The main objective of double taxation treaties is to facilitate the international flow of capital, technology and services by eliminating double taxation of income and other taxes in international transactions through a bilateral (sometimes multilateral) solution to overlapping conflicts between tax jurisdictions. Bilateral agreements have often been seen as a magnet for investors and as key factors in promoting foreign direct investment, international trade and the promotion of diplomatic missions and relations. When the income is generated in a country with which a double taxation agreement (DTT) is in force, the convention regulates the discharge. A policy would help guide all ongoing and future negotiations on bilateral agreements. A policy would allow the country to maintain important principles that minimize the loss of taxes. The policies would also create an environment of integration in which all stakeholders can contribute to the model and conditions of the bilateral agreements concluded by the country. There is therefore no evidence that the existence of PDOs is an important determining factor influencing the decisions of multinationals to invest in Tanzania, given that most countries of origin do not have a PDO with Tanzania. However, this does not mean that bilateral agreements are not at all relevant to attracting foreign direct investment. The tax department of Breakthrough Attorneys has prepared this article to provide an overview and assess the effectiveness of the bilateral agreements in which Tanzania participates. The terms « bilateral treaties », « double taxation treaties » and « double taxation treaties » are used synonymously in this article. Our specialized tax databases allow us to provide current and historical tax rates, comparative tables and country surveys.
We have recent summaries of the most important facts, as well as detailed analyses of the tax system in countries around the world that cover corporate taxation, individual taxation, companies and investments. Tanzania has signed DTAs with nine countries. It is aimed at Sweden, Canada, Denmark, Finland, Norway, India, Italy, Zambia and South Africa. With the exception of South Africa, whose treaty was signed in 2005, most of the agreements are old and were signed in the 1960s, 1970s and 1990s. Most of the existing agreements are very old and do not reflect changes in the Tanzanian economy or advances in e-commerce around the world. More importantly, these agreements do not reflect the current major economic partners with respect to investment companies and labour inflows, which tend to be both tax points and are vulnerable to double taxation. Breakthrough Attorneys wishes to highlight China`s impact on the African continent and, in particular, its foreign direct investment (FDI) in Tanzania, but also the number of Chinese citizens currently staying in Tanzania and the resulting tax consequences. A bilateral or double taxation (DBA) treaty is a treaty between two countries that reduces the tax bill of a person established in one country, but who has nationality in another country.  To identify a taxable person, the term « natural person » in the broad sense is used to encompass both natural and natural/legal persons (entities). Such an agreement exempts a taxable person from paying taxes to both countries. Under the Double Taxation Convention, any tax paid in the country of residence is exempt in the country where it occurs, i.e.
in the country of origin. The Tanzania Tax Justice Coalition is calling on the government to urgently review its DTA network, especially as it negotiates contracts with many new countries. Tax rates and duties need to be rethought and harmful DTAS removed and avoided….