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Tanzania — Orbitax Country Chapters
5.5. Source Rules with Respect to Income Derived by Non-Residents

Income earned by non-residents from sources in Tanzania is subject to tax in the country. The following income is deemed to be derived or sourced from Tanzania:

a) A dividend paid by a resident company;

b) Interest paid by a resident company or a domestic permanent establishment;

c) A natural resource payment for a natural resource taken from Tanzania;

d) Rent paid for the use of or right to use an asset located in Tanzania;

e) Derived from premiums for general insurance paid to and proceeds from general insurance paid by a person in respect of the insurance of any risk in Tanzania;

f) Derived from activities including the rendering of services in Tanzania, regardless of the place of exercise, rendering, or forbearance, and regardless of the place of payment; or

g) Paid for services availed by the Government of Tanzania.

Taxes are collected through withholding tax, which includes dividends, interests, royalties, technical, and management service fees, etc.

Effective 1 July 2020, income derived directly or indirectly through any business connection, property, asset, source of income, or transfer of asset situated in Tanzania is considered as income sourced from Tanzania. Such income shall be subject to tax through a representative assessee of a non-resident person or beneficial person.

The term ‘business connection’ refers to a person undertaking any business activity or acting on behalf of a non-resident person or a beneficial owner:

  • Has and habitually exercises authority to conclude contracts or plays a principal role leading to the conclusion of contracts in Tanzania on behalf of the non-resident person or a beneficial owner;  
  • Has no authority but habitually maintains a stock of goods or merchandise in Tanzania from where regular delivery of goods or merchandise is made on behalf of the non-resident person or the beneficial owner;
  • Habitually secures orders in Tanzania, primarily or wholly for the non-resident person or for the same non-resident person and other non-residents who are controlling or controlled by, or subject to the same common control as that non-resident person, or for the beneficial owner; or
  • Carries out any business or investment in Tanzania directly or indirectly through an entity or an arrangement for the economic benefit of a non-resident person or beneficial owner.