Service Levy in Tanzania: How Councils Tax Your Turnover

This page is the service levy operating file: which council charges it, on what base and cycle, and how a company with several premises splits it. It is not a business-licence guide and not a property-rate schedule.

• Licence fee versus levy: service levy vs business licence
• Where the island differs: Union vs non-Union taxes: TRA and ZRB
• TRA’s charges on the same sales: 2026 tax rates

As at 14 September 2026. Confirm with the council’s revenue office and its current Service Levy By-laws; this file rests on Cap. 290 (R.E. 2019), with the VAT Act Cap. 148 and the Excise (Management and Tariff) Act Cap. 147 governing what comes off the base. Confirm the live schedule on tra.go.tz for those two lines.

The charge and its ceiling in Cap. 290

Service levy is council revenue, not a TRA tax. Cap. 290 lists it at section 6(1)(u) for urban authorities (city, municipal and town councils), and at section 7(1)(y) for district councils. Both paragraphs carry the same formula: payable by corporate entities or any person conducting business with a business licence, at a rate not exceeding 0.3 per cent of the turnover after value added tax and excise duty are taken out. The rate is a ceiling that by-laws fill; every council this desk has filed with charges the full amount.

Two further lines do work. Section 16(7) makes the levy payable in lieu of industrial cess and relieves a corporate entity that pays it from produce cess: a point for agro-processors buying crops in districts. The Schedule to the Act, item 4(a), repeats the cap and marks two things prohibited: charging above it, and charging service levy on non-corporate entities. The two texts pull against each other; a sole proprietor billed for the levy should ask the council which line it relies on before paying.

Ownership is irrelevant to the levy; whether a non-citizen may run the activity at all is the GN No. 487A of 2025 question, screened first.

Mainland only: Zanzibar runs its own local revenue

Local government finance is not a Union matter, so Cap. 290 stops at the water. An Unguja or Pemba business deals with the Zanzibar Revenue Authority (ZRA, the renamed ZRB) for Zanzibar’s own taxes and with the Zanzibar Municipal Council or the district council for local charges under Zanzibar’s instruments. This desk carries no Zanzibar service-levy rate; budget nothing until the island council states its charge in writing. Income tax on the same sales stays Union and TRA’s on both sides.

What counts as turnover, and what comes off

The base is gross revenue for the period, less the VAT charged on it under the VAT Act Cap. 148, the Mainland standard rate is 18%, and less excise duty under Cap. 147 where the goods carry it. Nothing else comes off: cost of sales, wages, rent and income tax are irrelevant. A company below the VAT registration threshold has no VAT to deduct and pays on gross takings.

The arguments live on contested lines. Banks argue interest income against gross receipts; insurers, net premium against gross; clearing agents and brokers, commission against the value that passed through their hands; fuel dealers point to the fuel levy under the Roads and Fuel Tolls Act, which the section does not name, so it stays in the base unless the by-law says otherwise. Councils read the VAT returns filed with TRA as the turnover evidence, so a declaration below the VAT-return figure invites a query.

For income tax the levy paid is a deductible business expense under section 11 of the Income Tax Act Cap. 332, not a credit against corporate tax.

Levy, licence fee, property rate and cess side by side

The levy and the licence are the pair operators most often confuse; the sibling post runs that comparison.

Branches: each council takes the turnover generated inside its boundary

Both charging paragraphs add that the branches of corporate entities pay service levy to the authority in whose area they are located. The head office cannot remit the group figure to its own council and close the file; the Arusha branch owes Arusha City Council on Arusha sales. Dar es Salaam is five councils, not one (the City Council for Ilala, plus the Kinondoni, Temeke, Ubungo and Kigamboni municipal councils), so a Sinza warehouse and a Kariakoo shop answer to two treasurers.

The Act speaks of branches, which leaves project sites unsettled. A contractor building a road in a district where it has no registered branch will meet a demand from that council with the contract value as base; telecom operators and banks meet the same question on towers and agents. Allocate turnover by where the sale or service is delivered, write the basis down, and hold one ledger per council. A revenue officer who sees a clean split rarely argues; one who sees a single national figure claims all of it.

The quarterly cycle, the annual true-up and the control number

Councils bill in quarterly instalments under their own Service Levy By-laws; the due date after each quarter closes sits in the by-law, not in Cap. 290, and differs between councils. Each instalment rests on a turnover declaration for the quarter. After year-end the council reconciles the four declarations against the audited financial statements and raises a balancing demand or carries a credit forward. Payment is against a control number issued from the council’s revenue system (TAUSI in migrated councils, the older LGRCIS elsewhere), and settled through GePG at a bank or by mobile money. A cash receipt without a control number is not proof of payment at renewal.

Late payment attracts the penalty and interest the by-law sets; this page publishes no penalty figure. Recovery is a civil claim by the council. The objection route under the Tax Administration Act Cap. 438 does not apply: a levy dispute runs to the council director and, failing that, to the ordinary courts, not the Tax Revenue Appeals Board.

Sequence from first quarter to receipt

1. Map every premises to its council: ward and council for each shop, depot, site and office, before the first invoice.
2. Register at each council’s revenue office once BRELA incorporation, the TRA TIN and the Cap. 208 licence are in hand; the council opens a file and issues its declaration form.
3. Build one turnover ledger per council from EFD Z-reports and the VAT return, with VAT and excise removed.
4. Declare and compute the quarter’s levy on each ledger, on the council’s form, signed by a director or the accountant.
5. Obtain the control number and pay through GePG; file the receipt with the declaration it settles.
6. Present receipts at licence renewal and inspection: the licensing desk checks levy standing before renewing a Category B licence.
7. Reconcile after the audit: submit the audited accounts, settle the balancing demand or bank the credit.

Documents the revenue office will ask for

• BRELA certificate of incorporation or current compliance extract
• TRA TIN certificate and, where registered, the VAT certificate
• The Cap. 208 business licence for each premises
• Quarterly turnover declaration on the council’s own form
• VAT returns for the quarter, with EFD Z-reports or the sales ledger as backing
• Branch turnover schedule with the allocation basis written on it
• Audited financial statements for the annual reconciliation, signed by an NBAA-registered auditor
• Prior receipts and control numbers, plus any assessment or demand note

Illustrative arithmetic, not a quotation

A distributor runs a warehouse in Ubungo Municipal Council and a branch in Arusha City Council. VAT-inclusive sales for the quarter: TZS 1,180,000,000 through Ubungo and TZS 590,000,000 through Arusha, all standard-rated, no excise.

• Ubungo: TZS 1,180,000,000 ÷ 1.18 = TZS 1,000,000,000 net; × 0.3% = TZS 3,000,000 owed to Ubungo Municipal Council.
• Arusha: TZS 590,000,000 ÷ 1.18 = TZS 500,000,000; the levy is TZS 1,500,000, to Arusha City Council.
• Quarter total TZS 4,500,000 on two control numbers; at a flat run-rate, TZS 18,000,000 for the year.

Had TZS 100,000,000 of the Ubungo net figure been excise duty, the base falls to TZS 900,000,000 and the Ubungo instalment to TZS 2,700,000. Pay the whole TZS 4,500,000 to Ubungo and Arusha still raises its TZS 1,500,000 with penalty; the Ubungo refund is a separate, slow file.

Where the file stalls

• One national payment to the head-office council, then a second demand from the branch council on the same sales
• Levy computed on VAT-inclusive receipts because the accountant lifted the figure from the EFD total
• Declaring less than the VAT return shows, which triggers a back-year audit by the council
• A project site treated as no branch until the district council’s demand arrives with the contract sum as base
• Cash handed to a collector without a control number; nothing shows in TAUSI at renewal
• A TISEZA certificate of incentives treated as a council exemption: only an EPZ or SEZ licence carries one, written into its own Act and limited to the licensed activity
• A Zanzibar branch budgeted at the Mainland rate because it is the same company

What has moved, and what has not

The 0.3% ceiling has survived every Finance Act since the levy replaced industrial cess; sections 6 and 7 stand unchanged in the 2019 revised edition. What moved is around it. The branch rule and the Schedule of permitted and prohibited local charges are now printed in the Act, which ends the older argument that a head-office payment discharged the group. Finance Act 2023 lifted the VAT registration threshold to TZS 200 million, so more small companies pay levy on gross takings with nothing to deduct. Property-rate collection has passed between councils and TRA by successive Finance Acts; confirm the current collector before a building charge goes to the wrong desk. Since 2025 the certificate of incentives comes from TISEZA, the merged TIC and EPZA; it exempts service levy no more than TIC’s did.

Mandate-holders this file does not replace

The council director and revenue office assess and collect; PO-RALG (tamisemi.go.tz) supervises councils, approves by-laws and runs the revenue systems. TRA administers VAT, excise and income tax on that turnover and supplies the returns councils read, but is not the levy collector. The Ministry of Industry and Trade and the council licensing desk own the Cap. 208 licence. ZRA and Zanzibar’s councils own the island side. An NBAA-registered auditor signs the accounts the reconciliation rests on. Zatra prepares the branch ledgers, declarations and reconciliation pack and coordinates the desks; it does not assess, collect or waive.

What to confirm before you act

• The council for each premises, by ward, and whether it is a city, municipal, town or district authority
• The council’s current Service Levy By-laws: rate charged, quarter dates, penalty
• Whether the council assesses on VAT-return turnover or on your declaration, and what it wants attached
• The branch allocation basis, written and signed before the first declaration
• Any EPZ or SEZ exemption wording, read from the licence itself
• For island premises, ZRA and the Zanzibar council in writing before any rate goes in the budget