A non-resident entity having a branch or a permanent establishment in Tanzania is subject to tax on income earned by such branch or permanent establishment in Tanzania. The tax is levied at the same rate as for resident companies i.e., at 30%. A 10% withholding tax applies on the (deemed) remittance of the after-tax profits to the foreign head office.
Non-residents are also required to pay a tax of 5% of turnover for providing technical and management services to mining and petroleum companies.
Capital gains derived from the disposal of investment assets such as land, buildings, shares, and securities situated in Tanzania, by non-residents, are taxed at the rate of 30%, but the tax may be paid in installments. Effective 1 July 2020, a capital gains tax at the rate of 20% applies to non-residents from the realization of licenses or concessional rights on reserved land.
Tanzania sourced income earned by non-residents not having a permanent establishment in Tanzania is subject to withholding tax in the country (see Sec. 8.2.2.).
Effective 1 July 2022, Tanzania introduced a digital services tax at the rate of 2% on the gross income received by non-residents from an individual in Tanzania in respect of services rendered through a digital market place. The gross income means payment made excluding VAT. Non-resident suppliers providing electronic services to individuals in Tanzania are required to register with the Commissioner General within 6 months from 1 July 2022.
A digital market place is defined as a platform that enables direct interaction between buyers and sellers of goods and services through electronic means. The term “electronic services” has the meaning ascribed to it under section 51 of the Value Added Tax Act (see Sec. 12.2.), and it includes any of the following services provided or delivered through a telecommunications network:
- Websites, web-hosting, or remote maintenance of programmes and equipment;
- Software and the updating thereof;
- Images, text, and information;
- Access to databases;
- Self-education packages;
- Music, films, and games, including gaming activities; and
- Political, cultural, artistic, sporting, scientific, and other broadcasts and events including broadcast television.
A person to whom the digital services tax applies is required to pay monthly income tax in a single instalment and file the return within 7 days of the following month.
The supply of electronic services by a non-resident to an individual is considered as a supply delivered in Mainland Tanzania if the recipient of the services is in Tanzania. A recipient is deemed to be in Tanzania if:
- The payment proxy including credit or debit card information and bank account details of the recipient of the electronic services is in Tanzania; or
- The resident proxy including the billing or home address or the access proxy including the internet address or mobile country code of the SIM card of the recipient is in mainland Tanzania.