THE BENEFITS FOR LISTING SECURITIES WITH THE DAR ES SALAAM STOCK EXCHANGE IN TANZANIA: FISCAL INCENTIVES

The Government has deliberately provided several incentives in order to encourage active participation in capital markets by issuers and investors. The DSE hand book further provides some incentives for the companies that list shares with it. The privileges include:
INCENTIVES TO ISSUERS
The incentives to issuers are in accordance to the DSE handbook.
1)    Reduced corporate tax from 30% to 25% for the period of three years where the Issuer has issued at least 35% of the issued shares to the public. The reduced rate is applicable for five years starting from listing date.
2)    Tax deductibility of all Initial Public Offering (IPO) costs for the purposes of income tax determination. All IPO costs are accepted by the Tanzania Revenue Authority (TRA) as acceptable expenses used in the generation of income and profits, and therefore are taken into consideration when determining profit for tax purposes; and
3)    Withholding tax on investment income made by Collective Investment Schemes (CIS) is final tax. Investors in CIS are not charged with tax on the income.
INCENTIVES TO INVESTORS
The incentives to investors are as stipulated in the DSE handbook.
1)    Zero capital gain tax as opposed to 10% for unlisted companies;
2)    Zero stamp duty on transactions executed at the DSE compared to 6% for unlisted companies;
3)    Withholding tax of 5% on dividend income as opposed to 10% for unlisted companies;
4)    Zero withholding tax on interest income from listed bonds whose maturities are three years and above;
5)    Exemption of withholding tax on income accruing to fidelity fund maintained by DSE for investor protection; and
6) Income received by the Collective Investment Scheme (CIS) investors is tax-exempt.