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9.1. Unilateral and Treaty Based Methods Available for the Elimination or Mitigation of Double Taxation

Resident taxpayers are allowed to credit foreign taxes paid on income earned outside Tanzania against the Tanzanian tax liability, which is limited to the amount of Tanzanian tax applicable on such foreign income. However, the unabsorbed tax credit may be carried forward to subsequent years.

Tax credits may be forfeited and are no longer available for carry-forward in case of a change in underlying ownership or control of a company by more than 50% any time during a period of 3 previous years, unless the company continues to conduct the same business and does not engage in new business or investment for a period of 2 years after the change.

Below is a summary of the available methods for various income tax streams based on domestic law.

Royalty Copyright OC
Capital Gains OC
Dividends OC
Interest OC
Royalty Patent OC
Sales OC
Service Management OC
Service Technical OC
Royalty Trademark OC

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment.  Four abbreviations are used for the type of foreign tax credit available:

  • NC means no credit but foreign withholding taxes can be deducted.
  • OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
  • IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
  • ND means no credit and no deduction for any foreign withholding taxes incurred.