Double taxation agreement in tanzania

Double taxation agreement in tanzania

Article 8 Shipping and Air Transport Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. Gains from the alienation of shares of a company which is a resident of Tanzania, other than shares to which paragraph 4 applies, may be taxed in Tanzania provided that the person alienating the shares owns less than 25 percent of the capital stock of the company immediately before the alienation.

Subject to the existing provisions of the law of Canada regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions - which shall not affect the general principle hereof - for the purpose of computing Canadian tax, a company which is a resident of Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate which is a resident of Tanzania.

Article 22 Other Income Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State. Notwithstanding anything in this Agreement: war pensions and allowances including pensions and allowances paid to war veterans or paid as a consequence of damages or injuries suffered as a consequence of war arising in a Contracting State and paid to a resident of the other Contracting State shall be exempt from tax in that other State to the extent that they would be exempt from tax if received by a resident of the first-mentioned State; alimony and other similar payments arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein in respect thereof, shall be taxable only in that other State; and pensions and other payments made under a public scheme which is part of the social security system of a Contracting State or a political subdivision or a local authority thereof, shall be taxable only in that State. Article 18 Artistes and Athletes Notwithstanding the provisions of Articles 7, 15 and 16, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. If specifically requested by the competent authority of a Contracting State, the competent authority of the other Contracting State shall endeavour to provide information under this Article in the form requested, such as depositions of witnesses and copies of unedited original documents including books, papers, statements, records, accounts or writings , to the same extent such depositions and documents can be obtained under the laws and administrative practices of that other State with respect to its own taxes. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State. However, as most multinationals originate from the Global North while most of the production takes place in the Global South and as profits are routed through low-tax jurisdictions, the functionality of DTAs has become questioned. A Contracting State shall not change the income of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its national laws and, in any case, after five years from the end of the year in which the income which would be subject to such change would, but for the conditions referred to in paragraph 1, have accrued to that enterprise. One taxing jurisdiction might tax income at its source or destination, while others will tax income based on the residence or nationality of the recipient. In such a case, the provisions of Article 7 or Article 15, as the case may be, shall apply. Gains from the alienation of any property, other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Whilst the Treaty allows either party tomake amendments at any time, such amendments require a mutual consent in writing through the diplomatic channel. Notwithstanding paragraphs 1 and 2 items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State, and according to the law of that State.

The competent authorities of the Contracting States may consult together for the elimination of double taxation in cases not provided for in the Agreement and may communicate with each other directly for the purpose of applying the Agreement.

Business profitis narrowly defined to meanincome derived by an enterprise from carrying on business.

effect of double taxation in tanzania

Taxation of Capital Article 23 Capital Capital represented by immovable property owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

However, such management or professional fees may also be taxed in the Contracting State in which they arise and according to the laws of that State, but the tax so charged shall not exceed 20 percent of the gross amount of the fees.

Tanzania employee taxes

The consequence of double taxation is to tax certain activities at a higher rate than similar activity that is located solely within a taxing jurisdiction. Article 28 Diplomatic Agents and Consular Officers Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as a top-level managerial position of a company which is a resident of the other Contracting State may be taxed in that other State. The policy would also create an inclusive environment for all stakeholders to have an input on the model and terms of the bilateral agreements entered into by the country. Methods for the Elimination of Double Taxation Article 24 Elimination of Double Taxation In the case of Canada, double taxation shall be avoided as follows: Subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions - which shall not affect the general principle hereof - and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Tanzania on profits, income or gains arising in Tanzania shall be deducted from any Canadian tax payable in respect of such profits, income or gains. Provided that where such an enterprise derives profits from such operation in the other Contracting State, for the purposes of taxation in that other State: such profits shall be deemed to be an amount not exceeding five percent of the full amount received by the enterprise on account of the carriage of passengers or freight embarked in that other State; the tax chargeable in that other State shall not exceed fifty percent of the profits as calculated under the provisions of subparagraph a. Most contracting states are often at different economic levels and thus do not have equal ground in terms of benefits. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. The provisions of paragraph 1 shall not apply to income other than income from immovable property if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property, in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regarding to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State, or insures risks situated therein, through a person other than an agent of an independent status to whom paragraph 7 applies.

The exchange of information is not restricted by Article 1. However, research shows that taxation does not top the list of criteria that potential investors consider.

However, this limitation does not apply to lump-sum payments arising in Canada on the surrender, cancellation, redemption, sale or other alienation of an annuity, or to payments of any kind under an annuity contract the cost of which was deductible, in whole or in part, in computing the income of any person who acquired the contract.

tax calculation in tanzania
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Study on Tanzania’s Double Taxation Agreements