Dar es Salaam. Tanzania and the Czech Republic have signed an agreement aimed at eliminating double taxation and preventing fiscal evasion with respect to income taxes, a development expected to bolster investor confidence and enhance the flow of capital between the two nations.
The agreement, formally titled Agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Avoidance and Evasion in Respect to Tax on Income, was signed the minister for Finance, Dr Mwigulu Lameck Nchemba and the ambassador of the Czech Republic to Tanzania, Nicol Adamcová, who is based in Nairobi.
With this development, the Czech Republic becomes the eleventh country with which Tanzania has concluded such an agreement.
Other nations include Canada (1995), Denmark (1976), Finland (1976), India (1979), Italy (1973), Norway (1976), South Africa (2005), Sweden (1976), Zambia (1968), and Oman, with which an agreement was signed on December 15, 2024.
These treaties are designed to avoid the taxation of the same income in both Tanzania and the treaty partner.
They provide frameworks for determining how various forms of income — including business profits, dividends, interest, and royalties — are to be taxed, while offering avenues for taxpayers to claim relief in order to avoid being taxed twice on the same income.
Commenting after the signing ceremony, Dr Nchemba said the agreement will eliminate the risk of the same income being taxed in both jurisdictions, promote fair tax policies, and strengthen investor confidence in Tanzania’s fiscal environment.
“This agreement is a significant milestone in Her Excellency President Samia Suluhu Hassan’s broader efforts to open up Tanzania’s economy to international investment. It will enable investors and businesses operating between Tanzania and the Czech Republic to trade and invest with greater assurance,” said Dr Nchemba.
He noted that according to the Organisation for Economic Co-operation and Development (OECD), countries with robust double taxation treaties attract up to 30 percent more foreign direct investment compared to those without such frameworks.
“With this agreement, we expect to attract substantial capital from the Czech Republic, particularly in sectors such as automobile and aircraft manufacturing, electrical equipment, machinery, and industrial tools. This investment is anticipated to spur growth in the manufacturing sector, enhance industrial development, and generate employment for Tanzanians,” he added.
Ambassador Adamcová described the agreement as a reflection of the long-standing and mutually beneficial relationship between Tanzania and the Czech Republic.
“I am delighted that we have signed this agreement. It is a fundamental provision that signals a high level of trust between our two countries. If that trust did not exist, we would not have invested the time and energy to negotiate this,” she said.
She further observed that the agreement serves as a strong indicator of the stability and predictability of the business environment in both countries.
According to statistics from UN COMTRADE, bilateral trade between Tanzania and the Czech Republic reached approximately $16.2 million in 2022, predominantly in sectors such as machinery, electrical appliances, transport technologies, and agricultural products.
The agreement is expected to significantly boost both trade and investment flows in the years ahead.
