Employer of record in Tanzania

PAID TIME OFF

Annual Leave: According to the Employment and Labour Relations Act (2004), employees are entitled to 28 consecutive days of paid annual leave after completing one full year with their employer. This includes any public holidays that occur during the leave period. Employers can offset annual leave days by the number of paid occasional leave days taken, provided the employee consents and it occurs within the same leave cycle.

Employees with less than six months of service are generally ineligible for paid annual leave, unless they are employed seasonally or have had multiple employment engagements with the same company within a year.

Sick Leave: Employees can access up to 126 days of sick leave per year. The first 63 days are fully paid, while the remaining 63 days are paid at half the employee’s standard wage.

Maternity Leave: Female employees are entitled to at least 84 days of paid maternity leave, or 100 consecutive days in the case of a multiple birth, within a 36-month period. If the child dies within a year of birth, the employee may still access up to 84 days of maternity leave during the same cycle.

To qualify, the employee must provide the employer with at least three months’ notice and submit a medical certificate. Maternity leave may begin up to four weeks prior to the estimated delivery date, or earlier if recommended by a doctor.

Paternity Leave: Fathers are entitled to three days of paid leave to attend to responsibilities related to childbirth.

Family Leave: There is no specific legislation addressing family leave provisions in Tanzania.

Public Holidays: Tanzania observes 17 paid public holidays annually.

Other Paid Leave: No additional forms of paid leave are stipulated.

STATUTORY EMPLOYEE BENEFITS

Unemployment Benefits: Unemployed individuals can receive up to 33.3% of their previous monthly salary for a maximum of six months within a 12-month period. Throughout their working lifetime, benefits can be claimed for up to 18 months.

Unemployment Grant: Eligible individuals may receive a one-time payment of up to 50% of the total contributions made by both employer and employee to the social security scheme.

Workplace Injury Compensation: The Workers’ Compensation Act ensures employees who suffer work-related injuries or disabilities are compensated. Employers in the private sector contribute 1% of their workforce’s gross monthly earnings, while public sector employers contribute 0.5% of employees’ salaries.

Social Security Contributions: Private-sector employers must enroll their employees in the National Social Security Fund (NSSF). Contributions total 20% of an employee’s salary, with up to half deducted from the employee’s wages.

Public sector workers are covered under the Public Service Social Security Fund (PSSSF). Here, employers contribute 15%, and employees contribute 5% of their wages.

Retirement Benefits: To access retirement pensions, individuals must:

• Reach age 60, and
• Have contributed to a pension fund for at least 180 months.

Employees who join the scheme later in life have adjusted minimum contribution periods, ranging from 165 months at age 45, down to 45 months for ages 55–59.

Early retirement is permitted from age 55 with 180 months of contributions, provided the pension meets or exceeds the minimum threshold—40% of the national minimum wage. Pension payments can also be deferred, with no specified age cap.

PRIVATE EMPLOYEE BENEFITS

Private Workers’ Compensation: As of now, private workers’ compensation schemes are not available in Tanzania.

Private Retirement Plans: Private pension schemes have not been widely established within the country.

Private Health Insurance: While private healthcare is available, access to quality services may be limited. Comprehensive health insurance is recommended due to high treatment costs for major medical procedures.

Private Life Insurance: Private life insurance products are available for individuals in Tanzania.

PERSONAL INCOME TAX

Tax Period: The fiscal year follows the calendar year: January 1 to December 31.

Tax Rates (Residents)

Non-residents are taxed at a flat rate of 15% on employment income, which is considered final.

Taxation Method: Tanzania taxes income earned within a calendar year. Income from irregular or non-recurring sources is taxed based on the actual income received. Tax revenue is collected by the Tanzania Revenue Authority (TRA), and local governments may also levy additional taxes.

Double Taxation: Tanzania has tax treaties to avoid double taxation with various countries.

Residency Status: An individual is considered a resident for tax purposes if they:

• Have a permanent home in Tanzania and visit during the year; or
• Are present in Tanzania for 183 days in a year or an average of 122 days annually across three years (current and prior two).

PAYROLL STRUCTURE

Earnings: Includes base salary, overtime, bonuses, allowances, and taxable non-cash benefits. Profits from business or trust-related earnings also fall under taxable income.

Bonuses: Employers may offer bonuses or incentives, though not required by law. These are subject to taxation under Tanzania’s Income Tax Act.

Allowances: There are no standard personal allowances for individuals.

Benefits in Kind: These are non-monetary perks provided by employers and are subject to taxation.

• Housing: Taxed as the lower of market rent or the higher of 15% of gross annual pay or the employer’s deductible cost.
• Vehicle: If the employer doesn’t deduct the car’s cost, no benefit applies.
• Loans: If interest is below the statutory rate, the taxable benefit equals the interest difference. Loans under three months’ basic pay and less than 12 months long are exempt.

Market value is used to determine other in-kind benefits.

INVESTMENT INCOME

Dividends: Dividends from Tanzanian companies are subject to a 10% withholding tax (WHT), or 5% for those paid by listed companies. This is a final tax for residents.

Dividends from foreign entities are taxed at 10%, and a foreign tax credit may apply.

Interest: Interest income not related to business is taxed via final WHT.

RETIREMENT CONTRIBUTIONS

Employees can retire at 60 with 180 months of contributions. Early retirement from 55 is possible under the same conditions. Pension deferral is allowed without a maximum age. The lowest pension is 40% of the minimum wage, which ranges from TZS 100,000 to 400,000 depending on sector.

HEALTH INSURANCE

The National Health Insurance Fund (NHIF) originally served government workers but is now open to private organizations and individuals. Contributions equal 6% of basic salary, shared equally by employer and employee. The system operates on a solidarity principle—contributions are based on ability to pay, not individual risk.

TAXABLE INCOME & DEDUCTIONS

Presumptive Tax: Small businesses with under TZS 100 million annual revenue may qualify for simplified tax rates.

Capital Gains: Gains on the sale of Tanzanian-sourced investments are taxed at 10% for residents and 30% for non-residents. Foreign-source investment gains for residents are taxed at 30%.

Deductions: The only employment-related deduction allowed is the statutory social security contribution. For businesses, deductions may apply for expenses wholly and exclusively incurred to generate income.

EMPLOYER CONTRIBUTIONS & PAYROLL TAXES

Pension: Pension contributions are based on a percentage of an employee’s salary: 20% (shared) for NSSF; 15% employer and 5% employee for PSSSF.

NHIF: Health insurance contributions are 6% of basic pay, split equally between employer and employee.

Workers’ Compensation

Private sector: 1% of gross pay
Public sector: 0.5% of gross pay