TENANTS in residential or commercial buildings should withhold a portion of their rent payments before paying their landlords and remit the relevant amount to the tax authorities as withholding tax.

Mashenene Benny, a senior tax officer for the Kariakoo Tax Region in Dar es Salaam for the Tanzania Revenue Authority (TRA) issued this guidance at a meeting with local government officials in the area yesterday.

He urged them to leaders to work closely with the TRA to ensure effective implementation of tax requirements, particularly regarding property leasing and land sales.

He said that tax regulations demand that tenants withhold 10 percent of their rent payments to the landlord before making the payment, then submit the funds to TRA on behalf of the property owner.

This withholding tax applies to all types of rental properties, for residential or commercial leases, where a tenant renting business premises and paying a monthly rent of 1m/-will be required to withhold 10 percent of the rent.

“In this case, the tenant will pay the landlord 900,000/- with the remaining 100,000/- being forwarded to TRA,” he stated, affirming that TRA shall be broadcasting this regulation to educate the public on tax obligations to ensure full compliance with the law. 

A significant challenge in enforcing this regulation is the lack of awareness among tenants and landlords, he said, insisting that the solution to the problem is assiduous TRA pursuit of educational sessions “to ensure everyone is fully informed and fulfils their tax duties.”

He similarly dwelt on the taxation of profits from land and property sales, noting that under section 90(1) of the Income Tax Act, individuals making a profit from selling land or property are required to pay 10 percent of that profit as tax.

“However, if there is no evidence of costs, such as construction expenses, the tax will be calculated at three percent of the sale price of the property or land,” he added.