Income Tax Exemptions

As well as the exemptions listed below, it should be noted that section 143 states that exemptions specified in Government Agreements will also be respected under the Act.

Second Schedule to Income Tax Act

The following amounts are exempt from income tax -

  1. amounts derived by the President of the United Republic or the President of the Revolutionary Government of Zanzibar from salary, duty allowance and entertainment allowance paid or payable to the President from public funds in respect of or by virtue of the office as President;
  2. amounts derived by the Government (including Executive Agency established under the Executive Agencies Act, 1997) or any local authority of the United Republic or by the Revolutionary Government of Zanzibar or any local authority of Zanzibar except amounts derived from business activities that are unrelated to the functions of government;
  3. amounts derived by any person entitled to privileges under the Diplomatic and Consular Immunities and Privileges Act to the extent provided in that Act or in regulations made under that Act;
  4. amounts derived by an individual from employment in the public service of the government of a foreign country provided -
    1. the individual is a resident person solely by reason of performing the employment or is a non-resident person; and
    2. the amounts are payable from the public funds of the country;
  5. foreign source amounts derived by -
    1. an individual who is not a citizen of the United Republic and who is referred to in paragraph (d); or
    2. a spouse or child of an individual referred to in subparagraph (i) where the spouse is resident in the United Republic solely by reason of accompanying the individual on the employment;
  6. amounts derived by -
    1. the East Africa Development Bank;
    2. the Price Stabilization and Agricultural Inputs Trust; and
    3. the Investor Compensation Fund under the Capital Markets Regulatory Authority;
  7. amounts derived during a year of income by a primary co-operative society -
    1. registered under the Co-operative Societies Act;
    2. solely engaged in activities as a primary co-operative in one of the following fields:
      • (aa) agricultural activities, including activities related to marketing and distribution;
      • (bb) construction of houses for members of the cooperative;
      • (cc) distribution trade for the benefit of the members of the cooperative; or
      • (dd) savings and credit society; and
    3. whose turnover for the year of income does not exceed shs. 50,000,000;
  8. pensions or gratuities granted in respect of wounds or disabilities caused in war and suffered by the recipients of such pensions or gratuities;
  9. a scholarship or education grant payable in respect of tuition or fees for full-time instruction at an educational institution;
  10. amounts derived by way of alimony, maintenance or child support under a judicial order or written agreement;
  11. amounts derived by way of gift, bequest or inheritance, except as required to be included in calculating income under section 7(2), 8(2) or 9(2); and
  12. amounts derived in respect of an asset that is not a business asset, depreciable asset, investment asset or trading stock.
  13. amounts derived by way of foreign living allowance by any officer of the Government that are paid from public funds and in respect of performance of the office overseas.
  14. amounts earned by non-residents on deposits in Banks registered by the Bank of Tanzania;
  15. income derived from investments exempted under the Economic Processing Zones Act;
  16. income derived from investments exempted under any written laws for the time being in force in Zanzibar.
  17. rental charges on aircraft lease paid to a non-resident by a person engaged in air transport business
  18. amounts derived by a crop fund established by farmers under a registered farmers cooperative society, union or association for financing crop procurement from its members
  19. gratuity granted to a member of Parliament at the end of each term
  20. the fidelity fund established under the Capital Markets and Securities Act, 1998

Back to exemptions page