Introduction to Payroll in Tanzania
Congrats on your new hire in Tanzania! It must be an exciting time. Tanzania’s economy is on the rise and better than ever.
Yet, it may also be confusing and a little daunting. How do you complete payroll in Tanzania? What does your employee expect from you? And what do you have to do to stay compliant?
It’s understandable to feel this way. Tanzania, like all countries, has specific labor requirements you must meet.
A payroll company like Skuad can make it simple for you. We are here to help you throughout the payroll process in Tanzania so that you can focus on expanding your business.
Payroll Process in Tanzania
We will let you in on a secret—standardize your payroll process. There will always be unique aspects to consider with each employee’s payroll. This is only heightened when you hire around the world. Still, there are some aspects that you can standardize to simplify the process for your payroll team. To begin, let’s split the process up into three phases:
This first phase is vital. You will deal with a lot of information and regulations that will keep your company compliant.
Setting up the Organization
With global business on the rise, new companies are popping up everywhere. Consider how you want to stand out against the competition. Think about your company's mission and your desired team dynamic. To set up a uniform payroll in Tanzania, it will be important to have straightforward organizational policies, such as:
- Business Profile: To establish your business in Tanzania, you will need to apply at the Business Registrations and Licensing Agency (BRELA). Also, you will have to receive a taxpayer identification number from the Tanzania Revenue Authority.
- Work Location: Another part to establish your business is having a work location. Different areas of Tanzania might have different regulations, so you will need to research each location.
- Leave Policy: There are various leaves that your employees will be entitled to, such as sick leave, maternity leave, or vacation leave. You will need to establish this policy for employment contracts and to calculate payroll.
- Attendance Policy: You will need to think about your employees’ scheduled hours and how they will record their work time. For example, Biometric attendance devices could be an option.
- Statutory Components: Tanzania has laws that regulate labor components, like payroll deductions, benefits, and employees’ rights. You must stay compliant with these to have employees in the country.
- Salary Components: You will design your company’s salary components with the statutory ones in mind. Some components to decide on are work time, wages, benefits, and deductions. However, you must keep in mind that your team is international. Each country has its own culture and standards that must be taken into consideration.
- Pay Schedule: The time has come to pay your team—except when would that time cycle be exactly? In Tanzania, there are several normal pay cycles: daily, weekly, biweekly, or monthly; it is illegal to wait longer than a month.
- Employee Information: You will have to create an employment contract that is agreed upon by both you and your new team member. This will establish basic information, like their identification and role. However, it will also classify their type of contract and employment. Payroll will also need this information for deductions and proper payment.
Payroll Calculation Phase
After you have established your business and policies, it is time to calculate your payroll in Tanzania. The process and timing of this phase depend on the calculation method used. The fastest and easiest method is using payroll software. It takes taxes, withholdings, and deductions into account and calculates the payroll amounts instantly.
Yes, your payroll team is fantastic. Nevertheless, if it would save time, it's worth considering.
While the calculations are complete, the payroll is not quite finished. You have a few more steps to take:
- Salary payments: You can either send a calculation report to your bank or use payroll software that has a direct deposit option.
- Payroll accounting: Mistakes happen. Because of this, you should keep a record of your payroll in Tanzania.
- Payroll reporting and compliance: Finally, your organization should send the payroll deductions to the appropriate agencies. It is important to submit them on time to stay compliant.
Contact Skuad to see what payroll services we offer in Tanzania.
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Payroll Processing in Tanzania
Don’t let payroll processing in Tanzania overwhelm you. There are unique laws to keep in mind, such as employment standards and employment contracts. The Tanzanian government has detailed them in The Employment and Labour Relations Act. However, payroll in Tanzania isn’t impossible.
Payroll Processing Company in Tanzania
If you want all the benefits of hiring in Tanzania without the stress of Tanzania’s labor laws, look no further. Skuad provides payroll services in Tanzania and has already put in the leg work.
Book a demo with Skuad to help you with your payroll today.
Payroll Management in Tanzania
Another service to consider is that of payroll management. The difference is that this payroll service will uphold your company’s compliance with statutory laws in Tanzania. It will also maintain employee payroll records, such as documenting their gross and net incomes, incentives, and payslips.
Payroll Compliance in Tanzania
To keep your payroll in Tanzania compliant, you will need to meet the requirements established in the country's labor laws. Such requirements include but are not limited to employee benefits, taxes, and social security.
Payroll Components in Tanzania
Let’s look at some of the payroll components you should consider to stay compliant in Tanzania:
Tanzania is unique in that it doesn’t have a set minimum wage for everyone. Instead, it has minimum wages according to the employees’ field of work. For instance, an IT Engineer makes 3,946,757 Tanzanian Shillings (TZS) on average per month. This converts to about USD 1,697. Only 25% of employees make less than TZS 735,000 (or USD 316) per month.
You should also note that night shift workers receive 5% more than those working day shift hours for the equivalent job.
Because of how different each industry’s salaries can be, consider Skuad for expert guidance.
In Tanzania, they have a six-day workweek. A standard shift consists of nine hours per day and an unpaid lunch break after working for five hours. That comes to a maximum of 45 hours each week.
Be aware—the law entitles workers to at least 12 hours between each shift. Also, employees cannot work more than six days in a row. After the sixth day, employees must receive at least 24 hours until their next shift.
There is no set overtime pay in Tanzania. However, any overtime must be agreed upon in writing between the employer and employee. Overtime cannot exceed 50 hours in any four-week cycle.
In Tanzania, they have the National Social Security Fund. This finances employee retirement, maternity benefits, unemployment, and more. Both employees and employers contribute to the social security scheme:
- Employee: 10% of their gross monthly salary
- Employer: 10–20% of their gross month payroll
There is also public medical insurance, but it is recommended for employers to also provide private medical insurance.
Sometimes employees need a sick day to rest. The Tanzanian government requires that employees can receive up to 126 days of medical leave within a year. The first 63 days are paid in full while the rest is only 50% paid.
Under the Employment and Labor Relation Act of 2004, Tanzania provides maternity and paternity leave to employees.
Fathers are entitled to three days of paternity leave.
On the other hand, mothers receive 12 weeks of paid leave or 100 days if they had multiple births in 36 months. The mother will stop working six weeks before the delivery date. Employers must grant an employee maternity leave at least four times during her employment.
There are 15 paid public holidays in Tanzania:
- New Year’s Day
- Zanzibar Revolution Day
- Good Friday
- Easter Monday
- Union Day
- Labor Day
- Eid al-Fitr
- Saba Saba
- Eid al-Adha
- Nane Nane (Farmer’s Day)
- Nyerere Day
- Independence & Republic Day
- Christmas Day
- Boxing Day
Tanzania requires income tax to be deducted from your employees’ gross income. The percentage depends on their monthly income:
- Up to TZS 1,620,000: 0%
- TZS 1,620,001 – TZS 4,320,000: 14%
- TZS 4,320,001 – TZS 6,480,000: 20%
- TZS 6,480,001 – TZS 8,640,000: 25%
- Over TZS 8,640,001: 30%
Companies must also pay a 30% tax on taxable profits within Tanzania.
Employees are entitled to 28 paid vacation days per year.
This is just a brief overview of the payroll components in Tanzania. Check out more Tanzanian hiring information before you complete your payroll process.
Payroll in Tanzania has many facets. You need to comply with statutory benefits, employee rights, and business regulations. To hire an employee here, you must have a subsidiary in the country. You can register this yourself, but it can be difficult.
To avoid unnecessary stress, let Skuad be your payroll company for your employees in Tanzania. We will streamline the process while keeping your company compliant every step of the way. Try Skuad to see how we can help you.