Currency Rules in Tanzania: Rent, Salaries and Supplier Contracts

This page is the contract currency operating file: which Tanzanian agreements must be denominated and paid in shillings, and which desk reads each afterwards. It is not a foreign-exchange trading note and not a profit-repatriation guide.

• Immigration stay for a foreign hire: residence permits
• Entry status before the contract: business visa and residence
• The workplace behind the payroll: OSHA registration
• Premises before the lease: building permits

As at 14 September 2026. This file rests on Cap. 197, the 2025 currency regulations, Cap. 366 on employment and Cap. 332 on income tax; confirm the live wording on bot.go.tz and the live schedule on tra.go.tz.

Section 26 is a statute, not a bank policy

Commercial banks apply this rule; they did not write it. The Finance Act 2024 amended section 26, and the regulations issued under that amendment carry the operating detail. Together they prohibit pricing, advertising, quoting, invoicing or demanding payment in a foreign currency for a domestic transaction, and make refusal of shillings tendered in settlement an offence. Sanctions attach. No fine is printed here; that figure moves by amendment.

Currency, coinage and legal tender are Union matters, so the shilling requirement reaches Mainland Tanzania and Zanzibar alike. The tax that follows a contract does not. TRA administers income tax and PAYE on both sides. The Zanzibar Revenue Authority administers VAT on island supplies under its own Act, and the mainland service levy has no island twin. Settle which side a supply is made on before choosing the return.

Employing a non-citizen: permission comes before the payslip

Two screens run before a contract is drafted for a foreign national. GN No. 487A of 2025 reserves stated business activities for citizens; where the activity sits on that list, no payroll arrangement rescues it. The individual then needs a work permit from the Labour Commissioner under the Non-Citizens (Employment Regulation) Act and a residence permit from Immigration under the Immigration Act, Cap. 54. Class B permits carry a succession plan naming the Tanzanian to be trained into the role.

A payslip issued to someone holding no valid permit is not a currency question. It is evidence in a labour file, and it usually settles the argument about when employment began.

Which of your agreements count as domestic

The test is where the obligation is performed and by whom, not where the parent keeps its budget.

Those exempt classes are drafted narrowly: payments by Government to regional bodies hosted here, diplomatic missions, foreign-currency lending by licensed banks, duty-free sales. Check the transaction against the wording in force before relying on any of them.

Rent: the lease becomes a tax file the day it is signed

A commercial lease attracts VAT at the standard rate of 18% under the Value Added Tax Act, Cap. 148, where the landlord is registered. The tenant withholds tax on the rent itself: 10% from a resident landlord, 15% from one who is not, under the Income Tax Act, Cap. 332, and issues a certificate. The instrument is stamped under the Stamp Duty Act, Cap. 189; confirm the ad valorem treatment of that term with TRA.

Land rent owed to the Ministry responsible for lands on a granted right of occupancy is assessed in shillings and falls on the holder of the title, not the occupier of the floor. Budget it apart from what a private landlord charges.

A shilling rent tracking a dollar reference recreates the pricing the 2025 regulations removed. Where the economics need a review mechanism, build it on a published domestic index or a fixed step, and put any foreign reference to counsel first.

Salaries: what the payslip shows, and who reads it

The Employment and Labour Relations Act, Cap. 366, requires written particulars of employment and payment of remuneration in legal tender by an agreed method: cash, cheque or transfer to an account the employee named. Sector minimum wages sit in wage board orders under the Labour Institutions Act, Cap. 300; read the order for your grade.

• PAYE: Income Tax Act, Cap. 332. Deducted monthly, remitted within seven days of month end. The first TZS 270,000 of monthly taxable income bears no tax; the top marginal rate is 30%.
• NSSF: National Social Security Fund Act, Cap. 50. Twenty per cent of gross emoluments, the employee bearing no more than half.
• Skills and Development Levy: Vocational Education and Training Act, Cap. 82. 3.5% of gross emoluments, mainland employers with ten or more staff.
• Workers Compensation Fund: Workers Compensation Act, Cap. 263. 0.5% of gross emoluments, private sector.

Zanzibar employers enrol staff with the Zanzibar Social Security Fund and do not meet the mainland skills levy; PAYE stays with TRA. That fund sets its own rate.

The expatriate package is where currency, tax and immigration meet. A token shilling salary with the balance sent abroad is read three times: by TRA as employment income understated at source, by the Labour Commissioner against the figure declared on the permit application, and by the bank when that employee asks to remit savings. Housing, school fees, a vehicle and home leave are benefits in employment unless exempted, so price each line before promising a net number.

Supplier contracts: the invoice, the receipt and two deductions

A resident supplier bills in shillings. VAT applies where that supplier is registered, and input tax is claimable only against a fiscal receipt generated by an electronic fiscal device under the Tax Administration Act, Cap. 438. A dollar proforma, however detailed, supports no deduction.

Withholding on service fees is 5% from a resident supplier and 15% from one abroad, deducted at payment under Cap. 332 with a certificate issued. Separately, the business pays a service levy of 0.3% of turnover to its local authority under the Local Government Finance Act, Cap. 290: a charge on your own revenue, never a line on a vendor’s bill. Where goods or services genuinely arrive from abroad the contract may be denominated in foreign currency, and VAT on imported services still applies.

Sequence the desks actually follow

1. Screen the activity and the people: the reserved list, then permits for every non-citizen on a payslip.
2. Classify each agreement: performed here, performed abroad, or inside a named exemption.
3. Amend before you renew: a written variation to the lease, the employment contract and the supply agreement.
4. Put the tax lines on the document: VAT-inclusive or not, who withholds, what certificate follows.
5. Register the payroll: TIN, PAYE, pension, compensation fund, and the skills levy at the tenth employee.
6. Pay from the company account: one mandate, names reconciling across BRELA, the TIN and the invoice.
7. Diary the returns: payroll monthly, VAT monthly, the council levy on its own cycle.

What the file has to contain

Written particulars of employment; the lease and any variation agreement, stamped; TIN and VAT registration certificates; the monthly PAYE return filed through TRA’s online system with proof of payment; withholding certificates for every landlord and supplier; pension and compensation-fund registration with the contribution schedules; work and residence permits for non-citizens; the fiscal receipt behind each input-tax claim; and a board minute recording the decision to redenominate, with the amendments attached.

Not in that pack: a screenshot of an exchange rate, or a broker’s assurance that dollars are still tolerated.

Illustrative arithmetic: one office, one hire, one vendor

Illustrative arithmetic, not a quotation. Take a monthly rent of TZS 9,000,000 from a resident corporate landlord. VAT adds TZS 1,620,000, so the invoice reads TZS 10,620,000. The tenant withholds 10% of the rent, TZS 900,000, pays the landlord TZS 9,720,000 and remits the deduction.

Now a hire at TZS 3,000,000 gross. The employee’s pension contribution of TZS 300,000 comes out before tax, leaving TZS 2,700,000 taxable. On the top band that is TZS 128,000 plus 30% of TZS 1,700,000, giving PAYE of TZS 638,000 and net pay of TZS 2,062,000. The employer adds its own TZS 300,000 to the fund, TZS 105,000 of skills levy and TZS 15,000 of compensation levy: TZS 3,420,000 spent on a three-million salary.

Then a resident IT contractor billing TZS 4,000,000 plus TZS 720,000 of VAT. Withhold 5% of the fee, TZS 200,000, pay over TZS 4,520,000 and file the receipt with the input claim. Every figure is in shillings, whatever head office uses.

Where this file stalls

• A renewal signed on the old dollar rent because the landlord has always invoiced that way
• A foreign hire whose contract names a dollar package while payslip and permit application disagree
• Input tax claimed against a vendor’s dollar proforma with no device-generated receipt
• The skills levy skipped for the year the tenth employee joined in March
• Deductions taken from landlords and suppliers but never remitted, found at audit with interest running
• A shilling price pegged to a foreign reference so the old economics survive

What changed, and why the window matters now

The Finance Act 2024 opened the amendment to Cap. 197; GN No. 198 of 2025 followed, in force from 28 March 2025, and gave contracts already denominated in foreign currency twelve months to be brought into line. Agreements left unamended risk being treated as void unless the Minister for Finance grants an extension, which cannot outlast the contract’s own tenure. That period ran out during 2026.

A dollar lease signed in 2022 and never revisited is a dispute waiting for a counterparty who wants one. Where a real case for extension exists, the application goes to the Minister.

Desks this page does not replace

The Bank of Tanzania owns the currency rule and the licensed bank applies it at the counter. TRA owns PAYE, VAT and withholding across the Union; ZRA owns Zanzibar VAT. The Labour Commissioner owns work permits, Immigration the residence permit beside one. The pension funds own contributions, the Workers Compensation Fund its levy, the municipal council the service levy. Zatra prepares, structures and coordinates these files; it does not practise law, audit or issue approvals.

What to confirm before you act

• The wording of GN No. 198 of 2025 and its exemption list, from bot.go.tz
• The live PAYE bands and withholding rates for the year you are filing
• Whether headcount has crossed ten, which switches on the skills levy
• The wage board order governing your sector
• Which agreements are still in foreign currency, and when each renews
• Which side of the Union each supply is made on, so VAT reaches the right desk