Withholding Tax on Local Payments: Who Withholds, How Much, By When

This page is the resident withholding tax operating file: what a Tanzanian payer deducts from rent, professional fees, interest, dividends and Government goods invoices owed to another resident, and when it reaches TRA. It is not the cross-border decision table and not a PAYE manual.

• Payments leaving the country: cross-border withholding
• Fees charged by a related company: management fees withholding
• Relief for non-resident payees: double tax treaties
• Full rate map: 2026 tax rates

As at 14 September 2026. This file rests on sections 81 to 87 and the First Schedule of Cap. 332, the Income Tax Act (ITA), and on the Tax Administration Act, Cap. 438; the live schedule is on tra.go.tz and filings run through the TRA Taxpayer Portal.

Who is a withholding agent under sections 82 and 83

Section 82 of the ITA covers investment returns (dividends, interest, rent, royalties and natural resource payments), and s.83 covers service fees and contract payments. Any resident person paying one of those amounts with a source in the United Republic is the withholding agent for it. An individual is caught only when paying in the course of a business: a tenant renting a family home deducts nothing, while a company renting the same house for its country manager deducts 10%.

If the deduction is missed, s.84 makes the agent liable for the tax as though it had been withheld and leaves recovery from the payee to the agent.

Income tax is a Union matter. A Zanzibar company registered at BPRA withholds on the same schedule and remits to TRA’s Zanzibar office, not to the Zanzibar Revenue Authority, which owns non-Union taxes such as Zanzibar VAT and hotel levy.

Rate table for payments to residents

Rent on assets outside the list carries 0%, and a goods invoice from a private supplier carries no row at all. Recent Finance Acts added 2% on minerals bought from a primary mining licence holder and 10% on verified carbon emission reductions paid to a resident; neither touches an ordinary trading company. Confirm the live schedule on tra.go.tz after each Finance Act.

Final or creditable decides what the certificate is worth

A final withholding under s.86 ends the matter: the payee excludes the income from its return. A creditable withholding under s.87 is a prepayment: the consultancy firm that suffered 5% on a TZS 10 million fee sets the TZS 500,000 against its year-end liability, and needs the certificate in TRA’s system to support that line.

Section 85 obliges the agent to prepare and serve a withholding certificate on each withholdee; the Taxpayer Portal generates it once the remittance is posted against the withholdee’s TIN. A certificate carrying the wrong TIN, or never generated because the money was paid without a return, is a credit TRA refuses at audit.

Seven days after month end: the s.84 clock

Section 84(1): tax withheld in a calendar month is paid to the Commissioner within seven days of the month’s end. July deductions are due by 7 August; December’s by 7 January. No threshold relaxes the rule.

The run is on the Taxpayer Portal: lodge the withholding return listing each payee’s TIN, gross amount, rate and tax, take the GePG control number it issues, and pay at the bank or by mobile money before the seventh. Section 84(2) separately calls for a withholding tax statement within 30 days after each six-month period; the monthly return already carries that detail, so the half-year statement is a reconciliation.

Interest under Cap. 438 runs on any shortfall from the eighth day, and a penalty attaches to each month a return is late; take both figures from tra.go.tz, not from this page.

Service fees, resident management fees and the Government 2% row

Professional and consultancy fees paid to a resident firm, or to an individual in business, carry 5% on the VAT-exclusive amount: audit, legal, engineering, IT and advisory invoices sit here. A management fee charged by a resident related company is the same row; the 15% belongs to payments leaving the country, and the pricing of the fee is a separate file under the Tax Administration (Transfer Pricing) Regulations. A treaty never enters a resident-to-resident payment.

Ministries, agencies, local authorities and parastatals deduct 2% on goods supplied by a resident; a private company buying the same goods deducts nothing. A supplier to Government that has never filed a return has no year-end in which to use the 2%.

How this differs from PAYE

PAYE is s.81 withholding on employment income. An employer deducts monthly at the graduated bands in the First Schedule (nothing on the first TZS 270,000 of monthly pay, 30% above TZS 1,000,000), and pays by the same seventh day. Skills Development Levy at 3.5% of gross emoluments on the Mainland (Vocational Education and Training Act, Cap. 82) and the 0.5% Workers Compensation Fund contribution (Workers’ Compensation Act, Cap. 263) travel with the payroll return. None of that touches a contract for services.

The line between the two is control and integration, not the label on the invoice. A ‘consultant’ with a desk, a line manager and a monthly retainer is an employee TRA will re-characterise; the PAYE shortfall, SDL and interest land on the company.

Sequence: one month’s payment run

1. Tag each supplier invoice at booking: resident or non-resident, then which row, or none.
2. Confirm the payee’s TIN and VAT status: the withholding base is the amount before VAT, and the TIN goes on the return.
3. Compute and deduct at payment: pay the net; record gross, base, rate, tax and invoice number in a withholding register.
4. Lodge the withholding return on the Taxpayer Portal in the first week of the following month and generate the GePG control number.
5. Pay the control number by the seventh: bank or mobile money; keep the receipt.
6. Download and serve the certificates on every payee once TRA posts the payment, and keep proof of service.
7. Reconcile the half-year statement to the register and the general ledger.

Papers the file needs

• An engagement letter with a withholding clause stating gross, rate and net; for rent, a lease stamped under the Stamp Duty Act, Cap. 189, naming the landlord’s TIN and the deduction; a loan agreement for interest; a board resolution and the register of members for a dividend.
• The supplier’s EFD fiscal receipt or tax invoice showing its TIN and, where registered, its VRN.
• The monthly withholding register: payee, TIN, invoice, gross, VAT, base, rate, tax and date paid.
• The portal acknowledgement, GePG control number and payment receipt for each month.
• Certificates served, with the email that proves service.
• For the payee, the certificates attached to the return of income (ITX 201.01.E for an entity) to support the s.87 credit.
• Evidence for a reduced dividend rate: the DSE listing or the 25% holding on the declaration date.

Illustrative arithmetic, not a quotation

A Dar es Salaam trading company’s July 2026 run to residents:

• Office rent of TZS 6,000,000 to an individual landlord who is not VAT-registered: 10% = TZS 600,000 deducted; the landlord receives TZS 5,400,000; final tax in the landlord’s hands.
• Consultancy invoice of TZS 10,000,000 plus 18% VAT (VAT Act, Cap. 148) = TZS 11,800,000: base TZS 10,000,000; 5% = TZS 500,000; the firm receives TZS 11,300,000; creditable.
• Interest of TZS 2,000,000 on a shareholder loan from a resident holding company: 10% = TZS 200,000; creditable for the lender.
• Interim dividend of TZS 40,000,000 to a resident company holding 30%: 5% = TZS 2,000,000; final. Paid instead to an individual with a 10% stake it would suffer TZS 4,000,000.

Total to remit by 7 August 2026: TZS 3,300,000 on one control number. Miss the date and Cap. 438 interest runs from 8 August, while the credits the consultancy firm and the lender expect stay unsupported until the payment posts.

Where the file stalls

• The supplier refuses the deduction and finance pays gross to keep the relationship. TRA later assesses the agent for the 5% plus interest; the supplier has spent the money.
• An individual landlord without a TIN; rent goes out gross for a year and the arrears surface at the next audit, with the lease and the return telling different stories.
• A dividend to a 25% corporate parent deducted at 10%. The parent cannot credit a final tax, so the excess becomes a Cap. 438 refund claim that outlasts the dividend.
• Certificates never downloaded; the consultant’s auditor asks in March, the agent’s accountant has left, and the credit is refused.
• Payee status read from the invoice address rather than residence: a resident firm with an offshore-sounding name still sits on the 5% row, and a resident management fee deducted at the 15% cross-border rate over-withholds.
• Remittance on the 15th because the payables ledger closes on the 10th. The seventh is the date; move the ledger.

Desks this file does not replace

TRA assesses, receives and certifies. Parliament sets the rows through each Finance Act. The Zanzibar Revenue Authority owns Zanzibar VAT, hotel levy and the other non-Union taxes, not this withholding. The local government authority collects service levy at 0.3% of turnover under the Local Government Finance Act, Cap. 290: the payee’s own levy, never deducted by the payer. BRELA holds the register that evidences a 25% holding; it does not tax the dividend. Zatra prepares the register, the return and the certificate run and coordinates the desks; it does not assess, audit or issue anything in TRA’s name.

What to confirm before you act

• The live rows for fees, rent, dividends, interest and Government goods after the current Finance Act.
• Each payee’s residence, TIN and VAT registration before the first payment goes out.
• The s.86 treatment of rent for your particular landlord: individual investor or business lessor.
• Whether the portal is enforcing the monthly return alone or also the half-year statement for your TIN.
• The current Cap. 438 interest and penalty figures.
• That the last six months’ certificates have been served and match each payee’s TIN.