TAXES EXEMPTION TANZANIA ; Export Processing Zones

TAXES EXEMPTION; Export Processing Zones

An export processing zone (EPZ) is a special zone where different taxation rules apply. A company operating in an EPZ must sell at least 70% of its produce outside Tanzania. Any produce sold in the �Customs Territory� of Tanzania will be treated as an import into Tanzania for tax purposes, i.e. import duty, VAT and excise on imports as applicable will be levied. The Export Processing Zones are regulated under the Export Processing Zones Act and relevant provisions are included in the tax laws to reflect this.
Companies in the EPZ enjoy the following fiscal incentives:

• Exemption from corporate income tax for ten years and thereafter a rate of corporate income tax no higher than 25%
• Exemption from withholding tax on interest and dividends
• Exemption from stamp duty on documents relating to activities in the EPZ
• Exemption from all taxes and levies imposed by local government authorities (except for goods sold in customs territory)
• Exemption from 50% of the training levy for investors who train local employees

In addition there are special provisions for companies in the EPZ as regards purchasing of inputs, compared to a normal exporter

EPZ exporter	Normal exporter
Does not pay customs duty, VAT and other tax on imports*	Pays customs duties, VAT and excise on imports as appropriate, and is entitled to reclaim import duties and VAT
Does not pay VAT or excise on local purchases*	Pays VAT and excise as appropriate on local purchases, and is entitled to reclaim VAT
Exempt from Pre-Shipment Inspection	Subject to pre-shipment inspection fee for imports of 1.2%
On-site inspection of imports in the EPZ	Port inspection of imports

*provision applies to goods purchased for use as raw materials, equipment, machinery including all good and services directly related to the manufacture in the EPZ but shall not include motor vehicles, spare parts and consumables