Effects of Double Taxation Agreements between Tanzania and India on the Foreign Direct Investments

In: The African Review
Semboja Haji Hatibu Haji Professor; Institute of Postgraduate Studies and Research, Zanzibar University Tunguu – 2440, Zanzibar Tanzania

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The paper analyzed policy effects of Double Taxation Agreements (DTA) between Tanzania and India. The study employed desk study and mini-field research survey purposely to obtain primary data and qualitative information from the Tanzania Revenue Authority (TRA), High Commission of India and Indian companies. The paper found that Tanzania has no comprehensive national taxation policy which incorporates DTAs. The current treaties do not protect the government revenue losses. The loopholes include the denial of taxing the gains made by investors selling assets. However, the contribution of Tanzania-India DTAs in Foreign Direct Investment, (FDIs) flow in Tanzania has been significant positive. Indian FDIs have positive effects on Tanzanian employment. Moreover, the investments from India have brought massive capital flows and new technologies into the country. Tanzania-India DTA is more potential for sustainable national development. The study recommends the need to review and formulate New National Investment Policy 2019 that effectively integrate into sustainable fiscal and sector policies. Tanzania has to review all DTAs with aim of minimizing government revenue losses and to renegotiate all existing DTAs adopting UN Model Tanzania. It has to rationalize favoured bilateral treaties to signal their commitments to stable, correct, and often favourable treatment of foreign investors. Tanzania has to implement the Goal #17 of Sustainable Development Goal as that of “Partnering for Development” as a strategy to strengthen the means of implementation and revitalize the global partnership for sustainable development.

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