Tax Clearance Before Closing a Company: The TRA Exit BRELA Asks For

This page is the tax-exit operating file: what TRA must see before a company can be struck off, wound up or shelved, and in what order the desks take it. It is not a liquidator’s manual and not a forms index.

• The whole closing file: deregistration, strike-off and tax exit
• Already removed: restoring a struck-off company
• Instalments running to cessation: provisional tax
• The registration being cancelled: Tanzania VAT

As at 14 September 2026. Confirm the live clearance route and forms on tra.go.tz; this file rests on Cap. 332, Cap. 148, the Tax Administration Act Cap. 438 and the Companies Act Cap. 212.

Two registers close, and neither desk reads the other

BRELA holds the company under Cap. 212 and removes it on application only when the Registrar sees that trading has stopped and the filings are current. TRA holds the same business as a taxpayer under a TIN and releases it only when each head of tax is settled. A company can be off the register and still carry an open income-tax assessment. The dead company does not answer for that; the people who signed do.

The council is a third desk. A licence under the Business Licensing Act Cap. 208, and the service levy charged on turnover by the local authority under the Local Government Finance Act Cap. 290, capped at 0.3%, run until the licence is surrendered and the last quarter settled.

Zanzibar splits differently. Its register belongs to BPRA, and the non-Union charges (island VAT, hotel levy, stamp duty) to the Zanzibar Revenue Authority. Income tax, PAYE and withholding stay Union taxes administered by TRA wherever the company sits, so an island company collects two clearances. A Mainland certificate does not speak for ZRA.

Three ways out, one tax file

The route decides who signs, not whether TRA is involved.

Waiting for the Registrar’s own initiative ends the company’s legal life without ending anything at TRA, while penalties run against a TIN nobody deactivated.

The final return covers a part-year

Cap. 332 sets the ordinary return of income at six months after the year of income ends, with provisional instalments on the last day of the third, sixth, ninth and twelfth months. On cessation the Commissioner can call for a return covering the short period to the date trading stopped. Ask for that direction in writing; an invented part-year filing is what the clearance desk returns.

The closing computation is rarely the ordinary one. Depreciable assets sold or handed to shareholders raise balancing charges; stock written off needs evidence, not a board note. A company carrying unrelieved losses for three consecutive years meets the alternative minimum tax of 1% of turnover under Cap. 332 even in its last period. Profit on the short period is taxed at 30%.

VAT cancellation, assets on hand, and the fiscal device

Cancellation is applied for, not triggered. A registered person who stops making taxable supplies applies to the Commissioner under Cap. 148; until it is granted, monthly returns stay due by the twentieth day of the month following the tax period, and nil ones still count. Registration bites at TZS 200 million of annual taxable turnover, so a business that fell below that line years ago may still be registered and accruing penalties.

Assets on hand are the trap. Vehicles, plant, fittings and stock on which input tax was claimed, and which the company still holds, are treated as supplied when registration is cancelled; output tax at 18% falls due on their value. Passing a pickup to a director on the way out is a taxable supply, not housekeeping.

The fiscal device goes back: closing Z report, machine surrendered at the TRA regional office, decommissioning acknowledgement kept. Penalties in Cap. 438 run in currency points, not shillings. Confirm what a point is worth. Where the closing return shows a repayment, claim it while the bank account lives; refunds reach an account in the company’s name, never a closed one.

The payroll tail outlives the payroll

PAYE on the last salaries is remitted within seven days after that month ends, and the half-yearly statement of tax withheld falls due within thirty days of the six-month period closing. Severance and terminal benefits are emoluments; taxing them correctly now costs less than arguing at clearance.

Three funds sit beside PAYE. The Skills and Development Levy is 3.5% of payroll cash costs for employers with ten or more employees under the Vocational Education and Training Act Cap. 82. The Workers Compensation Fund tariff for private employers is 0.5% of cash sums paid. Social security contributions run at 20% of gross, normally split 10% employer and 10% employee. Each fund clears on its own letter, reviewing history not the closing month.

Residence and work permits under the Non-Citizens (Employment Regulation) Act attach to the employer; cancel them with Immigration as contracts end.

Assessments, objections, and the deposit that admits them

A disputed assessment does not pause the exit; it changes the arithmetic. Notice of objection goes in within thirty days of service, and the Commissioner admits it only once the taxpayer has paid the amount not in dispute or one-third of the assessed tax, whichever is greater, under Cap. 438. Waiver of that deposit is discretionary and must be applied for. An objection lodged without either is not an objection. It is an unpaid assessment with a letter attached.

Appeals move to the Tax Revenue Appeals Board and onward to the Tribunal under Cap. 408. A liquidator can close over a pending appeal only by reserving for it; distributing instead puts the declaration of solvency in doubt.

Clearance is not absolution. The Commissioner may adjust an assessment within five years of the original, and without limit where fraud or wilful neglect is found; records must be kept five years. Deactivating the TIN is a separate request, until that registration closes, the portal expects returns from a business with no staff and issues penalties.

The order the desks actually take it

1. Minute the decision and fix a cessation date. Everything keys to it: the part-year return, the closing payroll, the VAT application.
2. Bring back-filing current first. Missing years, quiet ones included, are the commonest reason a clearance request never reaches an officer.
3. Run the last payroll and close the funds. PAYE, SDL, workers compensation and social security to the cessation month, then request each letter.
4. Apply to cancel VAT and surrender the fiscal device. Account for assets on hand in the closing return rather than waiting to be assessed on them.
5. File the return of income, then settle or object. Pay the balance, or object inside the window with the deposit made.
6. Apply for the tax clearance certificate on the live TRA process, with fund letters and payment receipts attached.
7. Surrender the licence and sector permits and close the council levy account for the final quarter.
8. File at BRELA or BPRA, and shut the bank account last. It pays the closing liabilities and receives any refund.

The pack the clearance officer opens

• Board or members’ resolution carrying the cessation date, with the certificate of incorporation
• TIN certificate, VAT certificate, and the device decommissioning acknowledgement with its final Z report
• Financial statements to cessation, audited where the company was required to audit, with comparatives
• Returns already filed, matched to control numbers and payment receipts
• Payroll schedules, statements of tax withheld, terminal-benefit computations, and letters from NSSF and workers compensation
• Business licence original, sector permits, OSHA workplace registration under Cap. 297, and council levy receipts
• Bank statements, the beneficial-ownership record, and a declaration of solvency where a liquidator is appointed

Illustrative arithmetic: a company that stops in month nine

Illustrative arithmetic, not a quotation. A Dar es Salaam services company ceases trading on the last day of its ninth month. Turnover to that date is TZS 900,000,000 and taxable profit for the period is TZS 120,000,000. Tax at 30% is TZS 36,000,000; instalments of TZS 24,000,000 were already paid, leaving TZS 12,000,000.

Two vehicles and office equipment carrying reclaimed input tax sit in the books at a market value of TZS 60,000,000. Deemed supplied at cancellation, they attract output tax of TZS 10,800,000. Service levy at the 0.3% ceiling on that turnover is TZS 2,700,000; quarterly payments of TZS 2,025,000 were made, so TZS 675,000 closes the council. One older assessment of TZS 90,000,000 is disputed, and admitting the objection needs a deposit of TZS 30,000,000.

Cash required before the application is credible: TZS 53,475,000, of which only TZS 12,000,000 is the tax the shareholders budgeted for. The rest is a registration nobody cancelled and a dispute nobody resolved.

Where this file stalls

• The bank account shut first, so a repayment has nowhere to land
• An objection lodged on the twenty-ninth day with no deposit and no waiver request
• The fiscal device handed to a supplier instead of TRA, leaving no decommissioning evidence
• Management fees charged by a parent in the closing year with no agreement and no withholding trail

What moved recently

The levy headcount threshold rose from four employees to ten, so a small closing payroll may fall outside it. VAT registration now starts at TZS 200 million of turnover, leaving older businesses registered above a line they no longer cross. Filing itself moved: returns and control numbers through the TRA taxpayer portal, receipting through virtual fiscal devices, company filings through BRELA’s online system, where the beneficial-ownership record must be current before the Registrar accepts anything else. Finance Acts move thresholds more often than rates.

Mandate-holders this file does not replace

TRA issues the clearance certificate and deactivates the TIN; no other office can. BRELA removes the company from the Mainland register and BPRA from Zanzibar’s. NSSF and the Workers Compensation Fund clear their own arrears. The local authority cancels the licence and levy account; Immigration cancels permits. A liquidator owes duties to creditors; the Official Receiver appears in a court winding-up. Zatra prepares, structures and coordinates the pack across those desks; it does not audit, practise law or issue certificates, and no outcome is guaranteed.

What to confirm before you act

• The cessation date in the minute, and that every later filing uses it
• Whether the Commissioner has directed a return for the short period, in writing
• Every year of income filed, quiet years included, with receipts matching control numbers
• Assets still held at cancellation, valued and carried into the closing return
• For any dispute: deposit paid or waiver applied for, and appeal dates diarised
• Which registry you are leaving, and which authority the certificate has to satisfy