Provisional Tax in Tanzania: Estimates, Instalments and the 80% Test

This page is the provisional-tax operating file: what an instalment payer must estimate, pay and revise before the return of income closes the year. It is not a rate table and not a guide to disputing an assessment.

• Rates that feed the estimate: Tanzania tax rates 2026
• Loss years and the minimum tax on turnover: tax loss carry forward
• Interest the estimate may not deduct: thin capitalisation
• When the Commissioner substitutes his own figure: appealing a TRA assessment

As at 14 September 2026. This file rests on Cap. 332, Cap. 438 and the TRA Taxpayer Portal; Finance Acts move dates, rates and penalties, so check the live schedule on tra.go.tz before you budget.

Who is an instalment payer, and under which section

Section 88 of the Income Tax Act makes every person who derives or expects to derive income from a business or an investment pay that year’s tax by instalments. Section 89 requires the same person to lodge an estimate on or before the first instalment date. The mandate sits with the Commissioner General of TRA; the desk is the Domestic Revenue Department at the regional office holding the TIN, or the Large Taxpayers Department where the company is designated to it.

An employee whose only income is salary is outside the regime because PAYE settles the liability at source. A resident individual with business turnover of TZS 100 million or less sits under the presumptive scheme in the First Schedule. Above that threshold, and for every company from its first year, the estimate is compulsory even when the expected figure is nil. The year of income is the calendar year unless the Commissioner has approved a different twelve-month period under section 20.

Income tax is a Union matter: a company registered at BPRA in Zanzibar lodges its estimate with TRA’s Zanzibar office on the Mainland dates. The Zanzibar Revenue Authority administers non-Union taxes such as Zanzibar VAT and the hotel levy only.

The calendar for a December and a June year-end

A company that begins trading part-way through its year lodges its first estimate by the next quarter-end and spreads the figure over the instalment dates that remain. Weekends do not move the dates.

How each instalment is computed

Each instalment is the estimated tax for the year, less instalments already paid and less non-final tax withheld from the company’s receipts so far, divided by the number of instalments still to fall due including the current one. The first is therefore a quarter of the estimate net of credits earned by that date. Withholding that arrives late in the year shrinks the later instalments. An upward revision loads the whole increase onto what is still outstanding. A downward revision cannot claw back money already paid; the surplus is recognised only when the return is assessed.

Credits that reduce an instalment, and PAYE that does not

Section 87 gives credit for non-final withholding suffered on income received: the 5% withheld on service fees paid by a resident payer and the 10% withheld on interest paid to a company, both under section 83 and the First Schedule. Dividend withholding is a final tax under section 86 and gives no credit. The evidence is the certificate the payer generates on the Taxpayer Portal after filing its own withholding return; a credit with no certificate on the system does not reduce the instalment in TRA’s ledger.

PAYE deducted from staff under section 81 is the employer’s liability to remit, not a credit against corporate instalments. Netting the two is the most frequent error on new files.

Revising the estimate

Section 89 lets the instalment payer file a revised estimate at any point in the year, accompanied by reasons. The revision governs only the instalments falling due after it is lodged. The Commissioner may reject an estimate he considers unreasonable and substitute his own; the company is then dealing with an assessment, and the objection route with its deposit rule is the file on the assessment page. Revising upward costs cash and nothing else. Revising downward needs arithmetic first.

The 80% test and section 75 interest

Section 75 of Cap. 438 applies where the estimate, or the revised estimate, is less than 80% of the tax finally payable for the year. Interest then runs for each instalment period on the amount by which the instalment paid fell short of the instalment a correct estimate would have produced. The rate is the statutory rate, the Bank of Tanzania discount rate as defined in the Act, compounded monthly. TRA computes the charge when the return is processed and posts it to the statement of account. Paying an instalment after its due date is a separate charge under section 76 at the same rate.

Penalties for a late statement or a late return

Section 78 of the Tax Administration Act penalises a late tax return for each month or part of a month at the higher of 2.5% of the tax assessed on that return, less tax already paid, or 5 currency points for an individual and 15 for a body corporate. A currency point is TZS 15,000, so the floor is TZS 75,000 a month for an individual and TZS 225,000 for a company. TRA applies the penalty separately to a late estimate and to a late return of income.

The quieter consequence is the tax clearance certificate that a business licence renewal under the Business Licensing Act Cap. 208, a tender or a bank facility review asks for; the regional office will not issue one while an instalment or a return is outstanding on the TIN.

Sequence

1. Fix the year of income. Confirm the calendar year applies or hold the section 20 approval, then check on the Taxpayer Portal whether TRA has already lodged an estimate against a new TIN from the registration questionnaire.
2. Build the estimate from a board-approved budget. Start at forecast profit before tax, add back non-deductible items, restrict interest on debt above the 7:3 debt-to-equity limit in section 12 for exempt-controlled entities, apply the 30% corporate rate in the First Schedule, and deduct expected non-final withholding. A third consecutive loss year is estimated at the 1% alternative minimum tax on turnover.
3. Lodge the statement on the portal by the first instalment date and save the acknowledgement.
4. Pay each instalment through a control number generated on the portal, on or before the quarter-end.
5. Reconcile withholding each quarter and recompute the next instalment.
6. Revise with reasons when the forecast moves: after testing a lower figure against 80% of the year’s likely outcome.
7. Close the year. Obtain audited financial statements certified by a certified public accountant in public practice registered with the NBAA, file the return within six months of year-end, pay the balance, and check the interest line on the statement of account.

Documents the file needs

• TIN certificate and the Taxpayer Portal login for the entity, not a director’s personal account
• The Commissioner’s approval of a substituted year of income, where one exists
• Prior-year return of income, the TRA assessment and the current statement of account
• Board-approved budget and monthly management accounts supporting the estimate
• The filed Statement of Estimated Tax Payable and any Revised Statement with its reasons
• Withholding tax certificates from each payer; control numbers and receipts for every instalment
• Audited financial statements, the auditor’s NBAA registration, and the return of income with its acknowledgement

Illustrative arithmetic, not a quotation

A Dar es Salaam services company with a calendar year of income budgets profit before tax of TZS 400,000,000 for 2026. Tax at 30% is TZS 120,000,000, filed as the estimate on 31 March. Resident customers withhold 5% on fees; certificates show TZS 7,500,000 withheld by then.

Instalment one: (120,000,000 − 7,500,000) ÷ 4 = TZS 28,125,000. By 30 June the certificates total TZS 15,000,000. Instalment two: (120,000,000 − 28,125,000 − 15,000,000) ÷ 3 = TZS 25,625,000.

In August a contract is lost and the board revises the estimate to TZS 90,000,000, with reasons. Withholding to 30 September stands at TZS 22,500,000. Instalment three: (90,000,000 − 28,125,000 − 25,625,000 − 22,500,000) ÷ 2 = TZS 6,875,000. By 31 December withholding reaches TZS 30,000,000 and the fourth instalment computes to a negative figure, so nothing is paid. Instalments total TZS 60,625,000; with credits the company has covered TZS 90,625,000.

The audit in May 2027 shows tax finally payable of TZS 125,000,000, leaving TZS 34,375,000 due with the return on 30 June 2027. The 80% threshold is TZS 100,000,000; the revised estimate sits below it, so interest runs on the instalment shortfalls at the statutory rate from each quarter-end. Had the board left the estimate at TZS 120,000,000, no interest would have applied and the year-end balance would have been TZS 5,000,000. A March statement lodged a month late would have added the higher of TZS 225,000 and 2.5% of TZS 120,000,000: TZS 3,000,000.

Where the file stalls

• The TIN registration questionnaire asked for projected turnover; the founder wrote an ambitious number, and the first contact with TRA is an instalment demand computed from it.
• PAYE remitted for staff is netted against the company’s instalment; the regional office reverses the netting and interest runs on the shortfall.
• Credits are claimed for withholding the payer deducted but never filed, so no certificate exists and the instalment is short.
• The estimate is cut in the third quarter to fund working capital without the 80% arithmetic; the interest arrives with the next assessment.
• The auditor is engaged in month five, the accounts are signed in month seven, and the return penalty clock starts.
• A group pays a subsidiary’s instalment under the parent’s control number; the receipt sits on the wrong TIN until a reallocation letter is processed.

Mandate-holders this file does not replace

The Commissioner General of TRA owns the estimate, the assessment, the interest and the tax clearance. An NBAA-registered accountant in public practice certifies the financial statements; Zatra prepares the estimate and the reconciliation and does not audit. BRELA and BPRA own the legal person and the year-end in its constitution, which must match what TRA holds. The Tax Revenue Appeals Board and Tribunal own disputes over a substituted estimate. The Bank of Tanzania sets the discount rate behind the statutory rate.

What to confirm before you act

• The live instalment dates on tra.go.tz and any Finance Act 2026 amendment to sections 88 and 89
• The current statutory rate and whether sections 75 and 78 of Cap. 438 have moved since this date
• Whether an estimate already exists on the portal for a new TIN
• That every withholding credit in the computation has a certificate on the portal
• The auditor’s sign-off date against the six-month return deadline
• For a BPRA company, that the estimate goes to TRA in Zanzibar, not ZRA