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important for both employers and employees to ensure compliance with the law and
accurate financial planning.

National Health Insurance Fund
National Health Insurance (NHIF) was created by an Act of Parliament No. 8 of 1999.
Membership to the fund is compulsory for all public servants, through employees in the
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private sector are also permitted to join the fund. The NHIF scheme provides benefits to
the contributing members, their spouses and up to four legal dependants (children and/
or parents/in-laws). Under NHIF, public servants contribute 3 per cent of their basic
salaries and the employer contributes 3 per cent of the employee’s basic salary as well.
According to the Tanzania regulations, this contribution is allowable deduction. This
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means, tax rate is applied on the earnings after deduction of the NHIF amount.

Voluntary deductions
These are deductions contributed by employees voluntarily. For example, an employee
may request his employer to deduct from his salary the amounts for insurance premiums,
trade unions contributions, etc. These deductions vary from one firm or person to another.
Salary advances and staff loans
Sometimes an employee may need to receive their salaries or part of it in advance.
This advance receipt of the salary is called salary advance. At the end of the month an
employee’s net pay must be reduced by salary received before the month end. Loans
are advances to staff, that need to be repaid in more than one month. Usually there will
be an agreement based to the rate of interest, loan repayment instalments and amounts.
Repayment instalment will be deducted from an employee’s net pay at the end of each
agreed month.

Example 3.4
Mr. Kahawila has a basic working week of 40 hours, paid at the rate of TZS 40,000
per hour. For hours worked in excess to this, he is paid 1.5 times basic rate. In the
week ended 9 May 2024 he worked 47 hours. The first TZS 300,000 per week is
th
free of income tax, but on the next TZS 250,000 he pays 20 per cent for tax, and
above that, he pays 25 per cent for tax.
Required: Calculate the tax payable for the week ended 9 May 2024 assuming that
th
all overtime work was done during week days.

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