Q&A – 26 December 2011

Taxation of Tanzanians employed in embassies

I am a Tanzanian employed by an embassy in Tanzania for a couple of years. As far as I know, embassies and all their employees are exempted from income tax but to my surprise, the Tanzania Revenue Authority (TRA) officials have started following some of us up for failure to pay income tax. I think they want us to tip them. Please advice.
KM, Dar

Unfortunately whenever TRA officials start following individuals or companies, people think that they are trying to extract a bribe. As you shall see below, TRA officials are doing the right thing in following you up.

Whilst it is true that embassies and the foreign officials employed in the embassies are exempt from tax under the Diplomatic and Consular Immunities and Privileges Act we don’t believe you are a foreigner and covered by the act. The Embassies are also under no obligation to file any tax returns for their local employees but that does not mean that you are tax exempt. You are required by law to voluntarily remit your income tax, and it seems you have not done so.

TRA has the authority to contact the embassy in question and get details in relation to your income for taxation purposes and if you do not voluntarily comply, surely your employer will. We advise that you fully cooperate with the TRA and remit your taxes plus any penalties that may be assessed.

Taxation of education loans

I have been admitted in a certain university in Tanzania and obtained a loan from the Loans Board in Tanzania which lends money to students. I am yet to receive my 1st payment and wish to know whether the said amounts will be subjected to any taxes and at what rate. Also are these tax deductible in the event a company funds my studies?
JK, Singida

The loans paid in furtherance of full time education will not be subjected to taxation. The same is stated under paragraph (i) of the 2nd schedule of the Income Tax of Tanzania CAP 332 R.E. 2006. However, you have not disclosed whether the said admission is for full time or part time studies as the exemption is only in respect of tuition or fees for full time instruction at an educational institution.

Companies that sponsor employees for full time studies are also eligible to deduct the full amount as an expense from their profit and loss statement. This is an incentive that the government gives to companies to sponsor persons for full time studies.

Poor country, judges travelling by business class

I have travelled many times overseas and have noted that our judges travel in business class. Why can they not travel with us in economy. What is so special about business class travel? Can a law be passed that all aircraft entering Tanzania should not have business class seats? I am bitter because the business class ticket price is nearly three times a normal economy class ticket and as a nation we cannot afford this.
WP, Dar

First and foremost Judges have to be respected as they are dispensers of justice and you cannot merely dump them as you propose.

Secondly, much as you will not like this, the Judges Remuneration and Terminal Benefits Act provides that if a Judge is travelling for work or on leave, he must be provided a business class ticket. This is the law as it stands today. Other perks for Judges include a grade A house, security, house maid, basic household appliances and allowances to pay for water and electricity bills.

Your question on what is so special about business class travel is not a legal question and we choose not to answer it. You may however want to consider flying business class one day and notice the difference.

Your last part of the question is quite radical. It is tantamount to closing five star hotels in Tanzania and passing a law that all citizens should eat at Mama Lishe’s. Whilst theoretically a law disallowing aircraft from having business class seats could be enacted, it would have severe consequences for Tanzania and is a bit too farfetched for it to ever get approved in parliament.

Inspecting factories

I own a factory in Mwanza and wish to know what powers the chief inspector of factories has when coming for inspection. It seems like he has too much power which he may abuse. Please guide me.
WL, Mwanza

The Occupational Heath and Safety Act establishes the position of the chief factory inspector who indeed has some very strong powers. For example the Act stipulates that an inspector shall, for the purpose of the performance of this Act have powers to do all or any of the following:
(a) without prior notice, to enter, inspect and examine, by day or night, a factory or workplace, and every part thereof, when he has reasonable cause to believe that any person is employed therein;
(b) to enter, inspect, and examine, any place which he has reasonable cause to believe to be a factory or workplace and any part of any building of which a factory or workplace forms part and in which he has reasonable cause to believe that explosive or highly inflammable materials are stored or used;
(c) to exercise such other powers as may be necessary to inspect and examine any machinery, plant, or appliance, in a factory or workplace;
(d) to take with him any assistant or a police officer if he has reasonable cause to apprehend any serious obstruction in the execution of his duty;
(e) to require the production of a register, a certificate, notice, a document, an article, any substance, plant or machinery or a part or a sample in pursuance of this Act;
(f) to inspect, examine and copy any of documents
(g) to seize any relevant documents or article

The aim of this act is to make provisions for the safety, health and welfare of persons at work in factories and other places of work and the powers bestowed on the chief inspector, whilst very many and sometimes abuse able, are in line with the objectives of the Act.