WHAT IS CORPORATION TAX ?

Corporation tax is the tax which is levied or collected from entity,firm or companies.With reference to the united republic of Tanzania corporation tax form thirty percent of the net profit earned by the firm after the deduction of all expenses which are allowable as revenue expenditure.
Revenue expenditure refer to those expenditure incurred by the corporation in the course of earning revenue. Expenditure by the firm on salaries,wages,transport,rent,power,lighting and heating are all allowable as revenue expenditure and are deducted in the calculation of the taxable profit of the firm.Consumption expenditure as well as capital expenditure are deducted in financial statement for accounting purpose but on reaching tax authority for tax assessment the amount is added back to get the actual net profit figure for which the 30% will be applied to get the tax payable by the entity or corporation.

WHAT IS INDIVIDUAL INCOME TAX?

Individual income tax, refer to the amount of tax which is withheld from individual income, Individual income tax is sometimes  known as pay as you earn (P.A.Y.E), Not all amount of income are subjected to income tax, but in accordance to rules and regulation of particular state there are different range under which an amount will be subjected to income tax act in Tanzania the tax authority TANZANIA REVENUE AUTHORITY (T.R.A) has provided the specific amount upon which tax should be charged upon such income, in the so called tax bracket ,below is the list of income together with their instruction for computation  of chargeable income :-

As per income tax act no.11 of 2004, the individual income tax rate for residents with effects from 10/07/2010.


SN    Monthly income    Tax rate      
1.0    Where the total income does not exceed Tsh 135,000/=    NIL      
2.0    Where the total income exceeds Tsh 135,000/= but does not exceed 360,000/=    14% of the amount in excess of Tsh. 135,000/=      
3.0    Where total income exceeds Tsh 360,000/= but does not exceed 540,000/=    Tsh. 31,500/= plus 20% the amount in excess of Tsh 540,000/=      
4.0    Where total income exceeds Tsh 540,000/= but does not exceed 720,000/=    Tsh. 67,500 plus 25% of the amount in excess of Tsh 540,000/=      
5.0    Where total income exceed Tsh 720,000/=    Tsh.112,500/=plus 30% of the amount in excess of Tsh. 720,000/=   

For example a certain MR Y and is paid a monthly salary of 250,000/=, He is also providing a monthly contribution of 20% toward an approved pension fund. Calculate the amount of individual tax (P.A.Y.E) paid by MR Y.
                            Solution.
   1st
You will be required to calculate the amount of contribution made toward approved pension fund
                        20%x monthly salary (250,000) = 50,000/=
2nd
You will be required to subtracts the amount of contribution made to get the net income
                       (250,000 – 50,000) = 200,000/=
3rd
Look on the tax table and compare on which range the net income lies, then compute as follows :-
since the amount lies in 1.0 row then take the net income subtracts 135,000/= of excess of the net income times 14%.
                        (Net income - excess of 135,000) X 14%       =Taxable income
                         (200,000 – 135,000)X14% = 9,100 /=

The amount of tax paid by Mr. Y is 9,100 /= per month.
          

              

WHAT IS TAX?

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Tax is the compulsory levy by goverment on citizen where by no direct benefit citizen will receive from the goverment,Taxation is also covered and discused in various economic department such as department of public finance.In Tanzania taxation play a great role in financing various project in both social and economic perspective,knowing that taxtion bring alot of good news to individual and nation as well,My aim is to give fluent explanation concerning various kind of tax as well as tax procedure of each kind of tax begining with mereindividual up to company and firm.Basically there are two kind of tax in Tanzania of which are divided into two main category:-
 1.Direct tax
 2.Indirect tax 
                                                 1.DIRECT TAX.
Direct tax is the tax which is liable directly to the person intended to pay or on other word we can say that is the tax in which there is a specific person upon which the tax liability is belong to him or her.,direct tax comprises tax such as individual tax,corporation tax,as well as estate duty tax which is no longer implemented.
                                                2.INDIRECT TAX.
Indirect tax is the tax which is borne by another person rather  than from whom tax is collected or we can say is the tax in which there is no a specific person who is liable to tax liability.The good example of indirect tax is the Value Added Tax (V.A.T) which normally is based on daily consumption of an individual.
  Next time I will try to give detail explanation on various tax which are categorized into these two groups.
                                                    THANK YOU!