TAXATION OF NON - GOVERNMENTAL ORGANIZATIONS (NGOs) IN TANZANIA

2 .Tax Obligations for NGOs under Tax Laws
NGOs have various tax obligations as provided under the tax laws. Among the tax obligations include, acquiring Taxpayer Identification Number (TIN), Registration with VAT upon attaining the registration threshold, acquire and usage of Electronic Fiscal Device (EFDs), filing of tax returns and timely payment of taxes to the Tanzania Revenue Authority (TRA). Failure to comply with the aforementioned tax obligations, may attract unfavorable penalties to NGOs.

3 .Taxes Payable by NGOs under Tax Laws.
Under the tax laws of Tanzania, NGOs are required to pay various taxes (if applicable) to Tanzania Revenue Authority (TRA). Among the taxes payable by NGOs include, Corporate Tax, Withholding Taxes (service fees, rent, interest, royalties), Capital Gain Tax, Pay As You Earn (PAYE), Skills Development Levy (SDL), Value Added Tax, Stamp Duty, Import duties, etc.

4 . Tax Benefits available for NGOs

4.1. Tax Relief

NGOs with a “charitable status” granted by the Commissioner General of TRA are entitled to enjoy the tax reliefs in regards to corporate tax on deduction of all amounts applied in pursuit of charitable activities in the public. Under the tax laws of Tanzania, an NGO may be classified as “Charitable Organization on the grounds that:

1. It is a resident entity of public character that is established for relief of poverty or distress of the public, advancement of education, or provision of general public health, education, water or road construction or maintenance and
2. It has obtained a private ruling from the Commissioner General of TRA confirming that the NGO is indeed a charitable organization.

One will note that, in Tanzania, apart from the charitable activities, there must be a ruling of the Commissioner General confirming that the NGO has obtained a “charitable status”. This means that an NGO that needs to be classified as a “Charitable Organization” will need to make an application to the Commissioner General of TRA for charitable status ruling.

The application for charitable status ruling to the Commissioner General of TRA is made by submitting a letter, a prescribed form and supporting documents to prove that the NGO conducts charitable business. Upon receiving the application and supporting documents, the Commissioner General of TRA will review the Application. In the instance the TRA is satisfied that the charitable functions that the NGO carries fall within the ambit of the abovementioned criteria, the TRA will proceed to issue a private ruling confirming the charitable status of the NGO.

4.2 Tax Exemption

Another tax benefit available to an NGO includes tax exemption. NGOs may be exempted from paying various taxes. However, the tax exemption is not automatic. The respective NGO seeking to enjoy the tax exemption will be required to adhere to prescribed statutory procedures for tax exemption, including applying for tax exemption to the Minister of Finance.

Upon adhering to the prescribed procedures, the Minister of Finance will grant the tax exemption upon being satisfied with the application and publish the name of eligible NGOs in the Government Notice (exemption order) that are exempted from paying tax. The exemption order will indicate the duration of exemption and type of goods or services that are exempted from payment of taxes. It is worthy to note that the tax exemptions stipulated in a mere agreement between an NGO and the Government is not automatic. This means that the respective NGO will be required to obtain the Government Notice from the Minister for Finance and it will be published in the Government Gazette for the exemption to apply.

Recently, the Court of Appeal of Tanzania, in the case of the Commissioner General of the Tanzania Revenue Authority versus MSPH Tanzania LLC, Civil Appeal No. 358 of 2024, reaffirmed that tax exemptions granted by virtue of either the existence of a treaty, a mere agreement with the Government, donor funding arrangement or Memoranda of Understanding (MoU) are not automatic. The Court ruled that such exemptions must strictly follow the prescribed statutory procedures.

Based on the recent Court’s decision, one will note that tax exemption in Tanzania is not on assumption or an administrative expectation rather is a matter of law. NGOs are legally required to comply with the prescribed statutory procedures on tax exemption on accessing and enjoying the tax exemptions provided.

5 .Conclusion
NGOs in Tanzania are required to comply with tax laws by discharging their tax obligations and to pay taxes, where applicable. It is vital for NGOs to understand that accessing the tax reliefs and tax exemptions is not automatic by virtue of the nature of their work. NGOs must comply with prescribed procedures on enjoying the tax reliefs and tax exemptions. NGOs are called to revisit their tax positions to ensure any claimed tax exemptions have complied with the prescribed statutory procedures. Failure to revisit their tax exemptions may expose them to undesirable tax liabilities. NGOs are recommended to work closely with their legal advisors and tax professionals. Eternal Attorneys provide tax advisory services to NGOs in navigating tax compliance. For more information, please contact us through our email info@eternal.co.tz and mobile number +255 749 668 866.

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