Disclosure Requirements
There are no specific disclosure requirements in Tanzania.
Standard Documentation
The TP regulations require the taxpayers to prepare and maintain the TP documentation to reflect the arm’s length principle. The TP documentation is required to be prepared and submitted by taxpayers having annual related party transactions exceeding TZS 10 billion along with the tax return. Taxpayers having transactions less than the threshold are required to maintain the TP documentation which may be required to be submitted to the tax authorities within 30 days on a request made by them.
The TP documentation should provide the following information:
- Worldwide organizational structure covering persons involved in controlled transactions;
- Nature of the business/industry and market conditions;
- Details of controlled transactions;
- Strategies and assumptions related to the pricing policy;
- Comparability, functional and risk analysis;
- Selection and application of TP method;
- Documents explaining the transfer pricing analysis;
- Any other information, data or document considered relevant by the tax authorities.
Country-by-Country (CbC) Reporting
Tanzania has till date not introduced a Country-by-Country reporting requirement and has not joined the OECD’s Inclusive Framework, membership of which presupposes a commitment to implement the BEPS minimum standards, including Country-by-Country reporting.
Language of Documentation
The TP documentation is required to be maintained in the official language of Tanzania i.e. English or Swahili.
Penalties
Failure to comply with TP regulations attracts a penalty of TZS 50 million or imprisonment for a maximum period of 6 months or both. Penalty for any TP adjustment made as part of a tax audit is 100% of the unpaid tax and a penalty up to 3,500 currency points for failing to prepare or submit the TP documentation.
Abolishment of the 100% penalty on transfer pricing adjustments is proposed in Finance Act 2021.