Case Study Tanzania: Secondary Employment and Tax Compliance
Employer obligations when employees hold multiple concurrent roles in Tanzania.
A Praxima client operating in Tanzania recently approached our tax manager for information on secondary employment. When employees have more than one employer, they and their employers must follow specific rules outlined under Tanzania’s Income Tax Regulations (Government Notice No. 464 of 5 November 2004). Failure to apply these rules correctly can result in incorrect withholding, compliance discrepancies, and administrative challenges for payroll teams.
Income Tax Regulations
Under Regulation 18:
- Employees with two or more concurrent employers must designate one as their primary employer.
- Employees must formally notify all other employers that they are secondary employers.
- Failure to notify is considered a false or misleading statement to the Commissioner.
- Secondary employers must withhold tax at the highest applicable tax rate.
These rules are designed to ensure that the correct tax is withheld across multiple income sources, preventing under-withholding and tax leakage.
“Secondary employers in Tanzania must withhold tax at the highest rate.”
The Practical Problem for Employers
In practice, employees often do not inform the secondary employer of their status. As a result:
- Payroll applies standard rates instead of the highest tax rate.
- When monthly returns are submitted, the portal flags the employee as having multiple employments.
- The system then automatically recalculates withholding using the higher rate, creating a mismatch between employer payroll calculations and statutory records.
This mismatch can lead to compliance delays, and administrative rework.
Reducing Compliance Risks
Employers can take the following proactive steps to mitigate these issues:
- Request new employees to confirm whether they hold other active employments.
- Educate employees during onboarding about their obligation to declare their primary employer.
- Ensure payroll applies withholding correctly where a secondary employment relationship is identified.
These simple steps help ensure accuracy in monthly filings and prevent unexpected PAYE recalculations by the portal.
𝘐𝘧 𝘢𝘯 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘳 𝘩𝘢𝘴 𝘢𝘯𝘺 𝘶𝘯𝘤𝘦𝘳𝘵𝘢𝘪𝘯𝘵𝘺 𝘢𝘣𝘰𝘶𝘵 𝘸𝘩𝘦𝘵𝘩𝘦𝘳 𝘵𝘩𝘦 𝘢𝘣𝘰𝘷𝘦 𝘢𝘱𝘱𝘭𝘪𝘦𝘴 𝘵𝘰 𝘵𝘩𝘦𝘪𝘳 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘦𝘴, 𝘪𝘵 𝘪𝘴 𝘳𝘦𝘤𝘰𝘮𝘮𝘦𝘯𝘥𝘦𝘥 𝘵𝘩𝘢𝘵 𝘭𝘦𝘨𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦 𝘣𝘦 𝘴𝘰𝘶𝘨𝘩𝘵.
