Do you have clients with subsidiaries in Tanzania? Read on!

If you support clients with operations in Tanzania — especially where costs are charged from a regional hub or head office — a recent Court of Appeal decision is a useful one to have on your radar. Our member Baraka Cassian, Managing Partner at Cassian & Associates, has shared the key takeaways below:

On 12 December 2025, the Court of Appeal delivered its judgment in Aggreko International Projects Limited v Commissioner General, TRA (Civil Appeal No. 182 of 2025), dismissing the taxpayer’s appeal on head office cost deductions.

The case reinforces a principle we consistently advise clients on: allocation is not the same as deductibility.

Click HERE to download the PDF summary 

The facts in brief

Aggreko’s Tanzania branch claimed deductions for head office costs allocated from its Dubai regional hub using a pro-rata revenue methodology. The TRA disallowed these costs for the 2018 and 2019 income years, resulting in assessments totalling approximately TZS 2.06 billion (including interest and penalties).

The Court confirmed that, under Section 11(2) of the Income Tax Act, expenses must be:

• incurred during the year of income; and

• incurred “wholly and exclusively” in the production of income from the business.

Critically, the Court held that transfer pricing regulations do not override these statutory requirements. Documentation showing allocation methodology alone is insufficient — you need evidence demonstrating the nexus between services received and Tanzanian income generation.

What this means for you

If your company receives allocated costs from a regional hub or head office, it may be worth reviewing:

• whether you have contemporaneous documentation linking each service category to your Tanzania operations

• whether your current evidence would satisfy the “wholly and exclusively” test under audit

• the distinction between transfer pricing compliance and Income Tax Act deductibility

*An infographic summarising the key concepts from this case is included below.

With special thanks to Baraka Cassian, Managing Partner at Cassian & Associates, for sharing the original case summary and key takeaways. For further information, please contact him at Cassian & Associates.

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