CHAPTER 332
INCOME TAX ACT

[PRINCIPAL LEGISLATION]

ARRANGEMENT OF SECTIONS

   Section

Title

PART I
PRELIMINARY PROVISIONS

   1.   Short title and application to Zanzibar.

   2.   Interpretation.

PART II
IMPOSITION OF INCOME TAX

   3.   Charge of tax.

   3A.   Taxpayer identification number and issuance of certificate.

   3B.   Section not to apply to certain employees.

   3C.   Identification number for protection or collection of tax.

   3D.   Making return, statement, etc., for another person.

   3E.   Minister may amend, vary or replace Seventh Schedule.

   4.   Income from businesses.

   5.   Income from employment, etc.

   6.   Income from the use of property.

   7.   Income from dividends.

   8.   Income from pensions, etc.

   9.   Income of certain non-resident persons deemed derived from the United Republic.

   10.   Income from management or professional fees, royalties, dividends, interest and rent.

   11.   Trust income, etc., deemed income of trustee, beneficiary.

   12.   Collusive agreements or hirings.

   13.   Tax on capital gains income.

   13A.-13B.   [Repealed.]

   13C.   [Repealed.]

PART III
EXEMPTION FROM TAX

   14.   Certain income exempt from tax, etc.

   15.   Minister may exempt incomes from tax.

PART IV
ASCERTAINMENT OF TOTAL INCOME

   16.   Deductions allowed.

   17.   Deductions not allowed.

   18.   Ascertainment of income of corporations, partnerships, etc., from farming.

   19.   Ascertainment of gains or profits of business in relation to certain non-resident persons.

   20.   Ascertainment of income of insurance corporations.

   21.   Members' clubs and trade associations.

PART V
SPECIAL PROVISIONS RELATING TO RETIREMENT BENEFITS

   22.   Construction.

   23.   Approval of pension funds.

   24.   Approval of provident funds.

   25.   Determination of deductible contributions.

   26.   Procedural provisions relating to approval of funds.

PART VI
TRANSACTIONS DESIGNED TO AVOID TAX

   27.   Transactions designed to avoid liability to tax.

   28.   Avoidance of tax liability by non-distribution of dividends.

PART VII
PROVISIONS RELATING TO SETTLEMENTS

   29.   Income settled on children.

   30.   Income from certain settlements deemed to be income of settlor.

PART VIII
ACCOUNTING PERIODS AND CESSATION OF BUSINESS

   31.   Accounting periods not coinciding with year of income, etc.

   32.   Income and expenditure after cessation of business.

PART VIIIA
INSURANCE RELIEF

   32A.   Insurance relief.

   32B.-32D.   [Repealed.]

PART IX
RATES, DEDUCTIONS AND SET-OFF OF TAX AND DOUBLE TAXATION RELIEFS

A. Rates of Tax

   33.   Rates of tax.

B. Deductions of Tax

   34.   Deduction of tax from certain incomes.

   34A.   Payment to include crediting.

   35.   Deduction of tax from annuities, etc., paid under a will, etc.

   36.   Deduction of tax from emoluments.

   37.-38.   [Repealed.]

   39.   Application to Government.

   40.   Regulations and exemption.

C. Set-off of Tax

   41.   Set-off of tax deducted.

   42.   Relief in respect of tax paid in another country.

   43.   Special arrangements for relief from double taxation.

   44.   Computation of credits under special arrangements.

   45.   Time limit.

PART X
SPECIAL PROVISIONS RELATING TO INCOMES OF HUSBAND AND WIFE

   46.   Wife's income from husband's business.

   47.   Application of provisions relating to deductions.

PART XI
SPECIAL PROVISIONS RELATING TO INCOME
OF EMPLOYEES OF THE COMMUNITY
AND THE CORPORATIONS

   48.-49.   [Repealed.]

PART XII
PERSONS ASSESSABLE

   50.   Income of a person assessed on him.

   51.   Income of incapacitated person.

   52.   Income of non-resident person.

   53.   Income of deceased person, etc.

   54.   Liability of joint trustees.

   55.   Liability of person in whose name income of another person assessed.

   56.   Indemnification of representative.

PART XIII
RETURNS AND NOTICES

   57.   Return of income and notice of chargeability.

   58.   Provisional returns.

   59.   Documents to be included in return of income.

   60.   Returns to be prepared and certified by qualified auditor or accountant.

   61.   Books and accounts.

   62.   Production and preservation of books, attendances, etc.

   63.   Returns as to salaries, pensions, etc.

   64.   Returns as to fees, commissions, royalties, etc.

   65.   Occupier's return of rent.

   66.   Return of lodgers and inmates.

   67.   Return of income received on account of other persons.

   68.   Returns as to income exempt from tax.

   69.   Returns in relation to settlements.

   70.   Returns in relation to pension fund, etc.

   71.   Returns in relation to provident fund.

   72.   Returns of resident company dividends.

   73.   Returns as to interest paid or credited by banks, etc.

   74.   Access to official information.

   75.   Further returns.

   76.   Extension of time.

   77.   Returns deemed to be furnished by authority.

   78.   Additional tax in event of failure to furnish return or fraud in relation to a return.

PART XIV
ASSESSMENTS

   79.   Assessments.

   80.   Provisional assessments.

   81.   Assessment of person about to leave or having left the United Republic.

   82.   Assessment not to be made on certain employees.

   83.   Additional assessment.

   84.   Service of notice of assessment, etc.

   85.   Time limit for making assessment.

   86.   Assessment list.

   87.   Inconsequential errors, etc., in assessments or notices.

PART XV
OBJECTIONS, APPEALS AND RELIEF FOR MISTAKE

A: Appeals Boards and Appeals Tribunal

   88.-90.   [Repealed.]

B: Objections

   91.-97.   [Repealed.]

C: Relief for Errors

   98.   Relief in respect of error or mistake.

PART XVI
COLLECTION, RECOVERY AND REPAYMENT OF TAX

   99.   Time within which payment to be made.

   100.   [Repealed.]

   101.   Interest on unpaid tax.

   102.   Interest on underestimated tax.

   102A.   Penalty for failure to deduct or remit tax.

   103.   Appointment and duties of agent.

   104.   Tax on assessed income of deceased persons.

   105.   Collection of tax from persons leaving or having left the United Republic.

   106.   [Repealed.]

   107.   Collection of tax from guarantor.

   108.   Collection of tax by suit.

   109.   Collection of tax by distraint.

   110.   Security on property for unpaid tax.

   111.   Collection of tax from ship-owner, etc.

   112.   Refund of tax overpaid.

   112A.   Payment of interest where amount of tax refundable is determined by the Tribunal.

   113.   Repayment of tax in respect of income accumulated under trusts.

PART XVII
OFFENCES AND PENALTIES

   114.   General provisions relating to offences.

   115.   [Repealed.]

   116.   Failure to comply with notice, etc.

   117.   Incorrect returns, etc.

   118.   Fraudulent returns, etc.

   119.   Obstruction of officer.

   119A.   Publication of list of persons who commit certain offences.

   120.   Provisions relating to evidence.

   121.   Power of Commissioner to compound offences.

   122.   Place of trial.

   123.   Liability of firms, partners, directors and officers of firms and corporations.

   124.   Officer may appear for the prosecution.

   125.   Tax charged to be payable notwithstanding prosecution.

   126.   Power to search and seize.

   127.   Power to inspect books and documents.

   128.   Admissibility of documents.

PART XVIII
ADMINISTRATION

   129.   Appointment of Commissioner and other officers.

   130.   Commissioner's discretion to abandon or remit tax.

   131.   Exercise of powers, etc.

   132.   Official secrecy.

   133.   Offences by or in relation to officers, etc.

PART XIX
MISCELLANEOUS PROVISIONS

   134.   Form of notices, etc.

   135.   Service of notices, etc.

   136.   Liability of manager of corporate body.

   137.   Regulations.

   138.   Exemption from stamp duty.

   139.   [Repeals and transitional provisions.]

   140.   [Transferred.]

SCHEDULES

CHAPTER 332
THE INCOME TAX ACT

An Act to make provision for the charge, assessment and collection of Income Tax, for the ascertainment of the income to be charged and for related matters.

[1st January, 1974]
[s. 1]

Acts Nos.
33 of 1973
16 of 1974
15 of 1975
7 of 1976
9 of 1977
12 of 1977
20 of 1978
2 of 1979
12 of 1979
10 of 1980
12 of 1980
25 of 1980
12 of 1981
20 of 1981
16 of 1983
10 of 1984
15 of 1985
6 of 1986
10 of 1986
12 of 1986
6 of 1987
9 of 1988
13 of 1989
17 of 1990
18 of 1991
14 of 1992
17 of 1992
5 of 1993
10 of 1993
1 of 1994
2 of 1994
16 of 1994
17 of 1995
25 of 1997
27 of 1997
2 of 1998
8 of 1998
10 of 1999
12 of 1999
9 of 2000
11 of 2000
15 of 2000
14 of 2001
18 of 2002

PART I
PRELIMINARY PROVISIONS (ss 1-2)

1.   Short title and application to Zanzibar Act No. 12 of 1979 s. 26">

   (1) This Act may be cited as the Income Tax Act.

   (2) This Act shall apply to Mainland Tanzania as well as to Tanzania Zanzibar:

   Provided that in the case of income of an individual ordinarily resident in Zanzibar and which is accrued in or derived from Zanzibar, other than income from the Government of the United Republic, or a parastatal organisation, the rates of tax and provisions relating to personal allowances in force immediately before the coming into force of this Act shall apply as if subsections (2) and (3) of section 139 had not been enacted, so however, that the provisions of subsection (5) of section 139 and the provisions of the Sixth Schedule to this Act shall apply mutatis mutandis in relation to all such incomes for the year of income 1974 and subsequent years of income to the same extent as those provisions apply to the incomes for the year of income 1973 and the preceding years of income.

[s. 140]

2.   Interpretation Acts Nos. 15 of 1975 s. 16; 7 of 1976 s. 24; 20 of 1978 s. 9; 16 of 1983 s. 13; 10 of 1993 s. 15; 16 of 1994 s. 14, 15, 16; 27 of 1997 s. 4; 8 of 1998 s. 20">

   (1) In this Act, unless the context otherwise requires–

   "accounting period", in relation to any person, means the period for which such person makes up the accounts of his business;

   "administration rate" means the administration rate of tax specified in the Third Schedule;

   "assessment" means any assessment or an additional assessment made under this Act;

   "business" means any form of trade, profession or vocation but does not include employment;

   "capital gains tax rate" means the capital gains tax rate specified in the Third Schedule;

   "Commissioner" means the Commissioner of Income Tax appointed under the provisions of this Act;

   "construction project" means a project for the construction of buildings, structures or public works in the United Republic;

   "co-operative society" means a co-operative society registered under the Co-operative Societies Act *;

   "corporation" means any company or other body corporate established, incorporated or registered by or under any law in force in the United Republic or elsewhere;

   "corporation rate" means the corporation rate specified in the Third Schedule;

   "debenture" includes any debenture stock, mortgage, mortgage stock, or any similar instrument acknowledging indebtedness, secured on any assets of the person issuing the debenture; and, for the purposes of paragraph (c) of subsection (1) of section 7, includes any loan or loan stock, whether secured or unsecured;

   "director" means–

   (a)   in relation to a corporation the affairs of which are managed by a board of directors or similar body, a member of that board or similar body;

   (b)   in relation to a corporation the affairs of which are managed by a single director or similar person, that director or person;

   (c)   in relation to a corporation the affairs of which are managed by the members themselves, a member of the body corporate,

and includes any person in accordance with whose directions and instructions such persons are required or are accustomed to act;

   "District Advisory Committee" means a committee established under section 129;

   "due date" means the date on or before which any tax is due and payable under this Act or pursuant to any notice issued under this Act;

   "employee" in relation to a corporation includes a director in receipt of remuneration for his services;

   "employer" includes any resident person responsible for the payment of, or on account of, any emoluments to any employee, and any reference to an employer shall be deemed to include a reference to any agent, manager or other representative so responsible in the United Republic of any employer who may be resident outside the United Republic;

   "farmer" means any person who carries on a pastoral, agricultural or other similar operation;

   "foreign tax", in relation to income charged to tax in the United Republic, means any income tax or any tax of a similar nature charged under any law in force in any place with the Government of which a special arrangement under this Act has been made by the Government of the United Republic and which is the subject of such arrangement;

   "incapacitated person" means a minor or any individual who is substantially blind or physically crippled or substantially mentally retarded or who is adjudged under any law, whether of the United Republic or of any other country, to be of unsound mind;

   "individual" means a natural person, whether male or female and whether married or unmarried;

   "individual rates" means the individual rates of income tax specified in the Third Schedule;

   "insurance relief" means a relief referred to under the provisions of section 32A of this Act;

   "interest" means interest payable in any manner in respect of any loan, deposit, debt, claim or other right or obligation, and includes any premium or discount by way of interest and any commitment or service fee paid in respect of any loan, credit, or discount on treasury bills but does not include interest charged on tax;

   "loss", in relation to gains or profits, means a loss computed in like manner as gains or profits;

   "management or professional fee" means any payment made to any person, other than a payment made to an employee by his employer, as consideration for any services of a managerial, technical or professional nature, however calculated; and includes any fee or other monetary consideration, including any monetary gift, paid or given to any non-resident person in respect of any theatrical or musical performance, any sports or acrobatic exhibition or any other entertainment performed, conducted, held or given in the United Republic;

   "mineral" means any substance, whether in solid, liquid or gaseous form, occurring naturally in or on the earth, or in or under the seabed, formed by or subject to a geological process, but does not include petroleum as defined in the Petroleum (Exploration and Production) Act *, or water;

   "mining" means intentionally winning minerals and includes every method or process by which mineral is won;

   "mining operations" means prospecting, mining or operations connected with prospecting or mining carried out pursuant to rights granted under the Mining Act *;

   "Minister" means the Minister responsible for matters relating to finance;

   "non-resident rate" means the rate of non-resident withholding tax specified in the Third Schedule;

   "officer" means the Commissioner and includes any public officer employed in connection with the assessment, collection or recovery of tax;

   "parastatal organisation" means–

   (a)   a local government authority;

   (b)   a body corporate established by or under any written law other than the Companies Act *;

   (c)   a trade union registered under the Trade Unions Act *;

   (d)   any company registered under the Companies Act * not less than fifty per centum of the issued share capital of which is owned by the Government or a parastatal organisation or, where the company is limited by guarantee, a company in respect of which the amount that the Government or the parastatal organisation which is a member of such company has undertaken to contribute in the event of the company being wound up is not less than fifty per centum of the aggregate amount which all the members have undertaken to contribute; and references in this paragraph to a parastatal organisation include references to any such company;

   "partnership firm" means a firm of two or more persons carrying on business in partnership;

   "pension fund" means any fund for the payment of pensions, gratuities or other similar benefits to employees on retirement, or to the dependants of employees on the death of such employees, and "approved pension fund" means a pension fund which has been approved by the Commissioner under Part V;

   "pension scheme" includes any scheme for the payment of pensions or other similar benefits, to employees on retirement, or to the dependants of employees on the death of such employees and "approved pension scheme" means a pension scheme which has been approved by the Commissioner under Part V;

   "permanent establishment", in relation to any person, means a fixed place of business in which such person carries on business and for the purposes of this definition a building site or a construction or assembly project which has existed for six months or more shall be deemed to be a fixed place of business;

   "permanent or semi-permanent crops" means such crops as the Minister may, by notice in the Gazette, declare to be permanent or semi-permanent crops for the purposes of this Act;

   "personal relief" means child relief or married relief;

   "premises" means land and any improvement thereon, and includes any building or, where part of a building is occupied as a separate dwelling house, that part;

   "prospect" means to search for any mineral by any means and to carry out any such works and remove any such samples as may be necessary to test the mineral bearing qualities of land and includes reconnaisance operations as defined in the Mining Act *;

   "provident fund" means any fund or scheme for the payment of a sum of money or for the grant of other monetary benefits, to an employee on determination of his employment or to the dependants of the employee on the death of such employee; and "approved provident fund" means a provident fund which has been approved by the Commissioner under Part V;

   "provisional return of income" means a provisional return of income required to be submitted under section 58;

   "resident" has the meaning assigned to that expression by subsection (2);

   "resident withholding rate" means the rate of resident withholding tax specified in the Third Schedule;

   "return of income" means a return of income furnished by a person consequent upon a notice served by the Commissioner under this Act, together with any documents required to be furnished therewith;

   "royalty" means any payment made as a consideration for the use of, or the right to use–

   (a)   any copyright of literary, artistic or scientific work; or

   (b)   any cinematograph film, including film or tape for radio or television broadcasting; or

   (c)   any patent, trade mark, design or model, plan, formula or process; or

   (d)   any industrial, commercial or scientific equipment;

or for information concerning industrial, commercial or scientific equipment or experience, and includes gains derived from the sale or exchange of any right or property giving rise to such royalty;

   "Schedule" means a Schedule to this Act;

   "scheduled company" shall have the meaning assigned to that expression in Part XI;

   "tax" means the income tax charged under this Act;

   "tax clearance certificate" means a certificate issued under section 106;

   "technical services" in respect of mining operations, means services in respect of earthmoving, engineering, construction, and includes geological, geotechnical and metallurgical services or any other like services;

   "total income" means the aggregate of income from all taxable sources after effecting necessary deductions under part IV of the Principal Act but does not include incomes exempt from tax;

   "trade" includes every trade, manufacture, or concern in the nature of trade;

   "trade association" means any body of persons which is an association of persons separately engaged in any business with the main object of safeguarding or promoting the business interests of such persons;

   "trustee" includes an executor of the will of a deceased person and an administrator of the estate of a deceased person, and trustees shall, for the purposes of this Act, be deemed to be a body of persons;

   "whole-time service director" means a director of a corporation who is required to devote substantially the whole of his time to the service of such corporation in a managerial or technical capacity and is not the beneficial owner of, or able, either directly or through the medium of another corporation or by any other means, to control more than five percent of the share capital or voting power of such corporation;

   "year of income" means a calendar year.

   (2) For the purposes of this Act a person shall be deemed to be a resident in relation to any year of income–

   (a)   in the case of an individual–

      (i)   if he has a permanent home in the United Republic and was present in the United Republic during any part of that year of income; or

      (ii)   where he has no permanent home in the United Republic–

         (A)   if he was present in the United Republic in that year of income for a period or periods amounting in the aggregate to 183 days or more; or

         (B)   if he was present in the United Republic in that year of income and in each of the two preceding years of income for periods averaging more than 122 days in each such year of income;

   (b)   in the case of a corporation–

      (i)   if the corporation was incorporated under a law of the United Republic; or

      (ii)   if the management and control of the affairs of the corporation were exercised in the United Republic during any period in that year of income;

   (c)   in the case of a body of persons other than a corporation, if the management and control of the body of persons were exercised in the United Republic during any period in that year of income;

   (d)   if the Minister has, by notice in the Gazette, declared such person to be a resident for the purposes of this Act for that year of income.

   (3) In relation to any year of income in respect of which any order relating to tax has been made under the Public Finance Act *, reference in this Act to rates of tax shall, so long as any such order remains in force, be construed as references to the rates referred to in such order; and if, after any such order has ceased to have effect, the rates of tax in relation to such year of income as specified in this Act are different from those referred to in such order, and any assessments have already been made having regard to such rates in such order, then all such adjustments shall be made to such assessments as may be necessary to give effect to the rates of tax for such year of income as specified in this Act.

   (4) For the purposes of this Act–

   (a)   in respect of a non-resident person, income shall be deemed to have accrued in the United Republic if such income arises in, or becomes due or payable in, the United Republic;

   (b)   in respect of a non-resident person, income shall be deemed to have derived from the United Republic if the locality of the source of the income is the United Republic or if the income accrues under a contract the locality of which is the United Republic:

   Provided that the meanings assigned to the expressions "accrued in" and "derived from" by this subsection or any other provision of this Act shall be in addition to and not in substitution of or in derogation of the ordinary meanings of those expressions.

   (5) The tax due under this Act shall be payable in accordance with the provisions of this Act and, without prejudice to any such provision, the tax due from an individual shall be payable monthly where such tax is in respect of his income from employment, and in any case where tax due from an individual is in respect of income other than income from employment, the tax due shall be calculated by reference to the monthly rates specified in the Third Schedule on the basis of the directions specified in the note appended to the first paragraph of that Schedule.

PART II
IMPOSITION OF INCOME TAX (ss 3-13C)

3.   Charge of tax Acts Nos. 12 of 1979 s. 23; 10 of 1986 s. 19; 17 of 1990 s. 23; 14 of 1992 s. 21; 17 of 1992 s. 21; 16 of 1994 s. 16; Act No. 9 of 2000; s. 28">

   (1) Subject to, and in accordance with this Act, a tax to be known as income tax shall be charged for each year of income–

   (a)   in the case of a resident person, upon all the income of such person which accrued worldwide; or

   (b)   in the case of any other person, upon all the income of such person which accrued in or was derived from the United Republic.

   (2) Subject to this Act, income upon which tax is chargeable under this Act is income in respect of–

   (a)   gains or profits from–

      (i)   any business, for whatever period of time carried on;

      (ii)   any employment or services rendered;

      (iii)   any right granted to any other person for use or occupation of any property;

   (b)   dividends or interest, where the interest exceeds the first two hundred and fifty thousand shillings of any income accruing as interest on monies saved in any bank operating in the United Republic;

   (c)   any pension or amount received under a pension scheme or a pension fund, other than any pension payable to an employee who has retired from the service of the Government or a parastatal organisation, any annuity or a trust scheme which is approved or established by or under any written law;

   (d)   any amount received by way of alimony or allowance–

      (i)   under any judicial order of separation or maintenance, or under any decree of divorce; or

      (ii)   under any written agreement of separation; or

      (iii)   under any agreement between spouses where they are separated in such circumstances that the separation is likely to be permanent;

   (e)   any amount deemed to be the income of any person under this Act, other than any amount payable by way of pension to any person who has retired from the service of the Government or a parastatal organisation.

   (3) For the avoidance of doubt it is hereby declared that where an individual–

   (a)   receives benefit of domestic services from a member of his family;

   (b)   occupies any premises owned by him; or

   (c)   utilises any agricultural product or handcraft product produced by him for his own consumption or use or for the consumption or use by the members of his family without receiving any monetary consideration from any such member of his family for such consumption or use,

the value of such services, occupation or product so used shall be deemed not to be income.

   (4) [Repealed by Act 9 of 2000 s. 28.]

   (5) Every tax withholder to whom the provisions of Part IXB apply shall register with the Commissioner at the nearest office within thirty days after the date the obligation to comply with this Part first arises.

   (6) A person or tax withholder who fails to comply with the provisions of subsection (4) or (5) shall be guilty of an offence.

3A.   Taxpayer identification number and issuance of certificate

   (1) Every person whose income is chargeable to tax under this Act shall upon application for registration, have a taxpayer identification number allocated to him by the Commissioner.

   (2) Every person, other than an individual, shall register for a taxpayer identification number within thirty days after the date on which that person is established, incorporated or registered by or under any law in force in the United Republic.

   (3) Every person who becomes chargeable to tax pursuant to the provisions of this Act shall register for a taxpayer identification number with the Commissioner within thirty days after the date on which that person becomes so chargeable.

   (4) The Commissioner shall issue to a person registered under this Act a certificate of registration which that person shall display in a conspicuous position at his place of business.

3B.   Section not to apply to certain employees Act No. 9 of 2000 s. 29">

   (1) Notwithstanding the provisions of section 3A, this section shall not apply in relation to an employee–

   (a)   if such employee had no income chargeable to tax for such year of income other than his income from emoluments; and

   (b)   if the tax payable in respect of such emoluments has been recovered by deduction under Part IX of this Act.

   (2) Every tax withholder to whom the provisions of Part IXB of this Act apply shall have a taxpayer identification number, which shall be produced when required by the Commissioner.

   (3) Every tax withholder to whom the provisions of Part IXB of this Act apply, shall register for taxpayer identification number within thirty days after the date on which the obligation to comply with this Part arises.

3C.   Identification number for protection or collection of tax Act No. 9 of 2000 s. 29">

   (1) For the purposes of collection or protection of tax, any person whom the Commissioner may so require shall have a taxpayer identification number.

   (2) Any person who is required under this Act to make a return, statement or other document shall, while making such a return, statement or document include the taxpayer identification number of that person.

3D.   Making return, statement, etc., for another person Act No. 9 of 2000 s. 29">

   (1) Any person who is required to make a return, statement, or other document on behalf of another person shall include the taxpayer identification number in such a manner as may be prescribed for the purposes of proper identification of the person in whose behalf the return, statement or other document is submitted.

   (2) Subject to subsection (1), any person required under this Act to make a return, statement or order document in respect of another person shall request from that other person, and include in the return statement or other document, the taxpayer identification number, in the prescribed manner for proper identification of the person on whose behalf the return, statement or other document is submitted.

3E.   Minister may amend, vary or replace Seventh Schedule Act No. 9 of 2000 s. 29">

   (1) Every institution specified under the Seventh Schedule to this Act, shall require a taxpayer identification number from any person applying for anything listed or engaged in the types of transactions listed in the Seventh Schedule.

   (2) The Minister may, by order published in the Gazette, amend, vary or replace the Seventh Schedule.

   (3) Any person who, in relation to the transactions for which a taxpayer identification number is required, refuses or fails to comply with the provisions of section 3A or 3E commits an offence punishable under this Act.

4.   Income from businesses Act No. 14 of 1992 s. 22">

   For the purposes of subparagraph (a) (i) of subsection (2) of section 3–

   (a)   the gains or profits of a partner from a partnership shall be the sum of–

      (i)   any remuneration payable to him by the partnership together with any interest on capital so payable, less any interest on capital payable by him to the partnership; and

      (ii)   his share of the total income of the partnership, calculated after deducting therefrom the tax payable thereon, and the total of any remuneration and interest on capital payable to any partner by the partnership and after adding any interest on capital payable by any partner to the partnership, and where the partnership makes a loss, calculated in the manner set out in subparagraph (ii), his gains or profits shall be the excess, if any, of the amount set out in subparagraph (i) over his share of such loss;

   (b)   any sum received under any insurance against loss of profits, or received by way of damages or compensation for loss of profits, shall be deemed to be gains or profits of the year of income in respect of which it is received;

   (c)   where in computing gains or profits for any year of income any expenditure or loss has been deducted, or a deduction in respect of any reserve or provision to meet any liability has been made, and in a later year of income the whole or part of such expenditure or loss is recovered, or the whole or part of such liability is released, or the retention in whole or part of such reserve or provision has become unnecessary, then any sum so recovered or released or no longer required as a reserve or provision shall be deemed to be gains or profits of the year of income in which it is recovered or released or no longer required:

   Provided that if the person chargeable with tax in respect of any such sum requests the Commissioner in writing to exercise his power under this proviso, the Commissioner may divide such sum into so many equal portions, not exceeding six, as he may consider fit, and one such portion shall be taken into account in computing the gains or profits of such person for the year of income in respect of which such sum is so deemed to be gains or profits and for each of the previous years of income corresponding to the number of such portions;

   (d)   where under the Second Schedule it is provided that a balancing charge shall be made or a sum shall be treated as a trading receipt, for any year of income, the amount thereof shall be deemed to be gains or profits of such year of income.

5.   Income from employment, etc. Acts Nos. 16 of 1974 s. 9; 10 of 1986 s. 20; 17 of 1990 s. 24; 13 of 1996 s. 24; 8 of 1998 s. 21; 18 of 2002 s. 33">

   (1) For the purposes of subparagraph (a) (ii) of subsection (2) of section 3 of this Act, any amount paid to–

   (a)   a person who is, or was at the time of the employment or when the services were rendered, a resident person in respect of any employment or services rendered by him in the United Republic or outside the United Republic; or

   (b)   a non-resident person in respect of any employment with or services rendered to an employer who is resident in the United Republic or the permanent establishment in the United Republic of an employer who is not resident,

shall be deemed to have accrued in or to have been derived from the United Republic:

   Provided that the Minister may, by order in the Gazette, modify all or any of the provisions of this subsection in its application to any employee or category of employees referred to therein.

   (2) For the purposes of subparagraph (a) (ii) of subsection (2) of section 3 of this Act, "gains or profits" includes–

   (a)   any wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, or any subsistence, travelling, entertainment or other allowance received in respect of employment or services rendered; and any amount so received in respect of employment or services rendered in a year of income other than the year of income in which it is received shall be deemed to be income in respect of such other year of income:

         Provided that–

      (a)   where the Commissioner is satisfied that any such subsistence, travelling, entertainment or other allowance represents solely the reimbursement to the recipient of an amount expended by him wholly and exclusively in the production of his income from the employment or services rendered then in the calculation of the gains or profits of the recipient he shall exclude any such allowance or expenditure;

      (b)   where any such amount is received in respect of a year of income which expired earlier than five years prior to the year of income in which it was received, or prior to the year of income in which the employment or services ceased, if earlier, such amount shall, for the purposes of the computation of the tax payable thereon, be allocated equally between the year of income in which it is received or, if the employment or services ceased in an earlier year of income between such earlier year of income; and the five years of income immediately preceding such year of income in which such amount is so received or, as the case may be, such earlier year of income in which the employment or service ceased, and each such portion allocated to any such year of income shall be deemed to be income of that year of income in addition to any other income in that year of income;

      (c)   the provisions of section 8 shall apply for the purpose of the computation of tax on commuted pension;

      (d)   the following allowances payable to an employee under this paragraph shall not be liable to tax:

         (i)   a house allowance not exceeding a prescribed percentage of the salary of an officer deductible from his salary toward house rent charges;

         (ii)   transport allowance of an amount not exceeding the monthly allowance prescribed by the Government for travelling to and from an employee's office and his residence;

         (iii)   a responsibility allowance not exceeding that payable to employees in the service of the Government or a parastatal organisation;

         (iv)   a housing allowance not exceeding 15% of the basic salary payable to an employee shall not be liable to tax.

   (b)   save as otherwise expressly provided in this section, the value of any benefit, advantage, or facility of whatsoever nature, the aggregate value whereof is not less than fifty thousand shillings, granted in respect of employment or services rendered;

   (c)   any amount received as compensation for the termination of any contract of employment or services, whether or not provision is made in such contract for the payment of such compensation:

         Provided that, except in the case of a director, other than a whole time service director, of a corporation the directors whereof have a controlling interest therein–

      (i)   where such contract is for a specified term, the amount included in gains or profits under this subparagraph shall not exceed the amount which would have been received in respect of the unexpired period of such contract and shall be deemed to have accrued evenly in such unexpired period;

      (ii)   where such contract is for an unspecified term and provides for compensation on the termination thereof, such compensation shall be deemed to have accrued in the period immediately following such termination at a rate equal to the rate per annum of the gains or profits from such contract received immediately prior to such termination;

      (iii)   where such contract is for an unspecified term and does not provide for compensation on the termination thereof, any compensation paid on the termination thereof shall be deemed to have accrued in the period immediately following such termination at a rate equal to the rate per annum of the gains or profits from such contract received immediately prior to such termination, but the amount so included in gains or profits shall not exceed the amount of three years remuneration at such rates;

   (d)   any balancing charge under Part II of the Second Schedule;

   (e)   the value, ascertained in accordance with subsection (3) of premises provided by an employer for occupation by his employee for residential purposes:

         Provided that the value of the premises shall be deemed not to be such gains or profits in any case where–

      (i)   the monthly total income of the employee, excluding the value of the premises, does not exceed eight hundred shillings;

      (ii)   the employee being an employee of the Government or of a parastatal organisation, pays rent on the basis of a general scheme relating to rents chargeable to such employees in proportion to their monthly income from such employment;

   (f)   any amount paid by an employer as a premium for an insurance on the life of his employee and for the benefit of such employee or any of his dependants other than such an amount paid to an approved pension scheme or an approved pension fund.

   (3) In paragraph (c) of subsection (2) of this section the value of premises, excluding the value of any furniture or other contents so provided, shall be deemed to be–

   (a)   in the case of a director of a corporation, other than a whole-time service director, an amount equal to fifteen percent of his total income excluding the value of such premises;

   (b)   in the case of any other employee, an amount equal to fifteen percent of the gains or profits from his employment excluding the value of such premises, subject to a limit of the rent paid by the employer if this is paid under an agreement made at arms length with a third party:

         Provided that–

   (i)   where any person occupies such premises for part only of a year of income then the value, ascertained under the foregoing provisions, shall be reduced by such proportion as may be just and reasonable having regard to the period of occupation and the yearly rate of gains or profits from employment;

   (ii)   where the employee pays rent to his employer for such premises the value, ascertained under the foregoing provisions, shall be reduced by the amount of such rent;

   (iii)   where part only of any premises is so provided, the Commissioner may reduce the value, as ascertained under the foregoing provisions, to such amount as he may consider just and reasonable.

   (4) Notwithstanding anything to the contrary in subsection (2) of this section "gains or profits" shall not include–

   (a)   the expenditure on passages between the United Republic and any place outside the United Republic borne by the employer:

         Provided that this paragraph shall not apply to expenditure other than expenditure on the provision of passages for the benefit of an employee recruited or engaged outside the United Republic and who is in the United Republic solely for the purpose of serving the employer and is not a citizen of the United Republic;

   (b)   in the case of a full-time employee (which expression shall not include any director other than a whole-time service director of a corporation) the value of any medical and cafeteria services provided by the employer; and

   (c)   subject to subsection (1)(f) the amount paid by the employer as contribution to any unapproved pension fund or unapproved provident fund or scheme, which together with other contributions by the employer to any approved or unapproved pension fund or scheme or any approved or unapproved provident fund or scheme and contributions by the employee to any approved pension scheme or fund does not exceed twenty percent of the gross remuneration of the employee, where the benefits are for the employee only and twenty-four percent of the gross remuneration of the employee where the benefits are payable also in respect of the widow or widower or dependant of such employee;

   (d)   the amount received by an employee from an approved provident fund.

6.   Income from the use of property

   For the purposes of paragraph (a) (iii) of subsection (2) of section 3 of this Act, "gains or profits" shall include any royalty, rent, premium or like consideration received for the use or occupation of property.

7.   Income from dividends Acts Nos. 16 of 1994 s. 17; 17 of 1995 s. 13">

   (1) For the purposes of paragraph (b) of subsection (2) of section 3–

   (a)   a dividend paid by a resident corporation shall be deemed to be income of the year of income in which it was payable or deemed to be payable;

   (b)   when, in relation to any corporation that is being wound up voluntarily, any profits whether earned before or during the winding up are distributed (whether in cash or otherwise) the distribution shall be deemed to be payment of a dividend;

   (c)   where any corporation issues debentures or redeemable preference shares for a sum less than their nominal value or redeemable value, whichever is the greater, or bonus share, the issue of such debentures or preferential shares or bonus shares shall be deemed to include a payment of dividend on the shares held by shareholders of an amount equal to such excess or, in the case of a bonus share, an amount equal to the nominal value:

   Provided that this paragraph shall not apply if–

      (i)   the sum paid for such debentures or redeemable preference shares is ninety five percent or more of their nominal or redeemable value, whichever is the greater;

      (ii)   in the case of bonus shares, the ownership in such shares did not change hands during such year of income.

   (d)   where a branch of any non-resident corporation having a permanent establishment in the United Republic remits any of its after tax profits to its head office, or retains the profits without reinvesting them in the United Republic, the remittance or retention of the profits shall be deemed to be a payment of a branch dividend.

   (2) Notwithstanding paragraph (b) of subsection (2) of section 3, a dividend received by a resident corporation shall be deemed not to be income chargeable to tax:

   Provided that this subsection shall not apply to a dividend received by a corporation which controls, directly or indirectly, less than twenty five percent of the voting power of the corporation paying the dividends and which is not a financial institution specified in the Fourth Schedule.

8.   Income from pensions, etc. Acts Nos. 12 of 1980 s. 14; 14 of 1992 s. 23">

   (1) For the purposes of this Act any pension or retirement annuity received by a non-resident individual from a pension fund or pension scheme established in the United Republic or under an annuity contract made in the United Republic shall be deemed to have accrued in or to have been derived from the United Republic.

   (2) [Omitted.]

   (3) Notwithstanding paragraph (c) of subsection (2) of section 3 of this Act, the first twenty-four thousand shillings of the retirement annuities received by a resident individual in any year of income shall be taxed at rates one half of those normally applicable; and for purposes of assessment under this subsection any pension or retirement annuity income received shall be deemed to be those portions of an individual's total income as are taxable at the lowest of the rates applicable to successive portions of his total income.

   (4) Any commuted pension received by surrender of future pension rights or any amount received under a pension scheme, a pension fund, an annuity contract or a trust scheme, which is approved or established by or under any written law, shall, for the purposes of this Act, be deemed to be the income for the year in which it is paid:

   Provided that where any employee commutes his future pension rights by receiving not more than one half of his total pension entitlement the commuted portion shall be deemed not to be income for the purposes of this Act.

9.   Income of certain non-resident persons deemed derived from the United Republic Acts Nos. 8 of 1998 s. 22; 12 of 1999 s. 12">

   (1) Where a non-resident person carries on the business of ship owner, charterer or air transport operator and, any ship or aircraft owned or chartered by him calls at any port or airport in the United Republic, the gains or profits from such business from the carriage of passengers who embark, or cargo or mail which is embarked, in the United Republic, rental of containers and related equipment which is supplementary or incidental to such business shall be such percentage of the full amount received on account of such carriage as the Commissioner may determine to be just and reasonable; and such gains or profits shall be deemed to be income derived from the United Republic.

   Provided that this subsection shall not apply to any gains or profits from the carriage of passengers who embark, or cargo or mail which is embarked, in the United Republic solely as a result of transhipment.

   (2) Where a non-resident person carries on in the United Republic the business of transmitting messages by cable or by radio or by electronic communication, then the gains or profits from such business shall be such percentage as the Commissioner may determine to be just and reasonable of the full amount received from the transmission of messages which are transmitted by any apparatus established in the United Republic whether or not such messages originated in the United Republic; and such gains or profits shall be deemed to be income derived from the United Republic.

10.   Income from management or professional fees, royalties, dividends, interest and rent Act No. 27 of 1997 s. 5">

   For the purposes of this Act, where a resident person or a person having a permanent establishment in the United Republic makes a payment to any other person in respect of–

   (a)   any management;

   (b)   any professional fee not being a fee for the provision of technical services;

   (c)   any royalty;

   (d)   any dividend;

   (e)   any interest;

   (f)   the use of any property;

   (g)   the provision of technical services,

the amount thereof shall be deemed to be income of the payee which accrued in or was derived from the United Republic:

   Provided that the provisions of this section shall not apply to any such payment as aforesaid unless the payment arises out of or is in connection with an activity or transaction, or intended activity or transaction, wholly or partly in the United Republic, or in the case of a payment of interest, unless such interest is in respect of moneys raised for the purposes of an activity or transaction wholly or partly in the United Republic.

11.   Trust income, etc., deemed income of trustee, beneficiary, etc.

   (1) Any income chargeable to tax under this Act and received by any person in his capacity as a trustee shall be deemed to be income of such trustee.

   (2) Any amount received as income in any year of income by any person beneficially entitled thereto from any trustee in his capacity as such, or paid out of trust income by the trustee on behalf of such person, shall, subject to this Act, be deemed to be income of such person; and to the extent that any such amount is received or so paid out of income chargeable to tax under this Act on such trustee it shall be deemed to be income–

   (a)   in any case other than that of an annuity directed to be paid free of tax–

      (i)   of such gross amount as would, after deduction or tax at the rate paid or payable on such income by such trustee, be equal to the amount received or so paid; and

      (ii)   that has borne tax at such rate;

   (b)   in the case of an annuity directed to be paid free of tax, of such gross amount as is equal to the amount of such annuity together with the amount of the sums paid by such trustee to the annuitant to meet the liability of the annuitant to tax on such annuity:

   Provided that in the case of any amount paid by an executor or an administrator to a person entitled thereto under the will or on intestacy (otherwise than under any settlement under the will) the amount so paid shall be deemed not to be chargeable income of the person to whom or on whose behalf it is paid where tax at the administration rate has been paid on such amount.

12.   Collusive agreements or hirings

   (1) Where–

   (a)   in computing gains or profits a deduction is allowable in respect of a payment made under a contract of hiring of an asset of any description; and

   (b)   before, at or after the time when the payment is made the parties to the contract enter into an agreement under which the ownership of, or any interest in, the asset passes to the person who made the payment or to an associate of his in return for a capital sum which is less than the true market value of the asset at that date,

the person or associate, as the case may be, shall be chargeable to tax on the amount by which the true market value exceeds that capital sum.

   (2) Subsection (1) of this section shall not apply to payments made under a contract of hiring entered into before 1st July, 1973.

   (3) In this section–

   "asset" means any description of property or rights other than land or rights or interests in or over land;

   "associate" means–

   (a)   in relation to any individual–

      (i)   the spouse of the individual;

      (ii)   any person related to the individual or his spouse by consanguinity or affinity;

      (iii)   any partner of the individual or his spouse;

   (b)   in relation to any person–

      (i)   any body of persons of which that person and persons associated with him have control;

      (ii)   any person nominated by such person to receive the ownership of or any interest in an asset under the kind of agreement mentioned in paragraph (b) of subsection (1) of this section;

   (c)   in relation to any corporation (hereinafter referred to as "the first-mentioned corporation")–

      (i)   any other corporation (hereinafter referred to as "the second-mentioned corporation") which owns more than twenty-five percent of the issued share capital of the first-mentioned corporation;

      (ii)   any other corporation, more than twenty-five percent of the issued share capital of which is owned by such first mentioned corporation or such second-mentioned corporation;

   "contract of hiring" means any kind of agreement or arrangement under which payments are made for the use of or otherwise in respect of, an asset.

13.   Tax on capital gains income Acts Nos. 16 of 1974 s. 10; 7 of 1976 s. 25; 16 of 1983 s. 14; 17 of 1990 s. 25; of 1993 s. 16; 13 of 1996 s. 25; 12 of 1999 s. 13; 11 of 2000 s. 22">

   (1) Where in any year of income any person sells any interest held by him in any premises or sells any financial asset owned by him in the United Republic, the difference between–

   (a)   the value of consideration for which such interest or such financial asset is sold; and

   (b)   so much of the adjusted cost to such person of such interest or financial asset as has not been claimed as deduction in respect of the capital expenditure to such interest or such financial asset under the Second Schedule,

shall be deemed to be capital gains income of such person accrued in or derived from the United Republic in the year of income in which the sale takes place and shall be chargeable to tax at the capital gains tax rate:

   Provided that–

   (i)   no interest under subsection (1) held by any person in any premises or financial assets shall be transferred or registered without a certificate of clearance issued by the Commissioner in that behalf certifying that capital gains tax has been paid or is not payable;

   (ii)   where the Commissioner is of the opinion that the actual value of the interest sold by any person is higher than the one declared by him, he may, if he determines it to be just and reasonable, direct that such adjustment be made with respect to the value of the interest sold as he considers appropriate.

   (2) For the purposes of this section, the expression "adjusted costs" means the costs arrived at after adjusting for inflation or devaluation using the inflation or exchange rates, as the case may be, applicable at the time of the sale.

   (3) For the purposes of this section where any interest or property to which this section applies is sold by way of a transaction in the nature of a hire purchase, the interest or property shall be deemed to have been sold on the date on which the possession is delivered and any interest payable shall be deemed to form part of the selling price.

   (4) This section shall not apply to the sale of any interest in premises where the proceeds of sale or the profits realised are income chargeable to tax under any other provisions of this Act.

   (5) The provisions of this section shall not apply to the sale of shares issued by a company listed under the Dar es Salaam Stock Exchange.

   (6) The capital gains tax payable under this section shall be due and payable within thirty days from the date of sale.

   (7) Any person who disputes an assessment made upon him under this Act may appeal to the Commissioner in accordance with the provisions of the Tax Revenue Appeals Act, 2000.

13A.   Repealed

   [Repealed by Act No. 25 of 1997 s. 25.]

13B.   Repealed

   [Repealed by Act No. 25 of 1997 s. 26.]

13C.   Repealed

   [Repealed by Act No. 11 of 2000 s. 23.]

PART III
EXEMPTION FROM TAX (ss 14-15)

14.   Certain income exempt from tax, etc.

   (1) Notwithstanding anything in Part II, the income specified in the First Schedule which accrued in or was derived from the United Republic or such other of the Partner States as may be so specified shall be exempt from tax to the extent so specified.

   (2) The Minister may, by order in the Gazette, amend, vary or replace the First Schedule.

15.   Minister may exempt incomes from tax Act No. 16 of 1974 s. 11">

   (1) Note: Subject to section 3 of the Miscellaneous Tax Exemptions and Remission (Revocation) Act, 1992 [Act No. 16 of 1992], section 2 of that Act revoked the tax exemptions or remissions granted pursuant to or under the provisions of this section with effect from 19th June, 1992 Section 3 of that Act provides as follows–


"3.   Revocation not to apply to ascertain exemptions and remissions.


   Notwithstanding the provisions of section 2, the revocation under this Act shall not–

   (a)   apply to any subsisting exemption or remission granted pursuant to or in accordance with the terms or conditions of any contract, treaty or other agreement entered into prior to this Act, between the Government of the United Republic and any other government or international organisation or other foreign body engaged in any project or undertaking within the United Republic;


   (b)   apply to any subsisting exemption or remissions granted in favour of religious or charitable organisations;


   (c)   operate to revive the liability to pay any tax which had become due and payable but exempted or remitted prior to this Act."')">1 The Minister may, by order in the Gazette provide–

   (a)   that any income or class of incomes accrued in or derived from the United Republic shall be exempt from tax to the extent specified in such order; or

   (b)   that any exemption under the First Schedule shall cease to have effect either generally or to such extent as may be specified in such order.

   (2) The Minister may, by order under his hand or by order published in the Gazette, remit in whole or in part the tax payable by any person in respect of any year of income specified in such order.

   (3) The Minister may, by order in the Gazette, exempt from tax such portion of the income of an agricultural marketing organisation as the Minister is satisfied has been or will be paid into a reserve fund established by such organisation for price stabilisation and every such exemption shall be subject to such administrative and accounting regulations as the Minister may, by order, specify either generally or in relation to any such particular organisation.

   (4) For the purposes of subsection (2) "agricultural marketing organisation" means any corporation or other body of persons charged by any written law with the responsibility for the orderly marketing of any agricultural or pastoral product, and "agricultural product" in this subsection includes livestock and any product of livestock.

PART IV
ASCERTAINMENT OF TOTAL INCOME (ss 16-21)

16.   Deductions allowed Acts Nos. 16 of 1974 s. 12; 20 of 1978 s. 20; 12 of 1979 s. 25; 10 of 1980 s. 21; 12 of 1985; 10 of 1986 s. 21; 17 of 1990 s. 27; 18 of 1991 s. 29; 1 of 1994 s. 14; 13 of 1996 s. 26; 27 of 1997 s. 6; 8 of 1998 s. 23; 12 of 1999 s. 14; 11 of 2000 s. 24; 18 of 2002 s. 34">

   (1) For the purpose of ascertaining the total income of any person for any year of income there shall, subject to section 17, be deducted all expenditure incurred in such year of income which is expenditure wholly and exclusively incurred by him in the production of such income and where under section 31 any income of an accounting period ending on some day other than the last day of such year of income is, for the purpose of ascertaining total income for any year of income, taken to be income for any year of income, then such expenditure incurred during such period shall be treated as having been incurred during such year of income.

   (2) Without prejudice to subsection (1) of this section, in computing for any year of income the gains or profits chargeable to tax under paragraph (a) of subsection (2) of section 3, the following amounts shall be deducted–

   (a)   bad debts incurred in the production of such gains or profits which the Commissioner considers to have become bad, and doubtful debts so incurred to the extent that they are estimated to the satisfaction of the Commissioner to have become bad, during such year of income;

   (b)   any deductions to be made under the Second Schedule in respect of such year of income;

   (c)   any expenditure of a capital nature incurred during such year of income by the owner or occupier of farm land for the prevention of soil erosion;

   (d)   any expenditure of a capital nature incurred in such year of income by any person on legal costs and stamp duties in connection with the acquisition of premises used or to be used by him for the purposes of his business;

   (e)   any expenditure, other than expenditure referred to in paragraph (f), incurred in connection with any business before the date of commencement of such business where such expenditure would have been deductible under this section if incurred after such date, so however that such expenditure shall be deemed to have been incurred on the date on which such business commenced;

   (f)   in the case of the owner of premises, any sums expended by him during such year of income for structural alterations to the premises where such expenditure is necessary to maintain the existing rent:

   Provided that no deduction shall be made for the cost of any extension to, or replacement of, such premises;

   (g)    the amount considered by the Commissioner to be just and reasonable as representing the diminution in value of any implement, utensil or similar article, not being machinery or plant in respect of which a deduction may be made under the Second Schedule, employed in the production of gains or profits;

   (h)   any entrance fee or annual subscription paid during such year of income to a trade association which has made an election under subsection (2) of section 21;

   (i)   in the case of gains or profits of the owner of any land from the sale of, or the grant of the right to fell standing timber which was growing on such land at the time such owner acquired such land–

      (i)   where such land was acquired for valuable consideration, so much of such consideration as the Commissioner may determine to be just and reasonable as representing the cost of such standing timber; or

      (ii)   where no valuable consideration was given for the land, so much of such amount as the Commissioner may determine to be just and reasonable as representing the value of such standing timber at the time such owner acquired such land, as is attributable to such timber sold during such year of income;

   (j)   in the case of gains or profits from the sale of standing timber by a person who has purchased the right to fell such timber, so much of the price paid for such right as the Commissioner may determine to be just and reasonable as attributable to the timber sold during such year of income;

   (k)   any expenditure of a capital nature incurred in such year of income by the owner or tenant of any agricultural land, as defined in the Second Schedule, on clearing such land, or on clearing and planting thereon permanent or semi-permanent crops;

   (l)   such amount in relation to mining operations which during the year of income has been–

      (i)   expended; or

      (ii)   in a manner approved by the Commissioner, was used in order to provide funds at a future date to defray expenses,

      in connection with remedying, to the satisfaction of the Minister responsible for minerals, upon cessation of mining operations, any damage caused by such mining operations to the surface of, and the environment on, the land in question:

         Provided that any amount provided for under subparagraph (ii) which is not used for the purpose specified herein, shall be included in the income of such person in the year of income following the year of income within which that person ceases to carry on mining operations, but if the amount so provided or any part of it is at any time, before the cessation of mining operations, utilised for any purpose other than the purpose specified therein, the amount so utilised shall be included in the income of that person in the year of income within which the amount is so utilised;

   (m)   any expenditure incurred by any person for the purposes of any business carried on by him being–

      (i)   expenditure of a capital nature on scientific research; or

      (ii)   expenditure not of a capital nature on scientific research; or

      (iii)   a sum paid to any scientific research association approved for the purposes of this paragraph by the Commissioner as being an association which has as its object the undertaking of scientific research related to the class of business to which such business belongs; or

      (iv)   a sum paid to any university, college, research institute or other similar institution approved for the purposes of this paragraph by the Commissioner for such scientific research as is mentioned in subparagraph (iii) of this paragraph;

   (n)   any sum contributed in such year of income by an employer to a national provident fund or other retirement benefits scheme established for employees in the United Republic by the provisions of any written law;

   (o)   any sum contributed in such year of income by an employer to a provident fund or a pension fund approved for the purposes of Part V and the sum so deductible shall be determined in accordance with section 25;

   (p)   any expenditure on advertising in connection with any business to the extent that the Commissioner considers just and reasonable, and for this purpose "expenditure on advertising" includes any expenditure intended to advertise or promote whether directly or indirectly, the sale of the goods or services provided by such business;

   (q)    [Repealed by R. L. Cap. 356 s. 11(i)(a).]

   (r)   the monetary value of free housing or any housing allowances of employees in agricultural or livestock development farms;

   (s)   [Repealed by Act No. 9 of 1988 s. 14.]

   (t)   any expenditure incurred by any employer for providing his employees with transport for travelling to and from the office and their residences;

   (u)   any payroll levy paid;

   (v)   vocational education training levy;

   (w)   without prejudice to the provisions of the Second Schedule where any corporation carries on business and has incurred expenditure in any year of income, there shall be made in computing his gains or profits for that year of income deduction equal to the amount of that expenditure:

         Provided that–

      (i)   the provisions of this subsection shall not apply to capital expenditure on buildings;

      (ii)   the provisions of this subsection shall apply to a corporation holding a certificate of incentives granted by the Tanzania Investment Centre not later than the 30th June, 2002;

   (x)   any sum not exceeding two percent of the chargeable gains or profits of a business contributed in such year of income to a public institution or charitable or religious institution for the purposes of provision of general public health, education, water and road construction or maintenance:

   (y)   any tax or levy paid by any person to a local government in connection with any business carried on by him;

   Provided that, for the purpose of this paragraph, chargeable gains or profits shall be the amount determined before the deduction allowed under this paragraph;

   (3) Without prejudice to subsection (1) of this section in ascertaining the total income of any person for any year of income the following amounts shall be deducted–

   (a)   the amount of interest paid in respect of such year of income by such person upon any money borrowed by him and employed wholly and exclusively in the production of income chargeable under this Act to the extent to which it is not expense deductible in ascertaining the gains or profits chargeable under paragraph (a) of subsection (2) of section 3;

   (b)   any amount paid during such year of income by such person which is chargeable under paragraph (d) of the said subsection (2) of section 3, or would be so chargeable if it were derived from the United Republic:

   Provided that if such person was entitled during such year of income to any income which is not so charged, the deduction under this paragraph shall be such proportion of such amount as his total income under this Act ascertained before any deduction allowable under this paragraph bears to his income from all sources for such year of income;

   (c)   in the case of a partner, the amount of the excess, if any, of his share of any loss incurred by the partnership, calculated after deducting the total of any remuneration and interest on capital payable to any partner by the partnership and after adding any interest on capital payable by any partner to the partnership over the sum of any such remuneration and any such interest so payable to him less any such interest so payable by him;

   (d)   the amount of any loss arrived at in computing for such year of income gains or profits chargeable to tax under paragraph (a) of subsection (2) of section 3 other than any loss incurred in any business which, having regard to the nature of the business to the principal occupation of the owner, partners, shareholders or other persons having a beneficial interest therein, to the relationship of any such person or to any other relevant factor, the Commissioner considers reasonable to regard it as not being carried on mainly with a view to the realisation of profits; and, without prejudice to the generality of the foregoing, a business shall be deemed not to be carried on for any year of income with a view to the realisation of profits where more than one quarter of the amount of the revenue expenditure incurred in such business in such year relates to goods, services, amenities or benefits, or to the production of goods, services, amenities or benefits, which are of a personal or domestic nature enjoyed by the owner, partners, shareholders or other persons having a beneficial interest in the business or a member of the family or the domestic establishment of any such person.

   (4) Subject to paragraph (b) of this subsection–

   (a)   where the ascertainment of the total income of any person results in a deficit for any year of income, the amount of such deficit shall be an allowable deduction in ascertaining the income of such person for the following succeeding year; and

   (b)   where such deficit arises in whole or in part in respect of ascertainment of income derived from mining operations the amount of such deficit which so arises shall not be allowable as a deduction for such person in respect of income other than income derived from mining operations and no deficit arising in respect of any other business carried on by that person shall be allowable as a deduction in respect of income derived from mining operations.

   (4A) The provisions of subsection (4) shall not apply to a partnership firm.

   (5) A person to whom this subsection applies who has succeeded to any business or to a share therein, either as a beneficiary under the will or on the intestacy of a deceased person who carried on, solely or in partnership, that business shall be entitled to a deduction in the year of income in which he so succeeds in respect of such part of any deficit in the total income of the deceased for his last year of income as is attributable to any losses incurred by the deceased in the business in that year of income or in earlier years of income to the same extent as the deduction had he not died.

   (6) Subsection (5) shall apply to a person who is the widow, widower or child of the deceased person and to a person who was an employee or partner of the deceased person in that business; and, where there are two or more such persons, each such person shall be entitled to a deduction of so much of the whole amount deductible as his share in the business under the will or on the intestacy bears to the sum of the shares of all such persons.

   (7) For the purposes of this section–

   (a)   "scientific research" means activities in the fields of natural or applied science for the extension of human knowledge; and when applied to any particular business includes–

      (i)   any scientific research which may lead to, or facilitate, an extension of such business or of businesses of that class and exclusively incurred by him in the production of the income;

      (ii)   any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or in businesses of that class;

   (b)   expenditure of a capital nature on scientific research does not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research but, subject thereto, does include all expenditure incurred for the prosecution of, or the provision of facilities for the prosecution of scientific research.

17.   Deductions not allowed Acts Nos. 16 of 1974 s. 13; 7 of 1976 s. 26; 18 of 1991; 27 of 1997 s. 7; 18 of 2002 s. 35">

   (1) Save as otherwise expressly provided, for the purposes of ascertaining the total income of any person for any year of income, no deduction shall be allowed in respect of–

   (a)   any expenditure or loss which is not wholly and exclusively incurred by him in the production of the income;

   (b)   any capital expenditure, or any loss, diminution or exhaustion of capital.

   (2) No deduction shall be allowed in respect of–

   (a)   any expenditure incurred by any person in the maintenance of himself, his family or establishment, or for any other personal or domestic purpose;

   (b)   any expenditure or loss which is recoverable under any insurance, contract, or indemnity;

   (c)   save to the extent specifically provided for by or under this Act, any income tax or tax of a similar nature paid on income;

   (d)   any sums contributed to any pension, saving, or provident scheme or fund, except as provided in paragraphs (n) and (o) of subsection (2) of section 16;

   (e)   any premium paid under an annuity contract;

   (f)   any expenditure incurred in the production of income deemed under section 10 of this Act to have accrued in or to have been derived from the United Republic where such expenditure was incurred by a non-resident person not having a permanent establishment within the United Republic;

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