Insurance firms are not solely subject to the same taxing treatment as compared to ordinary businesses and investments. Insurance firms receive funds (Premiums) under an agreement that such premiums paid will be held up until an agreed upon eventuality occurs where the insurance firm will have to cover for said eventuality as per the agreement. In consideration of this, Tanzania’s tax law treats the insurance business as a Special Industry and has set out the taxation of the insurance business as we can see below.

The law has grouped insurance businesses into two main categories and these are:

  1. General Insurance Business
  2. Life Insurance Business

General Insurance Business

A general insurance firm determines its income from the insurance business after accounting for all insurance payouts made to its clients for the year against the premiums that were not paid. Simply speaking, for every client whose premium was not compensated such premium will be considered as a profit made by the insurance firm. The opposite is true i.e., for each client compensated such compensation shall be considered as an expenditure or expense against the total turnover of the firm.

It should be kept in mind that any other income made by the insurance firm will be computed as per the other provisions of the Income Tax Act [Cap. 332 R. E. 2019].

Treatment of income of a general insurance business can be observed under Section 58 of the Income Tax Act [Cap. 332 RE. 2019] which explains how income of a general insurance business is computed and thus taxed.

The inclusions into the business are listed to be

  • Premiums received from clients of the business
  • Payments received from re-insurer(s) of the business

The amounts to be deducted from income are

  • Payments made to persons insured or re-insured by the business
  • Premiums paid by the business to re-insurer(s)

Life Insurance Business

The life insurance business operates differently from a general insurance business in the sense that collected premiums are paid out to the insured or their associate. In a wider span, the Income Tax Act has listed the classes of life insurance as under Section 3 to include Insurance where the specified events are:

  • Death of insured individual or their associate
  • Personal injury or incapacity of the insured or their associate
  • Insurance agreements lasting for five years or more
  • Insurance agreements where the insured is to receive payment of a certain amount/amounts
  • Or re-insurance of either or all of the above

As we have now established the classes of life insurance it is safe to say, as per Section 3 of the Income Tax Act, that a business carrying on those activities listed above is carrying on the business of life insurance.

Proceeding to the taxation of the life insurance business, Section 59 of the Income Tax Act provides light towards what is considered as part of income and expenditure in the life insurance business. Inclusions to income have been stated as under Section 59(2) a which provides that amounts that are included as income in other provisions of the Act will be regarded as income to a life insurance business.

However, the same sub-section expressly states under items (i) & (ii) that premiums paid into the business and also proceeds paid into the business by its re-insurer shall not be considered to form part of the income of the life insurance business for that year of income. The reason for this is that this sort of business pays out the premiums received at the occurrence of the events we saw above and thus cannot be considered as profits or income unlike in general insurance businesses.

With regards to deductions, Section 59(2) b provides that only the expenses of managing the investments of the life insurance business, including commissions, are deductible as under other provisions of the Income Tax Act. However, what amounts are not deductible can be observed as under items (i) & (ii) where the law provides that payments of premiums to re-insurer(s) and payments of proceeds to the insured or re-insured are not regarded as deductible expenditure since their vice versa were not regarded as income.

Finally, the law as under Section 60(1) of the Income Tax Act provides that the payments received to an insured or re-insured person from insurance will be treated in accordance with Section 31 of the Income Tax Act as compensation/recovery payments and shall be used in the calculation of the income of the person but subject to the provisions of Sections 58 & 59, that we have observed above, and Section 60(2) that we will analyze shortly.

Sections 60(2) & (3) of the Income Tax Act are based on the aspect of gains that are made as a result of receipt of payment from life insurance to an insured person. Simply, where a person receives more money from a life insurance compared to the amount that was paid as premium then it is regarded that they have received a gain (or profit) from that arrangement.

In such circumstances, if the gains were made from payments by an insurance firm/business that is a resident for tax purposes then they will be exempted from tax. However, if the payments were from a non-resident insurer then the gain will be included in calculating the income of the insured person.


Insurance businesses must exercise caution and vigilance in taking note that other provisions of the Income Tax Act and other tax laws remain in application to them. This means that compliance with all relevant tax, insurance as well as other applicable laws of the United Republic of Tanzania is a crucial consideration for the continuity of the business.

Important Notice:

This publication has been prepared for information purposes only, and it does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Cymbell Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Why Choose Us

We provide amicable and effective solution-oriented services in a timely manner to our clients and put efforts to be universally recognized as a full-service law firm in Tanzania and East Africa.

Get in touch

Legal Documents Downloads