business or investment that has a source in the to en United Republic separately from any income or loss from that n m er employment, business or investment that has a foreign source. ov G (2) A person’s income from any employment, business or 25 20 investment has a source in the United Republic to the extent © to which - (a) the amounts directly included in calculating that income that have a source in the United Republic, exceed the amount stipulated in paragraph (b); and 639 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) the amounts directly deducted in calculating that income that have a source in the United Republic. (3) A person’s loss from any business or investment has a source in the United Republic to the extent to which the amounts referred to in subsection (2)(b) exceed those referred . AG O to in subsection (2)(a). of n (4) A person’s foreign source of income or loss from an io s is employment, business or investment shall be calculated as- m er tp (a) the person’s worldwide income or loss from that ou employment, business or investment calculated ith w notwithstanding subsection (1); less ed ut rib (b) any income with a source in the United Republic from st di that employment, business or investment; or plus or ed (c) any loss with a source in the United Republic from that uc od employment, business or investment. re pr [s. 67] be ay m Source of 88.–(1) Amounts directly included in calculating income have ok bo directly included a source in the United Republic where they consist of- is and deducted th amounts (a) incomings, gains and amounts referred to in section of rt 8(2)(b), (c) or (d) or section 9(2)(b), to the extent to pa o which a domestic asset or domestic liability is involved; d .N and ver se (b) subject to paragraph (a), payments that have a source re s ht in the United Republic. rig (2) Amounts directly deducted in calculating income have a ll a.A source in the United Republic where they consist of- ni za an (a) allowances referred to in sections 13(1) or 17 and fT expenditure referred to in section 14(1) to the extent to to en which- n m er (i) subject to subparagraph (ii), they relate to ov G domestic assets; or 25 20 (ii) where the expenditure or allowances relate to © moveable tangible assets used by a person who conducts a business of land, sea or air transport operator or charterer to carry passengers, cargo, 640 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] mail or other moveable tangible assets, the assets are used to carry passengers who embark or cargo, mail or other moveable tangible assets that are embarked in the United Republic, other than as a result of transhipment; . AG O (b) losses from the realisation of business assets, investment of n assets and liabilities of a business where the asset io s is or liability involved is a domestic asset or domestic m er tp liability; and ou (c) subject to paragraphs (a) and (b), payments that have a ith w source in the United Republic. ed ut rib [s. 68] st di or

89. The following payments have a source in the United ed Source of uc payments Republic- od Acts Nos. pr (a) dividends paid by a resident corporation; re 5 of 2011 s. 15 be 4 of 2017 s. 21 (b) interest paid by a resident person or domestic ay 8 of 2020 s. 33 m 5 of 2022 s. 65 permanent establishment; ok bo 7 of 2023 (c) natural resource payments made in respect of or is th calculated by reference to natural resources taken from of rt land or the sea situated within the United Republic pa o or its territorial waters; including payment made for d .N harnessing, generating or utilising land, air or water ver se natural resources for generation of power or anything re s ht of value whether the respective natural resource is rig located alongside the border or within the country. ll .A a (d) rent paid for the use of, right to use or forbearance from ni za an using an asset situated in the United Republic; fT (e) royalties paid for the use of, right to use or forbearance to en from using an asset in the United Republic; n m er (f) premiums for general insurance or re-insurance ov G paid to, and proceeds from general insurance or re- 25 20 insurance paid by a resident person in respect of the © insurance or re-insurance of any risk in or outside the United Republic; 641 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (g) payments received by a person who conducts a business of land, sea or air transport operator or charterer in respect of - (i) the carriage of passengers who embark or cargo, mail or other moveable tangible assets that are . AG O embarked in the United Republic, other than as a of n result of transhipment; or io s is (ii) rental of containers and related equipment which m er tp are supplementary or incidental to carriage ou referred to in subparagraph (i); ith w (h) payments received by a person who conducts a business ed ut rib of transmitting messages by cable, radio, optical fibre st di or satellite or electronic communication in respect of or ed the transmission of messages by apparatus established uc od in or outside the United Republic, whether or not such re pr messages originate in or outside the United Republic; be (i) payments, including service fees, of a type not mentioned ay m in paragraphs (g) or (h) or attributable to employment ok bo exercised, service rendered or a forbearance from is th exercising employment or rendering service - of rt (i) irrespective of the place of exercise, rendering or pa o .N forbearance; d ve (ii) regardless of the place of payment; and r se re (iii) where the payer is the Government of the United s ht Republic, irrespective of the place of exercise, rig ll rendering or forbearance: .A a ni Provided that, in the case of subparagraph (i) and (ii) the za an services are consumed in the United Republic; fT to (j) proceeds of life insurance and retirement payments en m not falling within paragraph (i) the “return” paid by a n er resident person or a domestic permanent establishment ov G and any premium or retirement contribution paid to a 25 20 resident person or domestic permanent establishment © to secure such a return; (k) gifts and other ex gratia payments to the extent received in respect of business or investment conducted with domestic assets; and 642 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (l) payments not mentioned in the above paragraphs made in respect of- (i) the acquisition of a domestic asset, incurring of a domestic liability or realisation of such an asset or liability; or . AG O (ii) activity conducted or a forbearance from of n conducting activity in the United Republic; and io s is (m) payments received by a non-resident in respect of an m er tp electronic service consumed by or attributable to an ou individual in the United Republic regardless of the ith w place of payment provided that, the consumption of ed ut rib the service by an individual is not made in the course st di of doing business. or ed [s. 69] uc od pr

90.–(1) Income accruing or arising in the United Republic, re Income accruing be or arising in whether directly or indirectly through or from- ay United Republic m Act No. (a) any business connection; ok bo 8 of 2020 s. 34 (b) any property; is th (c) any asset or any source of income including the sources of rt of payment referred to in section 89; or pa o (d) transfer of an asset situated in the United Republic, d .N shall be deemed to accrue or arise in the United Republic ver se and shall be taxed through a representative assessee of a non- re s ht resident person or a beneficial owner. rig (2) This section shall not preclude the Commissioner from ll .A a assessing the tax to a non-resident person or beneficial owner ni za an under any provision of this Act. fT [s. 69A] to en n m er Division II: Permanent Establishments ov G 25 Principles of 91.–(1) The income tax liability under section 4(1)(a) of a 20 taxation © person with a domestic or foreign permanent establishment shall be calculated as if the person and the permanent establishment were independent but associated persons and 643 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] the permanent establishment were resident in the country in which it is situated. (2) In addition to taxation in accordance with subsection (1), a person with a domestic permanent establishment shall be taxed with respect to the repatriated income of the permanent . AG O establishment in accordance with sections 4(1)(b) and 95. of n (3) Part VII of this Act shall apply as though a reference io s is to a “resident person” includes a reference to a domestic m er tp permanent establishment of a non-resident person as though ou the permanent establishment were a person separate from the ith w non-resident person. ed ut rib [s. 70] st di or

92.–(1) Subsections (2) to (6) apply for the purposes of ed Calculating uc income of calculating the income of a domestic or foreign permanent od permanent pr establishment separately from that of its owner. re establishment be (2) Subject to Division II of Part III, the following amounts ay m derived and expenditure incurred shall be attributed to the ok bo permanent establishment, namely - is th (a) amounts derived and payments received in respect of of rt assets held by, liabilities owed by or the business of the pa o permanent establishment; and d .N (b) expenditure incurred and payments made for the ver se purposes of assets held by, liabilities owed by or the re s ht business of the permanent establishment, but only to rig the extent the expenditure is recorded in the accounts ll .A a of the permanent establishment. ni za an (3) The following assets and liabilities shall be treated as fT assets or liabilities of the permanent establishment: to en (a) tangible assets situated in the country of the permanent n m er establishment; ov G (b) intangible assets created by or through the permanent 25 20 establishment; © (c) intangible assets, to the extent that they may be exploited in the market of the country of the permanent establishment; 644 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (d) subject to subsection (6)(b), debt obligations incurred in borrowing money, to the extent that the money is employed in or used to acquire an asset that is employed in the business of the permanent establishment; and (e) other liabilities arising directly out of the business of . AG O the permanent establishment. of n (4) In addition to the circumstances specified in sections io s is 39 and 40, the permanent establishment shall be treated as m er tp realising an asset held by it or liability owed by it- ou (a) in the case of a tangible asset, when the asset is no longer ith w situated in the country of the permanent establishment; ed ut rib (b) in the case of an intangible asset, to the extent the asset st di is available for exploitation in the country in which the or ed owner is resident or a country in which the owner has uc od another permanent establishment; or re pr (c) in the case of a liability referred to in subsection (3) be (d), the money or asset is no longer employed in the ay m business of the permanent establishment. ok bo (5) The following activities shall be treated as conducted by is th the permanent establishment: of rt (a) employment by the owner of any individual who is pa o .N resident in the country of the permanent establishment; d ve (b) sales of trading stock by the owner of the same or a r se re similar kind as those sold through the permanent s ht establishment; and rig ll (c) other business activities of the owner conducted with .A a ni residents of the country of the permanent establishment za an of the same or a similar kind as those effected through fT to the permanent establishment. en m (6) Subject to Division II of Part III, the only arrangements n er between a permanent establishment and the owner that are ov G recognised are the following: 25 20 (a) the transfer of an asset or liability between the © permanent establishment and the owner or vice versa, in accordance with subsections (3) and (4); and 645 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) where the owner carries on a banking business through the permanent establishment, has received written approval under this subsection from the Commissioner and subject to such conditions as the Commissioner thinks fit, entries shown in the same manner in the accounts of the owner . AG O and the permanent establishment as- of n (i) a debt obligation between the owner and the io s is permanent establishment or vice versa; and m er tp (ii) interest derived or incurred with respect to a debt ou obligation referred to in subparagraph (i), ith w but where this paragraph applies no debt obligation incurred by ed ut rib the owner shall be attributed to the permanent establishment st di under subsection (3)(d). or ed (7) In this section, “the owner” means the owner of the uc od permanent establishment. re pr [s. 71] be ay m Repatriated 93.–(1) Subject to the provisions of subsection (2), the ok bo income of repatriated income of a domestic permanent establishment of is domestic th permanent a non-resident person for a year of income shall be calculated of establishment rt according to the following formula - pa o A+B-C d .N Where- ver se A. is the net cost of assets of the permanent establishment re s ht at the start of the year of income plus the market value rig of capital contributed to the permanent establishment ll .A a by the owner during the year; ni za an B. is net total income of the permanent establishment for fT the year of income; and to en C. is the net cost of assets of the permanent establishment n m er at the end of the year of income plus, where the ov G establishment has no total income for the year of 25 20 income, any unrelieved loss for the year of income © referred to in section 19(4). (2) The repatriated income shall not exceed- (a) the net total income of the permanent establishment for the year of income plus the balance of the permanent 646 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] establishment’s accumulated profits account referred to in subsection (3) at the end of the previous year of income after the adjustments referred to in that subsection, less (b) where the permanent establishment has no total . AG O income for the year of income, any unrelieved loss for of n the year of income referred to in section 19(4) for the io s is year of income. m er tp (3) For purposes of calculating repatriated income, ou a domestic permanent establishment shall maintain an ith w accumulated profits account which, at the end of each year of ed ut rib income, shall be- st di (a) credited with the net total income of the permanent or ed establishment for the year of income; and uc od (b) debited with the repatriated income and, where the re pr permanent establishment has no total income, any be unrelieved loss referred to in section 19(4) for the year ay m of income. ok bo (4) For purposes of this section- is th “net cost of assets” of a domestic permanent establishment- of rt (a) at the start of a year of income equals the net cost of assets pa o .N at the end of the previous year of income, if any; and d ve (b) at the end of a year of income is calculated as- r se re (i) the written down value of the permanent s ht establishment’s pools of depreciable assets at the rig ll end of the year of income plus the net cost of other .A a ni assets of the permanent establishment at the end za an of the year of income; less fT to (ii) the net incomings for liabilities of the permanent en m establishment at the end of the year of income; n er “net incomings for a liability to a particular period” means ov G the amount by which cumulative incomings for the 25 20 liability exceed cumulative costs for the liability to the © time; and “net total income” of a domestic permanent establishment for a year of income is its total income for the year of 647 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] income calculated without any deduction under section 19(1)(b) less income tax payable under section 4(1)(a) with respect to that income. [s. 72] . AG O Division III: Controlled Foreign Trusts and Corporations of n io

94.–(1) Controlled foreign trusts and corporations and their s Principles of is m taxation members shall be taxed in accordance with Subdivisions B and er tp C of Part IV as modified by this Division. ou ith (2) A controlled foreign trust or corporation shall be treated w ed as distributing its unallocated income to its members at the ut rib end of each year of income in accordance with section 96. st di or [s. 73] ed uc od Unallocated 95.–(1) The unallocated income of a controlled foreign trust or re pr income of corporation for a year of income shall be - be controlled ay foreign trust and (a) the attributable income of the trust or corporation for m corporation ok the year of income; less bo Act No. (b) any distributions made by the trust or corporation is 5 of 2022 s. 66 th during the year of income determined otherwise than of rt pa in section 96(1) that are included in calculating the o .N income of a member under sections 52(2)(b) or 54(1) d ve (b), respectively and in the case of distributions by a r se re resident financial institution and for purpose of section s ht 96(6), amount of distributions which are treated as not- rig ll .A distributable as determined by the Bank of Tanzania. a ni (2) The “attributable income” of a controlled foreign trust za an or corporation for a year of income shall be its total income fT to for the year of income calculated as if the trust or corporation en m were resident. n er ov [s. 74] G 25 20

96.–(1) Where at the end of a year of income a trust or © Taxation of members of controlled corporation is a controlled foreign trust or corporation, the foreign trusts or trust or corporation shall be treated as distributing to its corporations members at that time its unallocated income for the year of 648 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] income referred to in section 95(1) according to each member’s share. (2) A member who is treated as receiving a distribution under subsection (1) may deduct the amount treated as distributed in calculating the member’s income of a future year . AG O of income to the extent to which - of n (a) the amount has not previously been deducted under io s is this subsection; and m er tp (b) distributions of the type referred to in section 95(1) ou (b) received by the member during the year of income ith w exceed the member’s share of the trust or corporation’s ed ut rib attributable income for the year of income referred to st di in section 95(2). or ed (3) To the extent that all dividends distributed by a controlled uc od foreign corporation during a year of income, including as re pr a result of subsection (1), do not exceed the corporation’s be attributable income for the year of income referred to in ay m section 95(2), then dividends distributed to shareholders who ok bo are corporations and associated with the corporation at the is th time of distribution are treated as - of rt (a) having the same character as to type and source as the pa o .N corporation’s attributable income; and d ve (b) made proportionately out of each type and source of r se re the corporation’s attributable income. s ht (4) At the time an amount is treated as distributed by a rig ll controlled foreign corporation to an associated shareholder .A a ni under subsection (3), the shareholder shall be allocated any za an income tax under this Act or foreign income tax paid or treated fT to as paid by the corporation with respect to the amount. en m (5) A shareholder is treated as having paid the tax allocated n er to the shareholder by subsection (4) at the time of allocation ov G and foreign tax relief may be available to the shareholder 25 20 under section 98 but no other tax credit shall be available to © the shareholder. (6) Subsections (3), (4) and (5) shall apply to distributions by a resident corporation made during any year of income 649 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] to a non-resident associate of the corporation as though the corporation were a controlled foreign corporation and the attributable income of the corporation were its total income for the year of income. (7) For purposes of this section, a “member’s share” with . AG O respect to income of trust or corporation shall be- of n (a) equal to the member’s percentage right to share in the io s is income on distribution; or m er tp (b) where that right is not reasonably certain, such ou percentage as the Commissioner thinks appropriate in ith w the circumstances. ed ut rib [s. 75] st di or

97.–(1) An amount treated as distributed to a member under ed Cost and uc incomings of section 96(1) shall be included in the cost of the member’s od member’s interest pr membership interest in the non-resident trust or corporation re in controlled be foreign trust or at the time of distribution. ay corporation m (2) An amount deducted by a member under section ok bo 96(2) shall be included in the incomings for the member’s is th membership interest in the non-resident trust or corporation of rt at the time of deduction. pa o [s. 76] d .N ver se Division IV: Foreign Tax Relief re s ht

98.–(1) Subject to subsection (4), a resident person other rig Foreign tax relief ll .A than a partnership may claim a foreign tax credit for a year of a ni income for any foreign income tax paid by the person to the za an extent to which it is paid with respect to the person’s taxable fT to foreign income for the year of income. en m (2) Foreign tax credits claimed under subsection (1) are n er ov calculated separately for each year of income and shall not G 25 exceed the average rate of Tanzania income tax of the person 20 © for the year of income applied to the person’s taxable foreign income. (3) For purposes of subsections (1) and (2), there shall be treated as foreign income tax paid by a resident person with 650 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] respect to the person’s taxable foreign income for a year of income any unrelieved foreign income tax of a previous year of income paid by the person. (4) A person may elect to relinquish a foreign tax credit available for a year of income and claim a deduction for the . AG O amount of the foreign income tax but otherwise no deduction of n is available for foreign income tax. io s is (5) For purposes of this section - m er tp “average rate of Tanzania income tax” of a resident person ou for a year of income means the percentage that income ith w tax payable by the person under section 5(1)(a) calculated ed ut rib under section 4(3) without a reduction for any foreign st di tax relief) shall be of the total income of the person for or ed the year of income; uc od “taxable foreign income” of a resident person for a year re pr of income means foreign source income that shall be be included in the person’s chargeable income from any ay m employment, business or investment for the year of ok bo income; and is th “unrelieved foreign income tax” of a resident person means of rt foreign income tax paid by the person with respect to the pa o .N person’s taxable foreign income - d ve (a) for which a foreign tax credit has not been granted r se re under subsection (1) as a result of the limitation in s ht subsection (2); and rig ll (b) that has not been relinquished under subsection (4). .A a ni [s. 77] za an fT

99. A resident person, other than a partnership, who carries to Tax credit for en business or out business or investment in both Mainland Tanzania and n m investment er operating in Tanzania Zanzibar, may claim a tax credit for year of income ov G both Mainland for any income tax paid by the person in relation to the person’s 25 Tanzania 20 and Tanzania taxable income from business or investment carried out in © Zanzibar Act No. Mainland Tanzania or Tanzania Zanzibar. 5 of 2022 s. 67 [s. 77A] 651 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] PART VII TAX PAYMENT PROCEDURE Division I: General Obligations

100.–(1) Tax payable under this Act means- . AG Types of tax O and methods of (a) income tax imposed under section 4(1), including of payment n amounts payable by a withholding agent or withholdee io s is under Division II, by an instalment payer under m er tp Division III and on assessment under Division IV of ou ith this Part; w ed (b) interest and penalties imposed by assessment under ut rib Division I of Part VIII; st di (c) an amount required to be paid to the Commissioner in or ed collection from a tax debtor under sub-Part (b) of Part uc od Cap. 438 IX of the Tax Administration Act; and re pr (d) an amount required to be paid to the Commissioner be in respect of a tax liability of a third party under sub- ay m Part (c) of Part IX of the Tax Administration Act. ok Cap. 438 bo (2) Tax shall be paid to the Commissioner in the form and is th at the place as may be prescribed. of rt pa [s. 78] o d .N ve Time for payment 101. Subject to section 66 of the Tax Administration Act, tax r se of tax shall be payable- re Act No. s ht 10 of 2015 s. 119 (a) in the case of income tax payable by withholding, at the rig Cap. 438 ll time provided for in section 109; .A a (b) in the case of income tax payable by instalment, on ni za an the date by which the instalment is to be paid under fT to sections 113 or 115; and en (c) in the case of income tax payable on an assessment n m er under section 120, on the date by which the return of ov G income must be filed. 25 20 [s. 79] © Repealed 102–103. [Repealed by Act No.10 of 2015 s.120.] [ss. 80-80A] 652 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Division II: Income Tax Payable by Withholding Subdivision A: Withholding Obligations Withholding by 104.–(1) A resident employer who makes a payment that is employers to be included in calculating the chargeable income of an . AG Act No. employee from the employment shall withhold income tax O 2 of 2014 s. 38 of from the payment at the rate provided for in paragraphs 1 and n io s 4(a) of the First Schedule. is m er (2) The obligation of an employer to withhold income tax tp ou under subsection (1) shall not be reduced or extinguished ith w because the employer has a right or is under an obligation to ed ut deduct and withhold any other amount from the payment or rib st because of any other law that provides that an employee’s income di or from employment shall not be reduced or subject to attachment. ed uc [s. 81] od pr re be Withholding 105.–(1) Where a resident person- ay from investment (a) pays a dividend, interest, natural resource payment, m returns ok rent or royalty; and bo Acts Nos. is 15 of 2004 s. 32 (b) the payment has a source in the United Republic and is th 8 of 2012 s. 28 of not subject to withholding under section 104, rt 2 of 2016 s. 27 pa 5 of 2022 s. 68 the person shall withhold income tax from the payment at the o .N 7 of 2023 s. 26 d rate provided for in paragraph 4(b) of the First Schedule. ve r se (2) This section shall not apply to- re s (a) payment made by individuals unless made in ht rig conducting a business; ll .A (b) interest paid to a resident financial institution; a ni za (c) payments that are exempt amounts; an fT (d) rent paid to a resident person for the use of an asset to en other than aircraft, land or buildings; n m (e) interest payable to a non-resident bank by a strategic er ov G investor except for interest payable on any loan taken by a 25 20 strategic investor from an associated or related company; or © (f) interest paid to holder of corporate or municipal bonds issued and listed at the Dar es Salaam Stock Exchange with effect from 1st July 2022. [s. 82] 653 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Withholding 106.–(1) Subject to subsection (2), a resident person who- from service fees and contract (a) is conducting business of extractive industry in mining, payments oil or gas pays a service fee to another resident person in Acts Nos. 4 of 2013 s. 23 respect of management or technical services provided wholly and exclusively for the business; . AG 2 of 2014 s. 39 2 of 2016 s. 28 O (b) pays to a non-resident an insurance premium with a of 8 of 2020 s. 35 n source in the United Republic; io 7 of 2023 s. 27 s is (c) pays to- m er tp (i) a non-resident a service fee with a source in ou United Republic; or ith w (ii) a resident person a service fee for provision of ed ut rib professional services; or st di (d) pays- or ed (i) money transfer commission to a money transfer uc od agent; re pr (ii) fee, commission or any other charge to a be commercial bank agent; or ay m (iii) fee, commission or any other charge to a digital ok bo payment agent. is th (e) is a buyer of precious metals, gemstones and other of rt precious stones supplied by the holder of a primary pa o .N mining licence or artisanal miner; d ve (f) makes payment to a resident person in respect of r se re verified carborn emission reduction.”. s ht (2) This section shall not apply to- rig ll (a) payments made by individuals unless made in a.A ni conducting a business; or za an (b) payments that are exempt amounts. fT to (3) For the purposes of subsection (1), en m “digital payment agent” means a person who renders digital n er payment services at a fee, commission or any other ov G charges. 25 20 (4) For purposes of subsection (1)(c)(ii), “professional © service” means services rendered by a person licensed as a practitioner by any recognised professional body and shall include other services or activities of an independent 654 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] business character including consultancy, legal, architectural, engineering, supervisory, accounting, auditing, medical, artistic, survey, theatrical performance, sports, exhibition, private security services, private investigation and consultancies in various disciplines or any entertainment held or given other . AG O than those for remuneration under contract of employment: of n Provided that, where the service referred in subsection io s is (1)(c)(ii) involves construction works, the payment which is m er tp subject to withholding shall be based on the ratio of 3:2 for ou materials and services respectively. ith w [s. 83] ed ut rib st

107.–(1) Subject to subsection (2), a resident corporation di Withholding of or income tax for which makes a payment in respect of goods supplied by a ed goods uc resident person in the course of conducting business shall od Acts Nos. 13 of 2008 s. 15 pr withhold income tax at the rate provided for under paragraph re 15 of 2010 s. 16 be 4 of 2013 s. 24 4(c) of the First Schedule. ay m (2) This section shall apply to a resident corporation whose ok bo budget is wholly or substantially financed by Government is th budget subvention. of rt [s. 83A] pa o d .N Repealed 108. [Repealed by Act No. 10 of 2021 s. 4] ver se [s. 83B] re s ht rig Subdivision B: Procedure Applicable to Withholding ll .A a ni Statements and 109.–(1) A withholding agent shall pay to the Commissioner za an payments of within seven days after the end of each calendar month fT tax withheld to or treated as any income tax that has been withheld in accordance with en withheld m Subdivision A during the month. n Act No. er (2) A withholding agent shall file with the Commissioner, ov 3 of 2021 s. 24 G within seven days of the month following the month to which 25 20 the tax relates, a withholding tax statement for the calendar © month in the manner and form prescribed, specifying- (a) payments made by the agent during the period that are subject to withholding under Subdivision A; 655 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) the name and address of the withholdee; (c) Taxpayer Identification Number of the withholdee; (d) income tax withheld from each payment; and (e) any other information that the Commissioner may prescribe. . AG O (3) A withholding agent who fails to withhold income tax in of n accordance with Subdivision A must nevertheless pay the tax io s is that should have been withheld in the same manner and at the m er tp same time as tax that is withheld. ou (4) Where a withholding agent fails to withhold income tax ith w from a payment as required by Subdivision A- ed ut rib (a) the withholdee shall jointly and severally, be liable with st di the withholding agent for the payment of the tax to the or ed Commissioner; and uc od (b) the tax shall be payable by the withholdee within seven re pr days after the end of the calendar month in which the be payment is received. ay m (5) A withholding agent who withholds income tax under ok bo Subdivision A and pays the tax to the Commissioner shall be is th treated as having paid the amount withheld to the withholdee of rt for the purposes of any claim by the withholdee for payment pa o .N of the amount withheld. d ve (6) A withholding agent who fails to withhold income tax r se re under Subdivision A but pays the tax that should have been s ht withheld to the Commissioner in accordance with subsection (3) rig ll shall be entitled to recover an equal amount from the withholdee. .A a ni [s. 84] za an fT

110.–(1) A withholding agent shall prepare and serve on a to Withholding en certificates withholdee- n m er (a) separately for each period referred to in subsections (2) ov G and (3); 25 20 (b) at the time referred to in those subsections; and © (c) in the form prescribed, a withholding certificate setting out the amount of payments made to the withholdee and income tax withheld from those payments under Subdivision A by the agent during the period. 656 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) Subject to subsection (3), a withholding certificate shall cover a calendar month and shall be served within thirty days after the end of the month. (3) In the case of income tax withheld under section 104, a withholding certificate- . AG O (a) shall cover the part of the calendar year during which of n the employee shall be employed; and io s is (b) shall be served by 30th January after the end of the year m er tp or, where the employee has ceased employment with the ou withholding agent during the year, no more than thirty ith w days from the date on which the employment ceased. ed ut rib [s. 85] st di or

111.–(1) For purposes of this Act, the following are final ed Final withholding uc payments withholding payments- od Acts Nos. pr (a) dividends paid by- re 6 of 2006 s. 15 be 4 of 2013 s. 25 (i) a resident corporation; or ay 4 of 2017 s. 23 m 5 of 2022 s. 69 (ii) non-resident corporation to a resident individual, ok bo 7 of 2023 s. 28 other than a dividend received by- is th (aa) an individual in conducting a business; or of rt (bb) an individual referred to in section 6(2); pa o (b) interest paid by financial institution to a resident d .N individual where the interest is paid with respect to a ver se deposit held with the institution, other than- re s (i) interest received by the individual in conducting a ht rig business; or ll a .A (ii) foreign source interest paid to an individual ni za referred to in section 6(2); an fT (c) rent paid to a resident individual under a lease of land or a to en building and associated fittings and fixtures, other than - n m er (i) rent received by an individual in conducting a ov G business; or 25 20 (ii) foreign source rent paid to an individual referred © to in section 6(2); (d) service fees paid to a resident person that are subject to withholding under section 106(1)(a) and (d); 657 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (e) payments made to non-resident persons other than through a domestic permanent establishment of the person that are subject to withholding under Subdivision A or would be so subject if section 106(1) (a) is not applied; and . AG O (f) interest paid to a unit trust. of n (g) payment for purchase of minerals made to a primary io s is licence holder or artisanal miner; m er tp (h) payment made to resident person in respect of verified ou carborn emission reduction ith w (2) Income tax- ed ut rib (a) withheld from a final withholding payment under st di Subdivision A of Division II of this Part; or or ed (b) paid with respect to a final withholding payment in uc od accordance with section 109(3) or (4), satisfies the re pr withholdee’s income tax liability under section 4(1)(c) be with respect to the payment. ay m (3) Subject to the provisions of subsection (4), where a ok bo final withholding payment is not subject to withholding tax is th whether by reason of section 106(2)(a) or that the payer is of rt non-resident- pa o .N (a) the recipients income tax liability under section 4(1) d ve (c) with respect to the payment shall be payable by way r se re of assessment under Division IV of this Part as though s ht that liability were a liability under section 4(1)(a); and rig ll (b) where the payment is a foreign source payment, a .A a ni foreign tax credit shall be available under section 98 for za an any foreign income tax imposed on the payment and fT to the credit shall be calculated as though the payment en m were taxable foreign income. n er (4) Where- ov G (a) a resident individual the “landlord” receives rent 25 20 during a year of income in respect of residential © premises situated in the United Republic that are leased by another individual as the residence of that other individual; 658 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) the rent is not received by the landlord in conducting a business; and (c) the total of the rent received by the landlord under the lease and any other lease meeting the requirements of paragraphs (a) and (b) during the year of income does . AG O not exceed five hundred thousand shillings, of n then the landlord shall not have tax liability under section io s is 4(1)(c) with respect to receipt of the rent. m er tp [s. 86] ou

112. The withholdee of a payment that is not a final withholding ith Credit for non- w final withholding payment shall be treated as having paid any income tax- ed ut tax rib (a) withheld from the payment under Subdivision A of st di Division II of this Part; or or ed (b) paid with respect to the payment in accordance with uc od section 109(3) or (4); re pr and the withholdee is entitled to a tax credit in an amount be equal to the tax treated as paid for the year of income in which ay m the payment is derived. ok bo [s. 87] is th of rt Division III: Income Tax Payable by Instalment pa o .N

113.–(1) A person an “instalment payer” who derives or expects d Payment of ve income tax r to derive any chargeable income during a year of income- se by quarterly re (a) from a business or investment; or s instalment ht rig Act No. (b) from an employment where the employer is not ll 4 of 2017 s. 24 .A required to withhold tax under section 104 from a ni za payments received by the person that are included in an fT calculating the person’s income from the employment, to shall pay income tax for the year of income by quarterly en n m instalments as provided for by this section. er ov (2) An instalment payer shall pay instalments of income G 25 tax- 20 © (a) in the case of a person whose year of income is a twelve month period beginning at the start of a calendar month, on or before the last day of the third, sixth, ninth and twelfth months of the year of income; or 659 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) in any other case, at the end of each three month period commencing at the beginning of the year of income and a final instalment on the last day of the year of income unless it coincides with the end of one of the three month periods. . AG O (3) Subject to subsection (4), the amount of each instalment of n of income tax payable by an instalment payer for a year of io s is income is calculated according to the following formula: m er tp ou ith [A – C] w ed -------------------- ut rib B st di Where- or ed A is the estimated tax payable by the instalment payer for uc od the year of income at the time of the instalment under pr re section 114; be ay B is the number of instalments remaining for the year of m ok income including the current instalment; and bo C is the sum of any- is th of (a) income tax paid during the year of income, but rt pa prior to the due date for payment of the instalment, o .N by the person by previous instalment under this d ve section or section 115; r se re (b) income tax withheld under Subdivision A of s ht rig Division II during the year of income, but prior to ll .A the due date for payment of the instalment, from a ni payments received by the person that are included za an in calculating the person’s income for the year of fT to income; and en m (c) income tax paid in accordance with section n er ov 106(3) or (4) with respect to a payment of the kind G 25 referred to in paragraph (b) that shall be paid to 20 © the Commissioner by the withholding agent or the withholdee during the year of income but prior to the due date for payment of the instalment. 660 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (4) Where an instalment shall be payable at a time when an instalment payer’s estimated tax payable for a year of income is fifty thousand shillings or less or the amount of an instalment calculated under subsection (3) is twelve thousand five hundred shillings or less, the amount of the instalment shall be nil. . AG O (5) Where an instalment payer is a resident person who of n conducts agricultural business involving seasonal crops in io s is the United Republic during a year of income and conducts no m er tp other business instalments for the year of income shall be nil. ou (6) An instalment payer shall be entitled to a tax credit for ith w a year of income in an amount equal to the income tax paid by ed ut rib way of instalment for the year of income under this section. st di [s. 88] or ed uc

114.–(1) Subject to the provisions of subsection (7) and od Statement of estimated tax pr section 48 of the Tax Administration Act, every person who re payable be Act No. is an instalment payer for a year of income under section 113 ay m 10 of 2015 s. 121 shall file with the Commissioner- ok Cap.438 bo (a) in the case of a resident person to whom section is th 113(5) applies, by the end of September, of the year of of rt income; and pa o (b) in any other case, by the date for payment of the first d .N tax instalment an estimate of tax payable for the year of ver se income. re s ht (2) An estimate of tax payable of a person for a year of rig income shall, subject to any instructions by the Commissioner ll a.A to the contrary- ni za an (a) be in the manner and form prescribed estimating- fT (i) the person’s chargeable income for the year of to en income from each employment, business and n m er investment and the source of that income; ov G (ii) the person’s total income for the year of income 25 20 and the income tax to become payable with © respect to that income under section 4(1)(a); (iii) in the case of a domestic permanent establishment of a non-resident person, the permanent establishment’s repatriated income for the year 661 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] of income and the income tax to become payable with respect to that income under section 4(1)(b); and (iv) any other information that the Commissioner may prescribe. . AG O (b) be signed by the person and includes a declaration that, of n to the best of that person’s knowledge and belief, the io s is estimate is full and true; and m er tp (c) have attached to it any other information that the ou Commissioner may prescribe. ith w (3) Subject to the provisions of subsections (6) and (9), the ed ut rib sum of the income tax referred to in subsection (2)(a)(ii) and st di (iii) shall be the person’s estimated tax payable for the year of or ed income. uc od (4) In estimating income tax payable for a year of income re pr under subsection (2)(a)(ii) and, in particular, calculating any be foreign tax relief to be claimed under section 98, a person may ay m take account of foreign income tax only if the person has paid ok bo such tax or the person reasonably estimates that such tax shall is th be paid during the year of income. of rt (5) An instalment payer’s estimate under subsections (1) pa o .N and (2) shall remain in force for the whole of the year of income d ve unless the person files with the Commissioner a revised r se re estimate, in the form and specifying the information referred s ht to in subsection (2), together with a statement of reasons for rig ll the revision. .A a ni (6) Subject to subsection (8), a revised estimate filed by za an a person under subsection (5) is the person’s estimated tax fT to payable for the year of income, but only for the purposes of en m calculating instalments payable under section 88 for the year n er of income after the date the revised estimate is filed with the ov G Commissioner. 25 20 (7) The Commissioner may- © (a) specify by notice in writing that an instalment payer or class of instalment payers are not required to submit an estimate under subsection (1); or 662 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) extend the time for filing such an estimate in accordance Cap. 438 with section 48 of the Tax Administration Act. (8) Where an instalment payer fails to file an estimate for a year of income as required by subsection (1), or an instalment payer shall not be required to submit an estimate by reason of . AG O subsection (7), the Commissioner shall- of n (a) make an estimate of the person’s estimated tax payable io s is for the year of income, which may take into account the m er tp income tax payable under section 4(1)(a) and (b) for ou the previous year of income; and ith w (b) serve on the instalment payer a written notice stating ed ut rib the Commissioner’s estimate, and the manner in which st di it is calculated. or ed (9) Where the Commissioner serves an instalment payer uc od with a notice under subsection (8), then for the purposes of re pr section 113 the estimated tax payable by the person for the year be of income shall be the amount estimated by the Commissioner. ay m [s. 89] ok bo is th Single instalment 115.–(1) Where a person an “instalment payer” derives a gain of at time of rt in conducting an investment from the realisation of an interest pa realisation or o in land, petroleum or mineral rights or buildings situated in .N receipt d Acts Nos. the United Republic licence or concessional right on reserved ver 5 of 2011 s. 16 se land shares or securities held in resident entity that the person re 8 of 2012 s. 29 s 2 of 2016 s. 29 ht shall pay income tax by way of single instalment equal to- rig 4 of 2017 s. 25 (a) in the case of a resident person, ten percent of the gain; ll 8 of 2020 s. 36 a .A 7 of 2023 s. 29 (b) in the case of a resident person who realises an interest ni za an in land or building and does not have records of costs fT of assets, three percent of the incomings or approved to en value of the asset, whichever is greater; n m er (c) in the case of realisation of mineral rights under section ov G 73, thirty percent and petroleum right under section 25 20 82, thirty percent; or © (d) in the case of a non-resident person, twenty percent of the gain. 663 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) A person referred to under subsection (1) shall, within fourteen days from the date of realisation of the interest, report to the Commissioner. (3) The instalment referred to in subsection (1) shall be paid within thirty days or such other period determined by . AG O the Commissioner from the date of realisation of an interest. of n (4) The appropriate authorities for registration, transfer io s is or approval shall not register transfer of the interest or m er tp change of name without the production of a certificate by the ou Commissioner certifying that the instalment has been paid or ith w that no instalment is payable. ed ut rib (5) This subsection applies where - st di (a) a non-resident person, an “instalment payer”, receives or ed a payment in conducting a business of land, sea or air uc od transport operator or charterer;re pr (b) no part of that business is conducted through a be permanent establishment of the person situated in the ay m United Republic; and ok bo (c) the payment is received in respect of- is th (i) the carriage of passengers who embark or cargo, of rt mail or other moveable tangible assets that are pa o .N embarked in the United Republic, other than as a d ve result of transhipment; or r se re (ii) rental of containers and related equipment which s ht are supplementary or incidental to carriage rig ll referred to in paragraph (a). .A a ni (6) Subsection (5) shall not apply to payment received in za an respect of carriage of fish or horticulture products by a foreign fT to aircraft. en m (7) Where subsection (5) applies the person shall pay n er income tax by way of single instalment equal to five percent of ov G the gross payment. 25 20 (8) A tax certificate issued by the Commissioner showing © that the instalment referred to in subsection (6) has been paid is necessary before the vehicle, ship or aircraft in respect of which the payment shall be received shall be permitted to clear 664 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] customs and leave the United Republic and the proper officer of Customs by whom customs clearance may be granted shall refuse clearance until such a certificate is produced. (9) Civil or criminal proceedings shall not be instituted or maintained against the proper officer of Customs or any other . AG O authority in respect of a refusal of clearance under this section, of n nor shall the fact that a vehicle, ship or aircraft is detained io s is under this section affect the liability of the owner, charterer or m er tp agent to pay border, harbour or airport dues and charges for ou the period of detention. ith w (10) An instalment payer shall be entitled to a tax credit for ed ut rib a year of income in an amount equal to the income tax paid st di by way of single instalment for the year of income under this or ed section. uc od (11) For purposes of this section, “date of realisation of an re pr interest” means- be (a) the date of execution of contract for sale; ay m (b) the date of parting with possession, use or control of a ok bo realised asset; or is th (c) the date of payment of part or whole of the consideration of rt for the realised asset, pa o .N whichever comes earlier. d ve [s. 90] r se re s

116.–(1) Where a non-resident person receives a payment that ht Tax payment on rig income realised has a source in the United Republic from an individual, other ll .A through digital a than a payment made in the course of conducting business, in ni market place za Acts Nos. an respect of an electronic service, such person shall pay income fT 5 of 2022 s. 70 tax for payments received in a calendar month by way of single to 7 of 2023 s. 30 en instalment equal to two percent of the gross payment. n m er (2) A person referred to under subsection (1) shall be liable ov G to pay income tax by filing a return to the Commissioner on or 25 20 before the twentieth day of the month following the month to © which the payment relates. (3) The Minister may, by regulations, prescribe procedures for assessing and collecting income tax or giving effect to the provisions of this section. 665 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (4) For purposes of this section, “gross payment” means a total amount of payment, excluding value added tax, derived by a non-resident person from an individual, other than a payment made in the course of conducting a business, in respect of electronic services. . AG O [s. 90A] of n io s is Division IV: Income Tax Payable on Assessment m er tp Subdivision A: Returns ou ith w Returns of 117.–(1) Subject to sections 118 and 120 of this Act and 48 and ed ut income 59 of the Tax Administration Act, every person shall file with rib Acts Nos. st the Commissioner not later than six months after the end of di 10 of 2015 s. 122 or 2 of 2016 s. 30 each year of income a return of income for the year of income. ed 4 of 2017 s. 26 uc Cap. 438 (2) A return of income of a person for a year of income od pr shall, subject to any instructions by the Commissioner to the re be contrary- ay m (a) be in the manner and form prescribed specifying- ok bo (i) the person’s chargeable income for the year of is th income from each employment, business and of rt investment and the source of that income; pa o (ii) the person’s total income for the year of income d .N and the income tax payable with respect to that ver se income under section 4(1)(a); re s (iii) in the case of a domestic permanent establishment ht rig of a non-resident person, the permanent ll a.A establishment’s repatriated income for the year of ni za income and the income tax payable with respect an fT to that income under section 4(1)(b); to en (iv) any income tax paid by the person for the year of n m er income by withholding, instalment or assessment for ov G which a tax credit is available under sections 87, 113, 25 20 Cap. 438 115 of this Act or 58 of the Tax Administration Act; © (v) the amount of income tax still to be paid for the year of income calculated as the sum of the tax referred to in subparagraphs (ii) and (iii) less the 666 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] tax already paid referred to in subparagraph (iv); and (vi) any other information that the Commissioner may prescribe; (b) in the case of a corporation, be prepared or certified by . AG O a certified public accountant in public practice; of n (c) include a declaration that the return is complete and io s is accurate; m er tp (d) be signed by - ou (i) the person; and ith w (ii) a person specified in section 45(2)(a) of the Tax ed ut rib Cap. 438 Administration Act; and st di (e) have attached to it- or ed (i) any withholding certificates supplied to the person uc od under section 110 with respect to payments re pr derived by the person during the year of income; be (ii) any statement provided to the person under ay m section 47(2) of the Tax Administration Act; ok Cap. 438 bo (iii) certified financial statements; and is th (iv) any other information that the Commissioner of rt may prescribe. pa o .N [s. 91] d ver se

118. Unless requested by the Commissioner by notice in re Return of income s not required ht writing served on the person and subject to a right of the rig Act. No. person to elect to file a return, no return of income for a year ll 5 of 2022 s. 71 a.A of income shall be required under section 117 from- ni za an (a) a resident individual- fT (i) who has no income tax payable for the year of to en income under section 4(1)(a); or n m er (ii) whose income for the year of income consists ov G exclusively of either or both of the following: 25 20 (aa) income from any employment where the © employer is required to withhold tax under section 104 from payments made to the 667 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] individual that are included in calculating the individual’s income from the employment; or (bb) gains of the type referred to in section 115(1); or (b) a non-resident person other than one with a domestic . AG permanent establishment who has no income tax O of payable for the year of income under section 4(1)(a) or n io s is whose income tax payable for the year of income under m er section 4(1)(a) consists exclusively of gains of the type tp ou referred to in section 115(i) or 116. ith w [s. 92] ed ut rib st 119. [Repealed by Act No.10 of 2015 s.124.] di Repealed or [s. 93] ed uc od pr Subdivision B: Assessments re be

120.–(1) Where an entity files a return of income for a year of ay Self-assessment m Acts Nos. income, an assessment shall be treated as made on the due date ok 6 of 2006 s. 16 bo 10 of 2015 s. 123 for filing the return of- is th (a) the income tax payable by the person for the year of of rt pa income under section 4(1)(a) and (b) in the amount o .N shown in the return; and d ve (b) the amount of that tax still to be paid for the year of r se re income in the amount shown in the return the “tax s ht payable on the assessment”. rig ll (2) Where an entity fails or is not required to file a return of a.A ni income for a year of income then, until such time as a return za an shall be filed, an assessment shall be treated as made on the fT to due date for filing the return that - en m (a) the income tax payable by the person for the year of n er ov income shall be equal to the sum of any income tax G 25 withheld from payments derived by the person during 20 the year of income under Division II and any income © tax paid by the person by instalment for the year of income under Division III of this Part; and (b) there is no tax payable on the assessment. 668 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (3) Where an individual files a return of income, the Commissioner shall assess the tax as expeditiously as possible after the expiry of the time allowed for the filing of a return of income. (4) Where an individual has filed a return of income, the . AG O Commissioner may- of n (a) accept such return and make assessment on the basis of io s is the return; or m er tp (b) where the Commissioner has reasonable cause to ou believe that such return is not true and correct, ith w determine, according to the best of his judgement, the ed ut rib amount of the income of that individual and assess the st di tax accordingly. or ed (5) Where an individual has not filed a return for any uc od year of income, whether or not he has been required by the re pr Commissioner so to do, and the Commissioner considers that, be that individual has income chargeable tax for such year, the ay m Commissioner may determine, according to the best of his ok bo judgement, the amount of the income of that individual and is th assess the tax accordingly. of rt (6) Subject to the provisions of subsections (1) and (2), the pa o .N Commissioner may make an assessment under subsections d ve (3), (4) or (5), at any time prior to the expiry of three years r se re following the year of income to which the assessment relates: s ht Provided that - rig ll (a) where any fraud or wilful neglect has been committed .A a ni by or on behalf of any person in connection with or in za an relation to any tax for any year of income, an assessment fT to in relation to such year of income may be made at any en m time; and n er (b) in the case of payment referred to in subsections (4) and ov G (5) of section 7, an assessment in relation thereto may 25 20 be made at any time prior to the expiry of three years © following the year of income in which the payment is received. 669 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (7) Subsection (5) shall not affect any liability otherwise incurred by that individual under this Act in consequence of the failure to file a return. [s. 94] . AG 121-153. [Repealed by Act No. 10 of 2015 s.124] O Repealed of [ss. 95-127] n io s is m er PART X tp ou ADMINISTRATION ith w ed Official Documentation and Registration ut rib st

154.–(1) To the extent that the terms of an international di International or agreements agreement to which the United Republic is a party are ed uc inconsistent with the provisions of this Act, apart from od pr subsection (5) and Subdivision B of Division II of Part III, the re be terms of the agreement prevail over the provisions of this Act. ay m (2) This subsection applies where the Commissioner ok bo receives a request pursuant to an international agreement from is th the competent authority of another country for the collection of rt in the United Republic of an amount payable by a person pa o otherwise referred to as the “tax debtor” under the tax laws of d .N ve the other country. r se (3) Where subsection (2) applies, the Commissioner may, re s ht by service of a notice in writing, require the tax debtor to pay rig the amount to the Commissioner by the date specified in the ll .A a notice and for transmission to the competent authority. ni za an (4) This subsection applies where an international agreement fT provides that the United Republic shall exempt income or a to en payment or subject income or a payment to reduced tax. n m er (5) Where subsection (4) applies, the exemption or ov G reduction shall not be available to any entity that meets the 25 20 following conditions: © (a) the entity is, for the purposes of the agreement, a resident of the other contracting State; and (b) fifty percent or more of the underlying ownership of the entity is held by persons, being individuals 670 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] or entities in which no individual holds part of the underlying ownership, that are not, for the purposes of the agreement, residents of the other contracting State or the United Republic. (6) For purposes of this section, “international agreement” . AG O means a treaty or other agreement with a foreign government of n that has entered into force in the United Republic providing io s is for - m er tp (a) relief of international double taxation and the ou prevention of fiscal evasion; or ith w (b) reciprocal administrative assistance in the enforcement ed ut rib of tax liabilities. st di [s. 128] or ed uc

155. The Minister may make regulations for the better carrying od Regulations Act No. pr into effect of the principles, purposes and provisions of this re 4 of 2018 s. 27 be Act. ay m [s. 129] ok bo is 156-166. [Repealed by Act No. 10 of 2019 s.124.] th Repealed of [ss. 130-140] rt pa o .N PART XI d ver se TRANSITIONAL PROVISIONS re s ht rig

167.–(1) [Repeals the Income Tax Act No. 33 of 1973.] ll Repeal .A a (2) The applicable regulations, rules, orders or notices ni za an made under the Repealed Income Tax Act, and in force shall fT continue to be in force, so far as may be, as if they have been to en made as regulations, rules, orders or notices under this Act n m er until such time as they are amended or revoked by regulations, ov G rules, orders or notices made under this Act. 25 20 [s. 141] © Transition 168.–(1) Subject to subsections (6) and (8), the repealed Act No. 15 of 2004 s. 33 legislation continues to apply for years of income commencing prior to the date on which this Act comes into effect. 671 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (2) All appointments made under the repealed legislation and subsisting at the date this Act comes into effect shall be deemed to be appointments made under this Act. (3) An international agreement made by the Government of the United Republic that is effective at the time this Act . AG O comes into effect shall continue to have effect under this Act. of n (4) All blank forms and other documents used in relation to io s is the repealed legislation may continue to be used under this Act m er tp and all references in those forms and documents to provisions of ou and expressions appropriate to the repealed legislation are taken to ith w refer to the corresponding provisions and expressions of this Act. ed ut rib (5) A reference in this Act to - st di (a) a previous year of income includes, where the context or ed requires, a reference to a year of income under the uc od repealed legislation; or re pr (b) this Act or to a provision of this Act includes, where the be context requires, a reference to the repealed legislation ay m or to a corresponding provision of the repealed ok bo legislation, respectively. is th (6) Subject to section 20(4), (6), (7) and (8), a person whose of rt year of income under the repealed legislation is, at the time pa o .N the repealed legislation ceases to have effect, a period of twelve d ve months other than the calendar year shall be treated as having r se re been granted approval by the Commissioner under section s ht 20(3) to use that year of income under this Act. rig ll (7) Interest derived by a person from long-term bonds of a.A ni not less than three years maturity period issued and listed on za an the Dar es Salaam Stock Exchange in the fiscal year 2002/2003 fT to shall be exempted under this Act. en m (8) The provisions of sections 7(2) and 9(2) and Division II n er of Part V shall apply for the year of income commencing on or ov G after 1st January, 2005. 25 20 [s. 142] © Agreements and 169.–(1) Subject to subsection (2), where the Government of certificates for fiscal stability the United Republic has concluded a binding agreement with a person whether before or after the commencement of this 672 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Act such that certain provisions of the repealed legislation or provisions of this Act that are later repealed will continue to apply or not be altered to the detriment of the person- (a) the provisions of the repealed legislation shall continue to apply- . AG O (i) to the extent provided for in the agreement, for of n the duration of the agreement; or io s is (ii) until such time as the person relinquishes the m er tp right to apply those provisions; and ou (b) in calculating the tax liability of the person during the ith w application period referred to in paragraph (a), the ed ut rib Commissioner may, in the Commissioner’s discretion- st di (i) continue to apply other provisions of the repealed or ed legislation that the Commissioner considers are uc od associated with or that have an application that re pr is consequential upon the provisions mentioned be in paragraph (a) instead of applying the ay m corresponding provisions under this Act; and ok bo (ii) disapply any provisions in this Act that have is th no corresponding provision in the repealed of rt legislation. pa o .N (2) An agreement referred to in subsection (1) has no d ve effect on the application of this Act until such time as it shall r se re be incorporated in a register to be kept by the Minister and s ht known as the Register of Tax Agreements. rig ll (3) A person seeking the benefit of an agreement referred to a .A ni in subsection (1) shall apply to the Minister for inclusion of the za an agreement in the Register of Tax Agreements. fT to (4) For purposes of this section, an agreement concluded by en m the Government of the United Republic includes a certificate n er issued by the Tanzanian Investment Centre under the Tanzania ov Cap. 38 G Investment Act. 25 20 [s. 143] © Assets and 170.–(1) Subject to the provisions of subsection (2), the liabilities following provisions shall apply in calculating the cost of assets owned and net incomings of liabilities owed- 673 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (a) the net cost of a depreciable asset or class of depreciable assets for which capital allowances were available under the repealed legislation is, at the commencement, the residue of expenditure or written down value for the asset or assets, as the case requires, under the repealed . AG O legislation at the time the repealed legislation ceased to of n have effect; io s is (b) the net cost of a depreciable asset for which capital m er tp allowances were not available under the repealed ou legislation is, at the commencement, the market value ith w of the asset at that time; ed ut rib Act No. (c) the net cost of a business asset or investment asset st di 33 of 1973 that is an interest in any premises or a financial asset or Act No. ed 33 of 1973 within the meaning of section 13 of the Income Tax uc od Act, is, at the commencement, the lower of the asset’s re pr cost determined under section 13 of the Income Tax be Act, and adjusted for inflation and devaluation to the ay m date of commencement of this Act only and the market ok bo value of the asset at that time of commencement; is th (d) the net cost of a business asset or investment asset, of rt other than an asset referred to in paragraph (c), is, at pa o .N the commencement, the market value of the asset at d ve that time of commencement; and r se re (e) the net incomings of a liability of a business is, at s ht the commencement, the market value of the liability rig ll expressed in a positive amount at that time. a .A ni (2) The net cost of an asset for which a deduction or za an immediate expensing was available under the repealed fT to legislation is, at the commencement, nil. en m [s. 144] n er ov G Repealed 171. [Repealed by Act No. 2 of 2016 s. 31.] 25 20 [s. 145][] © 674 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023]

FIRST SCHEDULE (Made under section 4(6)) TAX RATES Rates of income 1.–(1) Subject to subparagraphs (2), (3) and (4) of this paragraph and . AG tax for individuals paragraph 2, the total income of a resident individual for a year of O of Acts Nos. income shall be taxed at the following rates: n 15 of 2004 s. 34 io s is 13 of 2005 s. 10 m 6 of 2006 s. 19 TOTAL INCOME RATE PAYABLE er tp 16 of 2007 s. 16 1. Where the total income does not ou 13 of 2008 s. 18 NIL ith exceed 3,240,000 15 of 2010 s. 21 w ed 8 of 2012 s. 31 2. Where the total income exceeds 8% of the amount in excess of Tshs. ut 15 of 2015 s. 15 3,240,000/= but does not exceed rib 3,240,000/= Tshs.6,240,000/= st 2 of 2016 s. 32 di 4 of 2018 s. 28 or 3. Where the total income exceeds 8 of 2020 s. 37 Tshs.240,000/= plus 20% of the ed 6,240,000/= but does not exceed amount in excess of 6,240,000/= uc 3 of 2021 s. 25 9,120,000/= od 5 of 2022 s. 72 pr 7 of 2023 s. 31 4. Where the total income exceeds re Tshs. 816,000/= plus 25% of the 9,120,000/= but does not exceed be amount in excess of 9,120,000/= 12,000,000/= ay m 5. Where the total income exceeds Tshs.1,536,000/= plus 30% of the ok bo 12,000,000/= amount in excess of 12,000,000/= is th of (2) Subparagraph (3) shall apply where - rt pa (a) the total income of a resident individual for a year of income o exceeds Tshs. 3,240,000/=; and d .N (b) any of the following (the “gains”) are included in calculating ver the individual’s income- se re (i) net gains from the realisation of investment assets but s ht not exceeding the amount calculated as: rig ll .A a ni A–B za an Where- fT to A is any gain from the realisation of shares and securities in the en United Republic; and n m er B is losses on the realisation of assets referred to in A used in ov calculating the net gains; and G 25 (ii) a commuted pension from an approved retirement fund. 20 (3) Where this subparagraph applies- © (a) the greater of- (i) the individual’s total income less the gains; or (ii) Tshs. 3,240,000/=, shall be taxed at the rates specified in subparagraph (1) as though it were the only total income of the individual; and 675 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) the balance of the total income shall be taxed at the rate of ten percent. (4) The total income of a non-resident individual for a year of income shall be taxed at the rate of thirty percent. (5) The total income of a person from conducting mining operations shall be taxed at the rate of thirty percent. . AG (6) The total income of a person from conducting petroleum O of operations shall be taxed at the rate of thirty percent. n io (7) The Minister may, in consultation with the Minister responsible s is m for finance of the Revolutionary Government of Zanzibar, determine er tp the rate applicable in Tanzania Zanzibar. ou ith Presumptive 2.–(1) Where a resident individual meets the following requirements w income tax for ed for a year of income the individual’s income tax payable with respect to ut individuals section 4(1)(a) for the year of income shall be equal to the amount of rib Acts Nos. st presumptive income tax provided in subparagraph (3)- di 15 of 2004 s. 34 or 8 of 2012 s. 31 (a) the individual’s income for a year of income consists ed 2 of 2014 s. 40 exclusively of income from a business not including uc od 15 of 2015 s. 15 income independent professions and providers of technical, 8 of 2019 s. 9 pr management, construction and training services having a re 5 of 2022 s. 72 be source in the United Republic; ay (b) the turnover of the business does not exceed the threshold in m ok subparagraph (2); and bo (c) the individual does not elect to disapply this provision for is th the year of income. of (2) The threshold referred to in subparagraph (1)(b) is 100,000,000 rt pa shillings. o .N (3) The amount of presumptive income tax referred to in d ve subparagraph (1) is- r se re s ht rig ll TAX PAYABLE WHERE TAX PAYABLE WHERE .A SECTION 43 OF TAX SECTION 43 OF TAX a ni TURNOVER ADMINISTRATION ACT IS ADMINISTRATION ACT IS za an NOT COMPLIED WITH COMPLIED WITH fT to Where turnover does not NIL NIL en exceed Tshs. 4,000,000/= n m Where turnover exceeds Tshs. er 3% of turnover in excess of ov 4,000,000/= but does not Tshs. 100,000/= G Tshs. 4,000,000/= exceed Tshs. 7,000,000/= 25 20 Where turnover exceeds Tshs. Tshs. 90,000/= plus 3% of © 7,000,000/= but does not Tshs. 250,000/= turnover in excess of Tshs. exceed Tshs. 11,000,000/= 7,000,000/= Turnover of Tshs. 11,000,001/= but does not exceed Tshs. 3.5% of turnover 100,000,000/= 676 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (4) The Minister may, in consultation with the Minister responsible for finance of the Revolutionary Government of Zanzibar, determine the presumptive rate applicable in Tanzania Zanzibar. (5) The rates of income tax referred to in section 85 shall be as follows: . AG O Category of Vehicles Tax Payable of n Category A : Goods Vehicle io s is Load Vehicle between 0 - 1 Tonne 180,000 m er tp Load Vehicle between 1 - 5 Tonnes 450,000 ou Load Vehicle between 6 - 10 Tonnes 720,000 ith w Load Vehicle between 11 - 15 Tonnes 1,710,000 ed ut Load Vehicle between 16 - 20 Tonnes 2,430,000 rib st di Load Vehicle between 21 - 25 Tonnes 2,610,000 or Load Vehicle above 25 Tonnes 2,790,000 ed uc od pr re Category B : Passenger Vehicle be Bus and other similar vehicle with seating capacity below 10 180,000 ay m passengers ok bo Bus with seating capacity above 10 but below 16 passengers 450,000 is th Bus with seating capacity from 16 up to 30 passengers 720,000 of Bus with seating capacity up to 32 passengers 1,710,000 rt pa Ordinary bus 2,430,000 o d .N Semi-luxury bus 2,610,000 ve r se Luxury bus 2,790,000 re s ht rig ll Rates of income 3.–(1) The total income of a corporation, trust, unapproved retirement .A a tax for entities fund or domestic permanent establishment of a non-resident person ni za Acts Nos. for a year of income shall be taxed at the rate of thirty percent. an 6 of 2006 s. 19 (2) Notwithstanding subparagraph (1)- fT 13 of 2008 s. 18 to 4 of 2009 s. 14 (a) a newly listed company with the Dar es Salaam Stock en Exchange with at least thirty percent of its equity ownership m 8 of 2012 s. 31 n er 4of 2013 s. 27 issued to the public shall be taxed at a reduced corporate rate ov 4 of 2017 s. 27 of twenty five percent for three consecutive years from the G 4 of 2018 s. 28 25 date of listing; 20 8 of 2019 s. 9 (b) a corporation with a newly established plant for assembling © motor vehicles, tractors, fishing boats or out boats engine and having a performance agreement with the Government shall be taxed at a reduced corporate rate of ten percent for five consecutive years from the year of commencement of production; 677 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (c) a newly established entity dealing in manufacture of pharmaceuticals or leather products and having a performance agreement with the Government of the United Republic shall be taxed at a reduced corporate tare of twenty percent for five consecutive years from the year of commencement of production; and . AG (d) an entity dealing in manufacture of sanitary pads and having O of a performance agreement with the Government of the n io United Republic shall be taxed at a reduced corporate rate of s is m twenty five percent for two consecutive years from the 1st July er tp 2019 to 30th June 2021. ou (3) Income of a corporation with perpetual unrelieved loss for three ith w consecutive years shall be taxed at the rate of 0.5 percent of the turnover ed of the third year of perpetual unrelieved loss. ut rib (4) The repatriated income of a domestic permanent establishment st di of a non-resident person for a year of income shall be taxed at the rate or of ten percent. ed uc od Rates of 4. Income tax to be withheld from payments under Division II of Part pr withholding tax VII shall be withheld at the following rates: re be Acts Nos. (a) payments to which section 104 applies - ay 8 of 2012 s. 31 (i) in the case of a resident withholdee - at the rates m 4 of 2013 s. 27 ok 2 of 2014 s. 40 prescribed in regulations; bo 4 of 2017 s. 27 (ii) in the case of a non-resident withholdee - fifteen percent; is th 5 of 2022 s. 72 and of (iii) in the case of director’s fees referred to in section 7(2) rt pa (h) - fifteen percent; o .N (b) payments to which section 105 applies - d ve (i) in the case of dividends - r se (aa) of a corporation listed on the Dar es Salaam Stock re s Exchange or to which subsection (2) of section 54 ht rig applies– five percent; or ll .A (bb) of any other corporation – ten percent; a ni za (ii) in the case of interest, rent or a commuted pension paid an to a resident withholdee or interest or rent paid to a non- fT to resident withholdee – ten percent; en (iii) in the case of royalty referred to in paragraph (c) of the n m definition of the term “royalty” –ten percent; or er ov (iv) in the case of other payments - fifteen percent; and G 25 (c) payments to which section 106 applies - 20 (i) in the case of service fee referred to in section 106(1) © (a), - five percent for a resident and fifteen percent for a non-resident; 678 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (ii) in the case of insurance premium referred to in section 106(1)(b), - five percent; (iii) in the case of service fee referred to in section 106(1) (c), - five percent for a resident and fifteen percent for a non-resident; (iv) in the case of money transfer commission referred to in . AG section 106(1)(d),- ten percent; and O of (v) in the case of payment referred to under section 107, - n io two percent. s is m er Change of rate 5.–(1) Where an order relating to tax rates is in force under the tp Cap. 153 Provisional Collection of Taxes and Duties Act, with respect to any year ou ith of income, the rates of tax referred to in this Schedule shall, so long as w ed the order remains in force, be construed in accordance with the order. ut (2) Subject to subparagraph (1), where the rates of tax specified rib st under paragraph 1, 2, 3 or 4 are changed for a year of income without di or specifying the precise date from which the change takes effect then - ed (a) in the case of tax rates under paragraphs 1, 2 and 3, the uc od change shall be treated as having effect from the start of the pr calendar year specified or if no year is specified from the start re be of the calendar year after the Act changing the rate receives ay Presidential assent; and m ok (b) in the case of tax rates under paragraph 4, the change shall bo be treated as having effect from the start of the calendar is th year specified or if no year is specified from the date the Act of changing the rate receives Presidential assent. rt pa (3) Where a tax rate specified under paragraphs 1, 2 or 3 changes o .N and the change takes effect on a date other than the start of a person’s d ve year of income then for the year of income in which the change takes r se place - re s (a) the person’s total income shall be apportioned between the ht rig part of the year of income occurring before the change and ll .A the remaining part according the number of days in each a ni part; za an (b) the total income attributable to the part of the year of fT income occurring before the change shall be taxed at the to en rate applicable before the change and that attributable to the m remaining part shall be taxed at the rate applicable after the n er ov change; and G (c) in the case of a resident individual, the thresholds referred 25 20 to in paragraph 1(1), both before and after change, shall © be reduced in proportion to the part of the year of income occurring before the change and the remaining part. 679 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023]

SECOND SCHEDULE EXEMPT AMOUNTS (Made under section 10) 1.– (1) The following amounts are exempt from income tax: . Acts Nos. AG 6 of 2006 s. 20 (a) amounts derived by the President of the United Republic or O of 13 of 2008 s. 19 the President of the Revolutionary Government of Zanzibar n 5 of 2011 s. 17 io from salary, duty allowance and entertainment allowance s is 8 of 2012 s. 32 m 2 of 2014 s. 41 paid or payable to the President from public funds in respect er tp 16 of 2015 s. 16 of or by virtue of the office as President; ou 2 of 2016 s. 33 (b) amounts derived by the Government including Executive ith 4 of 2018 s. 29 w Agency established under the Executive Agencies Act or any ed 8 of 2019 s. 9 local authority of the United Republic or by the Revolutionary ut 8 of 2020 s. 38 rib Government of Zanzibar or any local authority of Zanzibar st 3 of 2021 s. 26 di 5 of 2022 s. 73 except amounts derived from business activities that are or Exempt amounts unrelated to the functions of Government; ed uc (c) amounts derived by any person entitled to privileges under od the Diplomatic and Consular Immunities and Privileges Act pr re to the extent provided in that Act or in regulations made be under that Act; ay m (d) amounts derived by an individual from employment in ok the public service of the Government of a foreign country bo is provided - th of (i) the individual is a resident person solely by reason of rt pa performing the employment or is a non-resident person; o and d .N (ii) the amounts are payable from the public funds of the ver country; se Cap. 245 re (e) foreign source amounts delivered by - s ht (i) an individual who is not a citizen of the United Republic rig Cap. 356 and who is referred to in paragraph (d); or ll .A (ii) a spouse or child of an individual referred to in a ni za subparagraph (i) where the spouse is resident in the an United Republic solely by reason of accompanying the fT to individual on the employment; en (f) amounts derived by - n m er (i) the East African Development Bank; ov (ii) the Price Stabilisation and Agricultural Inputs Trust; G 25 (iii) the Investor Compensation Fund under the Capital 20 Markets Regulatory Authority; © (iv) the Bank of Tanzania; (v) Dar es Salaam Stock Exchange; and (vi) African Development Bank from the sale of bonds and securities in the capital market; 680 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (g) amounts derived during a year of income by a primary co- operative society - Cap. 211 (i) registered under the Co-operative Societies Act; (ii) solely engaged in activities as a primary co-operative in one of the following fields: . (aa) agricultural activities, including activities related to AG O marketing and distribution; of (bb) construction of houses for members of the n io s cooperative; is m (cc) distribution trade for the benefit of the members of er tp the cooperative; and ou ith (dd) savings and credit society; and w (iii) whose turnover for the year of income does not exceed ed ut one hundred million shillings; rib st (h) pensions or gratuities granted in respect of wounds or di disabilities caused in war and suffered by the recipients of or ed such pensions or gratuities; uc (i) a scholarship or education grant payable in respect of tuition od pr or fees for full-time instruction at an educational institution; re be (j) amounts derived by way of alimony, maintenance or child ay support under a judicial order or written agreement; m (k) amounts derived by way of gift, bequest or inheritance, ok bo except as required to be included in calculating income is th under sections 7(2), 8(2) or 9(2); of (l) [deleted] rt pa (m) amounts derived by way of foreign living allowance by any o .N officer of the Government that are paid from public funds d ve and in respect of performance of the office overseas; r se (n) income derived from gaming by a gaming licensee who has re paid gaming tax under Gaming Act; s Cap.41 ht rig (o) income derived from investment or business conducted ll .A within the Export Processing Zone, and Special Economic a ni Zone during initial period of ten years: za Provided that, this paragraph shall not apply to category B investor an fT in the Special Economic Zone as provided in the Special Economic to Zones Act; en Cap. 420 m (p) income derived from investments exempted under any n er written laws for the time being in force in Tanzania Zanzibar; ov G (q) amounts derived by a crop fund established by farmers under 25 a registered farmers cooperative society, union or association 20 © for financing crop procurement from its members; (r) [deleted] (s) the fidelity fund established under the Capital Markets and Cap. 79 Securities Act; 681 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (t) interest on bonds issued by the East African Development Bank which are listed in the Dar es Salaam Stock Exchange; (u) amounts derived from gains on realisation of asset by a unit holder on redemption of a unit by a unit trust; (v) interest, fees or other financing charges paid by the Government to a non-resident bank, financial institution, . AG other government or representative of other government O of arising from a loan agreement that entitles such non- n io resident entity to a tax exemption for purposes of financing s is m Government projects; er tp (w) amounts paid to persons entitled to benefits granted pursuant ou Cap. 225 to the provisions of Part V of the Political Service Retirement ith w Benefits Act ed (x) interest derived by a person from government bonds of not ut rib less than three years issued and listed on the Dar es Salaam st di Stock Exchange from 1st July, 2021. or (y) amount derived from gain on realisation or transfer of ed uc mineral rights and mineral information to a partnership od entity formed between the Government and an investor; pr re (z) amount derived from gain on realisation or transfer of be free carried interest shares from a partnership entity to the ay m Government; ok bo (aa) amount derived from gain on realisation or transfer is of shares to the Government through the Treasury th of Registrar. rt pa (2) The provisions of item (v) of subparagraph (1) shall be deemed o .N to have come into operation on the 1st June, 2017. d (3) The provisions of item (w) shall be deemed to have come into ver se operation on the 1st day of July, 2016. re s ht rig ll

THIRD SCHEDULE .A a ni za DEPRECIABLE ASSETS, ALLOWANCES AND INCLUSIONS an fT (Made under section 17) to en m Acts Nos. 1.–(1) Depreciable assets are classified as follows: n er 15 of 2004 s. 35 ov 8 of 2012 s. 33 G CLASS DEPRECIABLE ASSETS 25 4 of 2013 s. 28 20 2 of 2016 s. 34 Computers and data handling equipment together with © 4 of 2017 s. 28 peripheral devices; automobiles, buses and minibuses with a Classification 1. seating capacity of less than thirty passengers, goods vehicles and pooling of with a load capacity of less than seven tonnes; construction depreciable assets and earth-moving equipment. 682 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] CLASS DEPRECIABLE ASSETS Buses with a seating capacity of thirty or more passengers, heavy general purpose or specialised trucks, trailers and trailer-mounted containers; railroad cars, locomotives, and equipment; vessels, barges, tugs, and similar water 2. transportation equipment; aircraft; other self-propelling . AG vehicles; plant and machinery used in agriculture or O manufacturing; specialised public utility plant, equipment, and of n machinery irrigation installations and equipment. io s is Office furniture, fixtures and equipment; any asset not m 3. er included in another Class. tp ou 4. [Deleted.] ith w Buildings, structures and similar works of a permanent nature 5. ed used in agriculture, livestock farming or fishing farming. ut rib Buildings, structures and similar works of permanent nature st 6. di other than those mentioned in Class 5. or 7. Intangible assets. ed uc Plant and machinery including windmills, electric generators od and distribution equipment used in agriculture and electronic pr re 8. fiscal device purchased by a non value added tax registered be trader, equipment used for prospecting and exploration of ay minerals or petroleum. m ok bo (2) Each depreciable asset owned and employed by a person during a is th year of income wholly and exclusively in the production of the person’s of income from a particular business shall be, at the time the asset is first rt pa owned and so employed, placed in a pool - o .N (a) in the case of a Class 1, 2, 3, 5 or 8 depreciable asset other d ve than one referred to in paragraph (c), with all other assets of r se the same Class so owned and employed by the person in that re s business; ht rig (b) in the case of a Class 7 depreciable asset, of its own separately ll .A from other assets of that Class or any other Class; and a ni (c) in the case of a moveable tangible asset used by a person who za conducts a business of land, sea or air transport operator an fT or charterer to carry passengers, mail, livestock or other to moveable tangible assets between different countries, of its en m own separately from other assets of any Class, n er and those pools are referred to as the person’s pools of depreciable ov G assets for the year of income. 25 20 (3) To the extent not otherwise provided, expenditure incurred by a © person wholly and exclusively in the production of the person’s income from a business in respect of natural resource prospecting, exploration and development shall be treated as if it were incurred in securing the acquisition of an asset that is used by the person in that production. 683 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Initial allowance 2.–(1) Subject to this paragraph, an allowance is granted to a person for each item of plant or machinery - (a) that is used - (i) in manufacturing processes and fixed in a factory; (ii) in fish farming; or . (iii) for providing services to tourists and fixed in a hotel; AG and O of (b) that is added to the person’s Class 2 or 3 pools of depreciable n io assets for a business of the person in accordance with s is m paragraph 1(2). er tp (2) The amount of the allowance granted for each asset under ou subparagraph (1) is calculated as fifty percent of the net cost of the asset ith w at the time it is added to the pool. ed (3) The allowance granted to a person under subparagraph (1) shall ut rib be available in two portions as follows- st di (a) the first portion shall be available in the year of income in or which the asset is added to the person’s pool of depreciable ed uc assets; and od pr (b) the remaining portion shall be available during the year of re income following that in which the first portion is added, but be not if the pool has been dissolved under paragraph 4 in the ay m meantime. ok bo Depreciation 3.–(1) Subject to this paragraph, an allowance shall be granted to a is th allowance person for a year of income for each of the person’s pools of depreciable of assets equal to the depreciation for the year of income of each pool rt pa calculated in accordance with subparagraphs (2), (7) or (8). o .N (2) Depreciation for a year of income for each of a person’s pools of d ve depreciable assets shall be calculated: r se (a) in the case of Class 1, 2 and 3 pools, according to the re s diminishing value method; and ht rig (b) in the case of Class 5, 6 and 7 pools, according to the straight ll .A line method, a ni using the following formula: za an fT to A x B x C/365 en m Where - n er ov A is the depreciation basis of the pool at the end of the year of G income; 25 20 B is the depreciation rate applicable to the pool; and © C is the number of days in the person’s year of income. (3) The depreciation basis of a Class 1, 2, 3 or 8 pool of depreciable assets of a person at the end of a year of income is the total of- (a) the depreciation basis of the pool at the end of the previous year of income, if any, after deducting depreciation for that 684 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] pool calculated under subparagraphs (2), (7) or (8) for that year of income; and (b) amounts added to the depreciation basis of the pool during the year of income under subparagraph (5) in respect of additions to the cost of assets in or added to the pool, reduced, but not below zero, by incomings for the assets in the pool or . AG that have been in the pool derived during the year of income. O of (4) The depreciation basis of a Class 5, 6 or 7 pool of depreciable n io assets of a person at the end of a year of income shall be the total of - s is m (a) the depreciation basis of the pool at the end of the previous er tp year of income; and ou (b) amounts added to the depreciation basis of the pool during ith w the year of income under subparagraph (5) in respect of ed additions to the cost of assets in or added to the pool, ut rib reduced, but not below zero, by incomings for the assets in the pool st di derived during the year of income. or (5) Additions to the cost of a depreciable asset included in a person’s ed uc pools of depreciable assets are added to the depreciation basis of the person’s relevant pool as follows: od pr re (a) subject to item (b) of this paragraph at the time the asset is be added to the pool in accordance with subparagraph (2) of ay m paragraph 1 or the expenditure is incurred, whichever is ok later; or bo is (b) in the case of an asset for which an initial allowance is granted th of under paragraph 2, twelve months after the time referred to rt pa in subparagraph (a). o (6) The depreciation rates applicable to each pool referred to in d .N subparagraph (2) are- ver se re CLASS RATE s ht rig 1. 37.5% ll .A 2. 25% a ni za 3. 12.5% an fT 4. [Deleted] to 5. 20% en n m 6. 5% er ov 7. 1 divided by the useful life of the asset in the pool and rounded G down to the nearest half year 25 20 8. 100% © (7) Where the depreciation basis of a pool of depreciable assets at the end of a year of income reduced by depreciation calculated under subparagraph (2) produces an amount that is less than one million 685 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] shillings, additional depreciation of the pool shall be calculated as equal to that amount. (8) The allowance granted to a person under subparagraph (1) for a year of income with respect to a Class 5, 6 or 7 pool of depreciable assets shall not exceed the depreciation basis of the pool at the end of the year of income reduced by all other such allowances granted to the person in . AG any previous year of income in respect of the pool. O of (9) For the purposes of calculating the depreciation basis of a pool n io of depreciable assets - s is m (a) amounts to be added under subparagraph (5) in respect of er tp an asset when it is added to the pool shall be reduced by any ou initial allowance available under paragraph 2 in respect of ith w the asset, irrespective of the year of income for which the ed initial allowance is available; and ut rib (b) expenditure incurred in acquiring a road vehicle, other than st di a commercial vehicle, to the extent that the expenditure or exceeds thirty million shillings the excess shall not be ed uc recognised. od (10) For the purposes of this paragraph, “commercial vehicle” pr re means- be (a) a road vehicle designed to carry loads of more than half a ay m tonne or more than thirteen passengers; or ok (b) a vehicle used in a transportation or vehicle rental business. bo is th Realisation of 4.–(1) The excess of- of depreciable assets (a) incomings derived by a person during a year of income for rt pa any assets that are or have been in a Class 1, 2, 3, 5, 6 or 8 pool o .N of depreciable assets of the person during the year of income; d ve over; r se (b) (i) or (ii), as appropriate - re s (i) in the case of a Class 1, 2, 3 or 8 pool, the depreciation ht rig basis of the pool at the end of the year of income ll .A calculated under paragraph 3(3) but disregarding those a ni incomings; or za an (ii) in the case of a Class 5 or 6 pool, the written down value fT of the pool at the end of the year of income calculated to en under subparagraph (4) but disregarding those m incomings, n er ov shall be included in calculating the person’s income for that year of G income from the business in which the assets are or were employed. 25 20 (2) Where the assets in a pool of depreciable assets of a person are © all realised by the person before the end of a year of income, the pool shall be dissolved and - (a) an amount is included in calculating the person’s income for the year of income calculated in accordance with the following formula: 686 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] A–B or (b) an allowance shall be granted to the person for the year of income calculated in accordance with the following formula: . AG B–A O of n Where - io s is A is the person’s incomings derived during the year of income, m er or to be derived, for the assets; and tp B is the sum of- ou ith (i) the written down value of the pool at the end of the w ed previous year of income; ut (ii) any initial allowance otherwise available in respect of the rib st pool for the following year of income under paragraph 2; di or and ed (iii) expenditure added to the depreciation basis of the pool uc od during the year of income or to be added during the pr following year of income under paragraph 3(5). re be (3) [Deleted]. ay (4) For the purposes of this section, “written down value” of a pool m ok of depreciable assets at the end of a year of income means - bo (a) in the case of a Class 1, 2, 3 or 8 pool, the depreciation is th basis of the pool at the end of the year of income, if any, of after deducting depreciation for that pool calculated under rt pa paragraph 3(2) and (7) for that year of income; or o .N (b) in the case of a Class 5, 6 or 7 pool, the depreciation basis d ve of the pool at the end of the year of income reduced by all r se allowances granted to the person under paragraph 3(1) for re s that year of income and any previous year of income in ht rig respect of the pool. ll .A 5.–(1) The whole of depreciation allowance expenditure incurred in a Depreciation ni za allowances respect of mineral or petroleum operations during a year of income an for mineral shall be placed in a separate pool. fT or petroleum to (2) Subject to subparagraph (1), the depreciation allowances en operations shall be granted with respect to each pool at the rates provided for in m Act No. n er 2 of 2016 s. 34 subparagraph (3). ov (3) Depreciation allowance shall be granted for expenditure pooled G 25 under subparagraph (1) for a year of income at the following rates: 20 © Year of Income Depreciation Allowance First Year 20% of expenditure Second Year 20% of expenditure Third Year 20% of expenditure 687 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] Year of Income Depreciation Allowance Fourth Year 20% of expenditure Fifth Year 20% of expenditure . (4) The depreciation allowance granted with respect to a particular AG O year of income shall be taken in that year and shall not be deferred to a of later year(s) of income. n io s (5) Where an asset for which depreciation allowance have been or is m may be granted under this paragraph realised during a year of income er tp where- ou ith (a) the incomings derived from the realisation of an asset(s), w exceed the written down value of the pool of depreciable ed ut assets, the excess shall be included in calculating income rib from the mineral or petroleum operations for the year; and st di (b) the written down value of the pool of depreciable assets or ed exceed the incomings derived from realisation of all assets uc in the pool, the excess of written down value in the pool of od pr assets may be granted for that year of income and the pool re be shall be dissolved. ay (6) Where incomings are derived by a person during a year of m income with respect to a depreciable asset employed by the person in ok bo mineral or petroleum operations but the asset is not realised at that is time in whole or in part, the incomings shall be included in calculating th of income from the mineral or petroleum operations for the year. rt pa (7) In this paragraph- o .N “depreciation allowance expenditure” means- d ve (a) additions to the cost of depreciable assets owned and r se employed by a person wholly and exclusively in mineral or re petroleum operations; and s ht rig (b) expenditure other than financial costs incurred in ll respect of mineral operations wholly and exclusively on .A a reconnaissance, appraisal and prospecting or exploration ni za operations or in developing mineral or petroleum operations an fT and infrastructure, including as may be prescribed by to regulations, where- en m (i) the expenditure is not directly deductible in calculating n er income from the operations; and ov G (ii) does not otherwise fall to be included in the cost of an 25 asset; 20 © “written down value of a pool of depreciable assets at a particular time during a year of income” means- (a) the written down value of the pool at the end of the previous year of income; plus 688 <!-- page break --> THE INCOME TAX ACT [CAP. 332 R.E. 2023] (b) expenditure incurred prior to the time, which is added to the depreciation basis of the pool during the year of income or to be added during the following year of income; less (c) incomings derived during the year of income or to be derived with respect to a realisation occurring prior to the time in respect of assets that are or have been in the pool; and . AG “written down value of an asset” means the cost of the asset less all O of depreciation allowances granted with respect to expenditure included n io in that cost. s is m er tp ou

FOURTH SCHEDULE ith w ed (Made under section 133(5)) ut rib st [Revoked by Act No.10 of 2015s.125.] di or ed uc od

FIFTH SCHEDULE pr re be (Made under section 27(1)(a)) ay m ok QUANTIFICATION OF MOTOR VEHICLE BENEFITS bo is th ENGINE SIZE OF QUANTITY OF PAYMENT of VEHICLE rt pa Vehicle less than Vehicle more than o .N 5 years old 5 years old d ve Not exceeding 1000cc Tshs. 250,000 Tshs. 125,000 r se re Above 1000cc but not Tshs. 500,000 Tshs. 250,000 s exceeding 2000cc ht rig Above 2000cc but not ll .A Tshs. 1,000,000 Tshs. 500,000 exceeding 3000cc a ni za Above 3000cc Tshs. 1,500,000 Tshs. 750,000 an fT to en n m er ov G 25 20 © 689 <!-- page break --> © 20 25 G ov er nm en to fT an za ni a.A ll rig ht s re se rve d.N o pa rt of th is bo ok m ay be re pr od uc ed or di st rib ut ed w ith ou tp er m is s io n of O AG . <!-- page break -->