Tax Updates on Legal Implications for the Change of Ownership of an Entity for More Than Fifty Percent.
November 01, 2023

By Kasimu Musa Ititi


This article delves into the tax laws implications related to a change in ownership exceeding fifty percent of an entity’s with the primary focus on income tax. The focal point of discussion is the tax ramifications following a change in ownership exceeding fifty percent and its alignment with the recently enacted Finance Act of 2023.

The Finance Act of 2023 has instigated substantial changes by modifying the Income Tax Act, specifically its section 56. This amendment, introducing subsection 5, delineates circumstances where the preceding provisions of the same section would not be applicable, particularly when there is a change in underlying ownership as stipulated in subsection 1(a) of the section.

In essence, section 56 of the Act saw its first amendment through the Finance Act of 2012. The objective of this amendment was twofold: broadening the tax base by taxing gains arising from Tanzanian businesses and counteracting the practice of companies utilizing overseas holding structures. It’s noteworthy that legislators intended for the government to benefit when there was an offshore reorganization of the holding structure, thereby indirectly affecting local entities.

However, this move inadvertently deterred even onshore corporate restructurings taking place within Tanzania. To address this challenge, Tanzania chose to amend the section through the Finance Act of 2023. The amendment defines the prevailing circumstances under which an entity subjected to such changes will be exempted.

Among the prevailing circumstances, the key ones include:

  • Change of ownership resulting from the allotment of new membership interests of the entity.
  • Change of ownership resulting from the transfer of membership interests of a resident entity to another resident individual.

Previously, prior to the 2023 amendment, the section stipulated that if the underlying ownership of an entity changed by over 50% compared to the ownership of the preceding three years, the entity had to be treated as realizing any assets and liabilities owned by it immediately before the change.

Subsequent to the recent amendment, it’s essential to note that a change of ownership from one resident individual to another exceeding fifty percent within the previous three years, or a change resulting from the allotment of new membership interests of the entity, will allow the deduction of losses incurred by the entity before the change or the carrying back of losses incurred after the change to a year of income before the change.

The introduction of this amendment is geared towards expediting the direct transfer of shares and thereby promoting investment in Tanzania.Top of FormBottom of Form

For more details and legal advice for the changing ownership of an entity for more than fifty percent contact us through the address below:

Victory Attorneys & Consultants,
IT Plaza Building, 1st Floor,
Ohio Street/Garden Avenue
P.O. Box 72015, Dar es Salaam.
Mobile No: +255682197331


DISCLAIMER: This article is not intended to provide legal advice but to provide general information on the matter covered in the Article. The article does not constitute and is not to be relied upon as legal advice. Victory Attorneys & Consultants shall not be responsible for any loss in the event this Article is relied upon without seeking our professional advice first.

Victory Attorneys & Consultants © 2023

Augustine Dominic Shio

Managing Partner

Augustine Dominic Shio is also known as Mr Shio is a highly sought-after and widely recognized criminal law expert with more than 30 years of experience advising and assisting corporations and individuals charged with white-collar crimes.


Before founding the firm Mr Shio held several positions in the public sector, he served as a Principal State Attorney at the Attorney General’s Chambers, Legal Advisor at the President’s Office (Commission for Enforcement of the Leadership Code), Director of Legal Services and Complaints at the Ministry of Home Affairs and retired as a Deputy Director of Public Prosecutions at the Directorate of the Public Prosecutions.

Mr Shio is a recipient of the Presidential Medal for his distinctive public services and ethics of the highest order. His distinguished aptitude in handling complex criminal cases, particularly money laundering, economic and organized crimes has enabled the firm to handle high profile criminal cases in Tanzania.

Practice Focus

As the firm’s head of the Financial & Organized Crimes Department, Mr Shio represents corporations and individuals in the telecoms, media & ICT, mining, oil & gas and banking sectors in high profile criminal cases. He has advised and prepared legal compliance models and for large scale agribusiness operators, public listed companies and securities dealers and brokers in line with sector-specific laws.

He possesses vast experience in advising multinational corporations on money laundering and tax evasion throughout the life span of their commercial transactions.

Mr Shio has represented clients in major plea bargaining negotiations at the office of the Director of Public Prosecutions. He is renowned for closing some of the best pleas deals in the country on behalf of many locals and expatriates charged with money laundering, economic and organized crimes and cybercrimes. Additionally, Mr Shio consults and assists criminally charged individuals to secure pre-trail and post-trial bail on serious criminal charges.


Mr Shio holds a Bachelor’s Degree (LL.B Hons) from the University of Dar es Salaam, Certificate in Criminal Justice and Treatment of Offenders from the United Nations Institute (Fuchu, Japan). He is a certified criminal law expert in Money Laundering and Terrorism.

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