Turnover, Not Profit: What a Small Trader Owes TRA

A trader who has sold cement for eleven months without writing down a single monthly total is in a weaker position with TRA than a trader who owes more tax and can prove every shilling of it. The first question a small business faces in Tanzania is not what the rate is. It is what the turnover was, and whether it can be shown.

This page is the small trader tax file: who the presumptive regime is for, what leaving it commits a business to, where VAT begins, what the fiscal receipt roll is actually for, and what a trader is entitled to when an assessment lands. It does not print a presumptive rate, and the reason for that is the second section.

Who is the presumptive regime for?

Four conditions, all of them set and administered by the Tanzania Revenue Authority. Miss one and the regime is not available.

The word doing the work is turnover — what came in, not what was kept. A shop that sells TZS 90 million of cement and clears TZS 6 million of profit has turnover of TZS 90 million. Divided by twelve, the ceiling gives a monthly figure to check against: TZS 8,333,333.

Thresholds move with the Finance Act each 1 July: a figure that was right in June can be wrong in July.

What does a turnover-band schedule do, and why is no rate printed here?

TRA publishes the schedule and revises it with the Finance Act. This file does not reproduce it, and a trader should be careful with any article that does. A table copied two budgets ago produces a figure TRA does not recognise, and TRA assesses on the current one.

What does not change is the shape. A turnover-band schedule sets out ranges of annual turnover, with the tax payable stated against each range, so the trader finds the row the year’s sales fall into and reads across instead of working out a proportion of profit. A thin year and a fat year at the same level of sales therefore carry the same tax. That is the trade the regime offers: simplicity, in exchange for a figure that ignores how the year actually went.

Some schedules carry one figure against each band. Others carry two — a lower figure for a trader with complete records and a higher one for a trader without. Which shape the current schedule takes is a question for TRA, and the answer has a commercial consequence: where the schedule has a records column, a sales book is worth money in itself rather than only as evidence.

The current schedule comes from a TRA office, in writing, with twelve months of turnover already totalled. Relief measures are announced from time to time; whether one is running at any given moment is a question for TRA rather than for a forwarded message.

What does electing out commit a business to?

Electing out means leaving the turnover-band system and being taxed by TRA on business profit, with the full obligations of an ordinary taxpayer.

A business elects out when the presumptive figure looks high against the profit actually earned — the position of a high-turnover, thin-margin trader. An illustration makes it concrete. Turnover of TZS 80 million on a five per cent margin is TZS 4 million of profit, and a system that looks at the TZS 80 million line rather than the TZS 4 million line can cost more than tax on profit would. Banks and most procurement departments want audited accounts in any event.

Three obligations arrive with the election.

• Proper records, kept in books that let an auditor trace a sale from the receipt to the bank and a cost from the invoice to the payment.
• Provisional returns, with tax paid in instalments across the year on the trader’s own estimate of that year’s income rather than in one sum at the end, on the dates TRA sets. An optimistic estimate produces a correction at the final return.
• A final return with audited accounts, filed with TRA by 30 June of the year following the year of income and audited by a registered auditor.

Before electing, a trader settles three things with TRA: how the election is made, whether it binds beyond a single year of income, and from what date it takes effect. This is a change of system rather than a change of rate, and it is not casually reversed.

What does the regime switch off on the payroll side?

Nothing. The presumptive regime exempts a business from no payroll obligation. The moment one person is hired, the business becomes a collector of tax and contributions on someone else’s pay, owed to different institutions on different dates. Employer registration belongs before the first payday, not after it.

Worked example. Two employees: a supervisor on TZS 450,000 a month and an assistant on TZS 300,000. Payroll is TZS 750,000. Both sit above the TZS 175,000 residual minimum wage for sectors not otherwise specified, set by the Labour Institutions (Minimum Wage for Private Sector) Order, 2025, Government Notice No. 605A of 2025, effective 1 January 2026.

PAYE follows TRA’s resident monthly bands, unchanged by the Budget Speech 2026/27. Both wages fall in the 270,000–520,000 band, taxed at 8% of the excess over 270,000:

• Supervisor: 8% × (450,000 − 270,000) = TZS 14,400
• Assistant: 8% × (300,000 − 270,000) = TZS 2,400
• Total PAYE = TZS 16,800

NSSF is 20% of gross, 10% from each side: TZS 75,000 each. NHIF is 6%, 3% from each side under the National Health Insurance Fund Act, Cap 395: TZS 22,500 each. WCF is 0.5%, employer only — an employee cannot lawfully be required to contribute: TZS 3,750.

The Skills and Development Levy does not reach a business of this size. It is 3.5% of emoluments, due only from employers with 10 or more employees on the Mainland under section 14 of the Vocational Education and Training Act, Cap 82, and 4% at four or more employees in Zanzibar. The Mainland threshold rose from four to ten and is still widely published as four.

Check it: 16,800 + 75,000 + 22,500 = TZS 114,300 withheld, so TZS 635,700 reaches the two employees. The employer add-on is 10% + 3% + 0.5% = 13.5%, or TZS 101,250 on this payroll. A business that prices a job on the wage alone under-prices it by an eighth.

Guides that put everything on the 7th are wrong, and the error is expensive: late NSSF carries 5% a month on the unpaid amount under the NSSF Act, Cap 50. The gross-to-net arithmetic is worked line by line in the PAYE file, and the wider employer calendar sits in the payroll compliance file.

Where does VAT begin, and what changes when it does?

VAT is the next threshold above the presumptive ceiling, and a different tax on a different base. TRA registers a taxable person for VAT at TZS 200 million of annual turnover on the Mainland and TZS 100 million in Zanzibar — about TZS 16,666,667 and TZS 8,333,333 a month.

On the Mainland the VAT line sits at twice the presumptive ceiling, so a trader leaves the presumptive regime well before VAT arrives. In Zanzibar the two coincide. A Zanzibar trader at the top of the ceiling reaches the VAT threshold at the same moment — two separate questions arriving in the same week, and both belong in one conversation with TRA.

VAT is charged at 18% on the Mainland and 15% in Zanzibar, exports are zero-rated, and the tax is payable to TRA by the 20th of the month following the month in which it was charged. A registered trader collects that tax on every taxable sale and holds it for TRA; it was never the business’s money, and a business that spends it has spent a liability. Import duty, VAT and excise sets out how the same tax behaves at the border.

Who must issue a receipt, and what do the records decide?

Both sides of the counter carry a duty. The seller must issue a fiscal receipt or tax invoice. The buyer must demand one. Failure on either side can attract a fine. The amount is set and enforced by TRA and is obtained from a TRA office; it is not a figure to take from an article.

The receipt roll is also how TRA sees the turnover, and turnover is the figure that puts a trader in a band, keeps the business under the ceiling and eventually carries it across the VAT line. Records, not the rate, decide whether this regime is cheap or expensive for a particular business. Only records show whether turnover is genuinely under the ceiling, and whether the presumptive figure beats tax on actual profit.

The minimum set needs no software.

• A daily sales book giving the date, the day’s total sales and the receipt numbers covering them.
• A purchases file holding every supplier invoice in date order.
• A separate account, bank or mobile money, used only for the business.
• The fiscal receipt roll, retained.
• Payroll records where anyone is employed, showing gross pay, each deduction and the date of each remittance. Retention periods sit in the payroll records file.

Mixing household and business money is the commonest single reason a trader cannot prove turnover. Among the 2023 baselines for the National Financial Inclusion Framework III, only 14% of Tanzanian adults were able to pay bills and obligations on time. A tax bill is rarely a surprise in amount, only in timing, and a sales book turns it into a monthly line the business provides for. Where that provision is held matters too, because deposit insurance reaches licensed banks and not a savings club, as the savings protection file sets out.

What is a trader entitled to when an assessment lands?

More than most traders use. A taxpayer is presumed honest, and the burden of proof in a tax matter lies with TRA. A taxpayer has the right to object to an assessment. Both matter at exactly the moment a trader is most likely to simply pay whatever the paper says.

1. An assessment is a claim, not a conclusion. The taxpayer is entitled to be told the basis on which it was arrived at, and that request is made in writing.
2. An objection runs on a deadline. The date is taken in writing from the officer handling the file, at the moment the assessment is received rather than after a month of discussion about it.
3. The taxpayer may be represented. A registered tax consultant deals with TRA on the trader’s behalf, and on a disputed assessment that is usually cheaper than handling it badly alone.

Where an objection does not settle the matter, the dispute moves to the Tax Revenue Appeals Board and then the Tax Revenue Appeals Tribunal, and the deposit required at that door catches a small business unprepared. The appeals file sets out that sequence; the business taxes file places this regime among the other taxes a Tanzanian business meets.

Mandate-holders this file does not replace

TRA owns taxpayer registration, the presumptive schedule, VAT registration and the VAT rate, the fiscal receipt system and every assessment made under it. The Tax Revenue Appeals Board and the Tax Revenue Appeals Tribunal own an appeal once an objection has run its course. NSSF, NHIF and WCF each own their own contribution, rate and remittance date. The Ministry of Labour owns the minimum wage order. A registered tax consultant owns representation before TRA, and a registered auditor owns the audit opinion on a final return. Zatra prepares, structures and coordinates the file, grants no licence and does not practise law.

What to confirm before the Client acts

• The current presumptive schedule, obtained from a TRA office in writing, together with whether it carries a records column and what qualifies a trader for the lower figure.
• The Client’s own twelve months of turnover, totalled from the sales book and the receipt roll before any conversation with TRA begins.
• How far the business sits from the VAT registration threshold on the side it trades on, Mainland or Zanzibar, and whether the ceiling and the threshold arrive together.
• How an election out of the regime is made, whether it binds beyond one year of income, and the date from which it takes effect.
• Where an assessment has been issued, the basis on which it was arrived at and the date the objection period expires, both taken in writing from the officer handling the file.
• Registration with TRA, NSSF, NHIF and WCF before the first payday where anyone is employed, and the remittance date attaching to each.