Last reviewed: September 2026. Rates are set by statute and revised periodically; confirm with the relevant authorities before finalising a payroll budget.
A salary figure is not a cost figure. In Tanzania an employer carries statutory contributions on top of pay, and a hire that looks affordable on the gross salary can be materially more expensive once everything is counted.
| Contribution | Rate | Who pays |
|---|---|---|
| Social security | 20% of the employee’s monthly wage, remitted by the employer; the employee’s share may not exceed 10%, so the split is 10/10 or 15/5, and an employer may remit the whole 20% | 10% employer, 10% employee |
| Workers’ compensation | Set each financial year; recently 0.6% for private and 0.5% for public sector employers, down from 1% in July 2021 | Employer |
| Skills and Development Levy | 3.5% of monthly gross emolument on the Mainland, employers with 10+ staff; 4% in Zanzibar, employers with 4+ | Employer |
| PAYE | Nil up to TZS 270,000/month, then 8%, 20%, 25%, 30% by band, reaching 30% above TZS 1,000,000 | Deducted from employee |
What this means. On a gross salary of TZS 1,000,000 a month, an employer with ten or more staff carries roughly TZS 100,000 in social security, TZS 5,000 to workers’ compensation and TZS 35,000 in the Skills and Development Levy — about 14% on top of gross, before any benefits, before PAYE is deducted from the employee’s side.
Note the threshold in the Skills and Development Levy: it applies at ten employees or more. A company growing from nine to ten staff picks up a payroll-wide levy, not a levy on the tenth person. Employers not required to pay it are not required to file returns for it.
Register with the social security fund, which covers private sector and self-employed members. Register with the workers’ compensation fund within 30 days of recruiting your first employee; contributions are paid monthly by control number and may not be deducted from the employee. Register with the safety and health authority and obtain a workplace compliance licence. Register for PAYE with the revenue authority. PAYE, the Skills and Development Levy and withholding tax are filed and paid by the 7th day of the following month, and VAT by the 20th. These are not optional and inspectors do check.
Employment is governed principally by the labour relations law. Contracts should be in writing and should state the type of contract, duties, salary, hours and leave. Terminating without following a fair procedure is the most common and most expensive mistake foreign employers make here: the process matters as much as the reason, and the labour tribunals take it seriously. Budget also for annual leave, public holidays, sick leave and maternity entitlements, and for notice periods on termination.
Every foreign employee needs a work permit and a residence permit, as set out in Guide 2. The combined cost for a single expatriate on Class C work and Class B-1 residence is around USD 3,000, renewable every two years; the same person holding EAC citizenship costs around USD 1,500. Expect also to show that the role was not readily fillable locally, and to have a succession and training plan for positions held by expatriates. The practical conclusion most companies reach is that expatriates should be few, senior and time-limited, with local staff trained into the roles — which is also what the regulations are designed to produce.
It is rarely the cost. It is finding the right person, verifying that their qualifications are what they claim, and keeping them once trained. Verification is worth doing properly: certificates are checkable with the issuing institution, and professional registrations are checkable with the relevant board.