In 2015, Tanzania made paying taxes more complicated for companies by introducing an excise tax on money transfers. On the other hand, it made paying taxes less costly by reducing the rate of the skill and development levy.
A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Tanzania. Under Tanzanian Law, companies registered in other countries are allowed to obtain a license to do business and have employees in the country.
In some cases, a company will register their business in Israel under one of the forms available: Sole Proprietorship, Private Limited liability companies (LLCs), Public Limited liability companies, Partnerships and Branches and representative offices; but prefer to have another company administering its payroll.
This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Larger companies with a commitment to Tanzania may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Tanzanian payroll, and can fulfil all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Israeli employment laws.
Companies can outsource the employment and payroll of their staff in Tanzania to a GEO, like Shield GEO. This is possible for both foreign workers and Tanzanian nationals. This is the easiest, fastest and safest way to payroll staff in Tanzania.
Shield GEO manages all aspects of payroll for workers in Tanzania, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.
Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.
Read more about outsourced payroll and employment through Shield GEO.
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|Employee Information Required ?||
The only information that is required for setting up a new start is the employee’s personal data.
A new employee must be registered with the authorities within 80 days from the start date of employment, in which the company has to present its structure to the SII and await authorization to start operations.
The following information is required to set up a new start: –
|Tax Registration Requirements ?||
When an employee first starts employment with a company they must be registered with the TRA (Tanzania Revenue Authority), and the pension scheme.
TRA will provide a TIN (Tax Identification Number) and the pension scheme will also provide a scheme number. All registrations must be made within the first month for the new start commencing work.
|Social Security Registration ?||
NSSF (National Social Security Fund) is deductible from employee (10% of gross) with the employer paying the same amount on the employee’s behalf. Submissions to the NSSF authority are to be made within one month after the month of deduction.
Skills Levy: Employer is to pay 5% of the gross on behalf of the employee.
|Corporate Income Tax ?||
30% on taxable profits
|Income Tax Rate ?||
|Sales Tax ?||
|Withholding Tax ?||
10% on interest income
|Payment Mode ?||
An employer shall pay to an employee any monetary remuneration to which the employee is entitled in cash, unless the employee agrees otherwise, in which case the payment shall be made either by check payable to the employee; or direct deposit into an account designated by the employee in writing.
|Minimum Wage ?||
Minimum Wages in Tanzania vary according to the business area. For a detailed list it is possible to consult AfricaPay.
|Working on Sundays ?||
Employees are allowed to work on Sunday with an additional pay.
|Disclosure and Confidentiality of Personal Information ?||
An employer shall not be obliged to disclose information that:
(a) is legally privileged;
(b) the employer cannot disclose without contravening a law or an order of court;
(c) is confidential and, if disclosed, may cause substantial harm to an employee or the employer;
(d) is private personal information relating to an employee without that employee’s consent.
|Employee Protection and Anti-discrimination Rights ?||
Every employer shall ensure that he promotes an equal opportunity in employment and strives to eliminate discrimination in any employment policy or practice.
An employer s hall register, with the Labor Commissioner, a plan to promote equal opportunity and to eliminate discrimination in the work place.
|Time Off Work ?||
Subject to the provisions of the Employment and Labor Relations Act (ELR2004), an employee with less than six months’ service shall not be entitled to paid leave under the provisions of this Part.
|Medical Leave ?||
An employee shall be entitled to sick leave for at least 126 days in any leave cycle.
|Resignation / End of Service Payment ?||
On termination of employment, an employer shall pay an employee:
|Severance / Redundancy Pay ?||
For the purposes of this section, ”severance pay” means an amount at least equal to 7 days’ basic wage for each completed year of continuous service with that employer up to a maximum of ten years.
|Termination of Employment ?||
If a contract of employment can be terminated on notice, the period of notice shall not be less than seven days, if notice is given in the first month of employment and after that 4 days, if the employee is employed on a daily or weekly basis; or 28 days, if the employee is employed on a monthly basis.