Tax on property income in Tanzania
Taxation Researcher | November 15, 2019
Effective Tax Rate on Rental Income
|Click here to see a worked example|
|Source: Global Property Guide||Disclaimer|
Nonresidents are taxed only on income derived from Tanzania. Married couples are taxed separately.
Nonresidents are taxed on their Tanzanian-sourced income. The applicable tax rates depend on the source or nature of income.
Net rental income earned by nonresidents is taxed at a flat rate of 20%. Taxable income is computed by deducting costs incurred from the gross rental income.
Rental income from leasing land and buildings earned by nonresidents is subject to 15% withholding tax, which can be credited against the taxpayer´s income tax liability.
Stamp Duty on Lease of Property
Lease agreements are liable to stamp duty, which is levied at 1% of the gross rent.
CAPITAL GAINS TAX
Capital gains realized from the disposal of Tanzanian assets by nonresidents are taxed at a flat rate of 20%. To calculate the taxable capital gains, acquisition costs are deducted from the gross selling price.
However, if the property was used as the individual´s private residence for three years prior to the sale, capital gains up to TZS15 million (US$6,637) may be exempt from taxation.
Stamp Duty on Sale of Property
Conveyance of real properties is liable to stamp duty, which is levied at 1% of the gross selling price.
Property tax is levied at flat rates on the property value by the municipal or city councils. Applicable rates vary depending on the size, use and location of the property.
For Dar es Salaam region, property tax is levied at 0.15% on residential properties and 0.20% on commercial properties.
Income and capital gains earned by companies are generally taxed at a flat rate of 30%. Income-generating expenses are deductible when calculating for taxable income.