On 30 June 2021, the Revenue Authority Officially published the Finance Act 2021. Some of the tax measures, which generally applies from 1 July 2021 are given below:

Permanent establishment

According to Finance Act 2021, the definition of the term “permanent establishment” is expanded to provide that, where an agent other than an independent agent is acting on behalf of another person, that other person shall be deemed to have a permanent establishment if:

• the agent other than an independent agent has and habitually exercises authority to conclude contracts or issues invoice on behalf of that other person, unless their activities are limited to the purchase of goods or merchandise for that other person.
• the agent other than an independent agent has no authority to conclude contracts, but habitually maintains stock of goods or merchandise from which they regularly deliver goods or merchandise on behalf of that other person; or
• the agent other than an independent agent habitually secures orders, wholly or almost wholly for that other person or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that of that other person.

Individual income tax

• Under the Finance Act, the income tax rate is reduced from 9% to 8% for the lowest taxable employment income band and adjustment of income brackets as follows:

An income tax exemption is provided on interest income derived from government bonds issued and listed on the Dar es Salaam Stock Exchange.

Where a taxpayer is required to submit an official translation of communication or document not in an official language (Kiswahili and English), it is provided that the deadline under Section 44 (Notice to obtain information) will apply, which is 14 days.

Withholding tax rate

In Finance Act 2021, a 2% withholding rate is introduced on payments by resident companies dealing with agricultural, livestock and fishery products.