The Income Tax regulations require foreign companies who are not tax residents in Tanzania but provide electronic services, such as streaming platforms, online marketplaces, and cloud services, to register with the Tanzanian tax authorities. This ensures that these non-resident entities comply with Tanzanian income tax laws and pay taxes on the revenue they generate from Tanzanian customers. By doing so, Tanzania aims to level the playing field between local and foreign service providers and ensure that all entities benefiting from the Tanzanian market contribute to its tax base.
This is requirement was brought forth by the Tanzania Government through two key legislative measures:
- The Income Tax (Registration of Non-Resident Electronic Service Providers) Regulations, 2022; and
- The Value Added Tax (Registration of Non-Resident Electronic Service Providers) Regulations, 2022.
The Value Added Tax (VAT) regulations require foreign companies that offer digital services to Tanzanian customers to register for VAT in Tanzania. This means these companies need to charge VAT on their services and remit charged VAT to the Tanzanian government. These rules simplify the tax process for digital services and ensure that foreign companies follow the same tax rules as local businesses. By introducing these regulations, Tanzania aims to update its tax system to fit the digital economy and boost tax revenue from online services.
All non-residential electronic service suppliers/providers must voluntarily register themselves online, and are required to provide the following information;
- Name of the business including the business trading name
- Certificate of Incorporation
- Name of the contact person for tax matters
- Registered address of the business
- Telephone number of the contact person
- Email address of the contact person
- Website or uniform resource locator of the supplier through which the business is conducted.
The Tanzanian government has imposed penalties if you provide false or misleading information to a tax officer or leave out important details that make your statement misleading. The penalty is 50% of the tax you owe if it was an honest mistake without a good excuse, but it jumps to 75% if you knowingly or recklessly made the false statement. If it’s not your first offense, the penalty goes up by 10%, but if you correct your mistake before the tax officer finds it, the penalty can be reduced by 10%.
At Lawfic Attorneys, we specialize in aiding clients and businesses in achieving their objectives by ensuring adherence to all necessary procedures, preparing requisite documentation, and submitting applications to the relevant authorities. For further inquiries, please feel free to reach out to us via the following email address:
Email; info@lawficattorneys.co.tz or call: +255 744 200 538
