Update: 1-Aug-2021. Tanzania Revenue Authority has announced modifications to the SDL Requirements, through the Finance Act 2021, which now makes SDL applicability threshold to be 10 or more employees, and not 4 or more as it was previously.
Through our Payroll Series, we try to answer some of the most common payroll questions we get from our clients. In this article, we look at the Skills Development Levy, or SDL for short.
What is the Skills Development Levy?
The Skills Development Levy, or SDL for short, is a levy that is collected by the Tanzania Revenue Authority. SDL is not a tax, therefore is isn’t a deductible from an employee’s gross salary but rather a cost to the employer. The levy is collected under the Vocational Training and Education.
How is SDL calculated?
SDL is calculated as a percentage of the total emoluments paid to all employees during the month. The term employee here covers all full-time employees, part-time employees, casual employees and any other person that is on the accounting payroll.
Is SDL applicable to all businesses?
SDL is applicable to any employer who has 10 or more employees on his payroll. For employers with less than 10 employees, SDL is not applicable. However, as a business grows and employment levels change, the SDL eligibility must be monitored and where applicable, filed and paid per the relevant regulations. SDL is calculated at 4% of the total cash emoluments paid to an employee.
Are there any exemptions for SDL?
The Vocational Training and Education provides exemptions to i) Government departments or public institutions wholly financed by the government ii) Diplomatic missions in Tanzania iii) The United Nations and its organisations iv) Religious institutions (with conditions) v) Charitable organisations vi) Local Government Authorities (LGA) vii) Farm employees (with conditions) and viii) Registered educational institutions.
Conclusion
As a small business owner, you can easily calculate your employment taxes yourself and ensure adequate compliance. However, if you are looking to unburden yourself from processing your Payroll and its related Taxes in Tanzania every month then consider outsourcing your payroll processing to a reputable accounting company. Outsourcing is often the best way to ensure compliance is achieved quickly and easily.
Got feedback?
Still got questions about SDL, or another Tax in Tanzania? Write to us on [email protected] and we will help you the best we can. Also check out our Outsourced Payroll Processing Services if you wish to focus your attention better on your core business.