Legislation, Tanzania

Tanzania Tax Year Changes 2021

Tanzania Tax Year Changes 2021

The Honourable Dr.Mwigulu Lameck Nchemba Madelu presented to the National Assembly on the 10th of June 2021 with the Budget Proposal. The Minister announced proposed Tanzania Tax Year Changes 2021 to the Income Tax Act, Vocational, Education, and Training Act, as well as changes to the Workmen’s Compensation Fund.

The effective date when the acts shall come into operation was announced in the Special Bill Supplement No.5 dated 12th June 2021, as 1 July 2021.

Click here for the Budget speech.

Click here for the Finance Bill.

Tanzania Tax Changes 2021 implemented during July

The tax tables have been updated effective 1 July 2021.

Lower Income Limit Upper Income Limit Income Threshold Marginal Rate Tax on Threshold
0.00 3 240 000.00 0.00 0% 0.00
3 240 000.00 6 240 000.00 3 240 000.00 8% 0.00
6 240 000.00 9 120 000.00 6 240 000.00 20% 240 000.00
9 120 000.00 9 999 999 999.99 9 120 000.00 25% 816 000.00

Vocational, Educational and Training Act (CAP 82)

The minister has increased the threshold for the exemption of ‘Skills Development Levy’ from four employees to ten.

Workers Compensation Fund

The Minister has proposed to make amendments to the Workers Compensation Fund Act, Cap 263 by reducing the rate of contribution to the fund applicable to private sector institutions from 1% to 0.6% of the total gross monthly salary of employees.

Impact of Tanzania Tax Year Changes 2021 on payroll:

  • These changes have been implemented on the system effective 01 July 2021.
  • Customer payrolls with ten employees can exempt employees by selecting the SDL Exemption Reason ‘Less than ten employees employed’ on the ‘Basic Company Information’ screen, under the ‘UIF, SDL, Other’ tab.
  • Customer payrolls can capture the rate to calculate the ‘Workmen’s Compensation Fund’ on company level. For private sectors, the 1% has been reduced to calculate at 0.6%.
  • Customer payrolls have been switched to the non-cumulative MTD tax method and the averaging YTD tax method has been removed, due to tax tables changing mid-tax year.
  • No other statutory changes have been announced for Mainland Tanzania.

Should you have any questions regarding this change, please feel free to visit our Support page for more ways to get in touch, or email us at [email protected].

The PaySpace Team