SDL and WCF Rates in Tanzania (2026)
The two payroll levies that sit entirely on the employer: the Skills Development Levy collected by TRA and the Workers Compensation Fund contribution. Rates, the base each is charged on, who is exempt, the deadlines, the penalties, and a worked example for a 15-person payroll.
The short answer
| Levy | Rate | Charged on | Who pays | Due |
|---|---|---|---|---|
| SDL — Mainland | 3.5% | Total gross emoluments of all employees | Employers with 10 or more employees | Monthly, by the 7th of the next month |
| SDL — Zanzibar | 4% | Gross emoluments | Employers with 4 or more employees | Monthly |
| WCF (private and public) | 0.5% | Basic salary plus fixed monthly allowances | Every Mainland employer, from the first employee | Monthly, by the end of the next month |
Neither levy is deducted from employees. Both are costs on top of the salary line.
SDL and WCF are small percentages that cause a disproportionate amount of trouble. Payroll spreadsheets copied from old templates still carry the 4% SDL rate or a 1% WCF rate, online guides mix up the Mainland and Zanzibar thresholds, and WCF is widely described as a quarterly payment when the Fund itself says it is monthly. This guide sets out what the primary sources say as of October 2026.
Skills Development Levy (SDL)
SDL is imposed under Section 14 of the Vocational Education and Training Act, Cap. 82, and collected by the Tanzania Revenue Authority. TRA is explicit that it is "due and payable by an employer": it is not a deduction from wages.
The rate and the threshold
On the Mainland, any employer with ten or more employees pays SDL at 3.5% of the total emoluments paid to all employees during the month. The rate was cut from 4% to 3.5% by the Finance Act 2023, which is why older payroll templates still show 4%. In Zanzibar the levy is 4% and starts at four employees, according to TRA's Taxes and Duties at a Glance 2025/26. Guides that quote a four-employee threshold for the Mainland are mixing up the two regimes.
The headcount is wider than many employers assume. TRA's definition of employee for SDL includes permanent, part-time and secondary employees and casual labourers. A business with seven permanent staff and four regular casuals is over the line.
The base: gross emoluments
TRA defines gross emoluments as salaries, wages, payments in lieu of leave, fees, commissions, bonuses, gratuity, and any subsistence, travelling, entertainment or other allowance received for employment. Overtime and bonuses are in. If you pay some staff weekly or quarterly, TRA treats the payments as if they were monthly, so the levy follows the monthly equivalent rather than the payment date.
Who is exempt from SDL
TRA lists these employers as outside the levy:
- Government departments and public institutions wholly financed by the Government, and local government authorities
- Diplomatic missions, the United Nations and its organisations, and international or foreign institutions dealing with aid or technical assistance
- Religious institutions, for employees employed solely to administer places of worship or give religious instruction
- Charitable organisations holding a Commissioner's ruling under Section 11 of the Tax Administration Act
- Registered educational institutions: nursery, primary and secondary schools, vocational training schools, universities and higher learning institutions
- Interns from higher learning or TVET institutions placed under the Tanzania Employment Service Agency programme
- Farm employers, for employees engaged directly and solely in farming (not farm management or processing staff)
TRA notes that only part of this list applies in Zanzibar. A religious body's office or a church-owned business is not automatically exempt; the exemption follows what the employees actually do.
Filing and paying SDL
- Submit the monthly return through TRA's IDRAS system on or before the 7th day of the month following the payroll month, the same date as PAYE.
- Pay using form ITX 300.01.E, the Employment Taxes Payment Credit Slip, to the tax region where you are registered.
- Prepare a half-year certificate that agrees with the monthly returns.
Since the Finance Act 2023 amendments, employers who are not liable for SDL no longer have to file SDL returns. Run the numbers for your own payroll in the SDL calculator.
Workers Compensation Fund (WCF)
The Workers Compensation Fund was set up under the Workers' Compensation Act, Cap. 263, and began operating on 1 July 2015. It pays compensation for work-related injury, occupational disease and death. The Fund covers employers and employees in the public and private sectors of Mainland Tanzania (Tanzania Bara).
The WCF rate in 2026
WCF's own contributions page puts the rate at 0.5% of employees' gross earnings for both the private and the public sector. The private-sector rate used to be higher, and figures of 1% or 0.6% still appear in older guides and payroll templates; they are out of date. WCF says contribution rates are set by law on the basis of an actuarial valuation and that any new rate is announced before the financial year in which it applies, so check the Fund's page each July.
There is no WCF salary scale. The same 0.5% applies to a cleaner and a managing director, and the Fund's page does not mention any ceiling.
The base: narrower than SDL
WCF describes gross earnings as the employee's basic salary plus the allowances paid together with the monthly salary that do not vary. In practice that means fixed housing, transport or responsibility allowances are in, while variable items such as overtime are not. This is the key difference from SDL, which is charged on all emoluments including overtime and bonuses.
Monthly, not quarterly
Many websites, including some payroll tools, describe WCF as a quarterly filing. WCF's own guidance says otherwise: each month's contribution is due within that month or the following month. Its example is that July contributions must be paid before 31 August. An employer may pay for three months, six months or a year at a time only after approval from the Fund's Director General.
- Registration: new employers must register with the Fund within 30 days of hiring their first employee.
- Payment: through the WCF portal (portal.wcf.go.tz) with a control number.
- No deduction from staff: WCF states plainly that the contribution must not be deducted from employees' wages.
- Late payment: interest of 2% of the late amount, under Section 75(2) of the Act read with the 2016 regulations as amended in 2021.
The WCF calculator multiplies the payroll you enter by 0.5%. Enter one month's basic pay plus fixed allowances to get the monthly contribution.
Worked example: a 15-person payroll
A Dar es Salaam distributor on the Mainland has 15 employees. October payroll:
| Group | Basic + fixed allowances, each (TZS) | Group total (TZS) |
|---|---|---|
| 10 warehouse and sales staff | 500,000 + 100,000 = 600,000 | 6,000,000 |
| 4 supervisors | 900,000 + 150,000 = 1,050,000 | 4,200,000 |
| 1 manager | 2,300,000 + 200,000 = 2,500,000 | 2,500,000 |
| Fixed pay subtotal | 12,700,000 | |
| Overtime paid to warehouse staff | 450,000 | |
| Total gross emoluments | 13,150,000 |
| Levy | Base (TZS) | Rate | October (TZS) | Due by |
|---|---|---|---|---|
| SDL | 13,150,000 | 3.5% | 460,250 | 7 November |
| WCF | 12,700,000 | 0.5% | 63,500 | 30 November |
| Total | 523,750 |
Together the two levies add about 4% to this month's gross payroll. If the payroll stays at the same level all year, that is TZS 5,523,000 of SDL and TZS 762,000 of WCF, or TZS 6,285,000 in total. Note the different bases: the TZS 450,000 of overtime attracts SDL (TZS 15,750) but no WCF.
Two variations show why the details matter. If the same business had only nine employees, SDL would be nil on the Mainland, but WCF would still be due in full, because WCF has no headcount threshold. And if this were a Zanzibar payroll with the same figures, SDL at 4% would be TZS 526,000, while WCF, which covers Mainland employers, would not apply in the same way; check the arrangements that apply there before you budget.
These levies sit alongside the employer's NSSF contribution and the PAYE you withhold. To model the full employer cost per employee, use the full payroll calculator; for the employee side, see the PAYE guide for employers.
Penalties for getting it wrong
SDL is administered under the general rules of the Tax Administration Act. TRA's guidance on penalties says that failing to file a return or pay tax on time attracts, for each month or part of a month the failure continues, the higher of 2.5% of the tax due or 15 currency points for a company (5 for an individual), with one currency point equal to TZS 20,000. Interest at the statutory rate is charged on the unpaid tax on top.
WCF charges interest of 2% of the late amount. More expensive in practice is an unregistered or unpaid employer facing a workplace injury claim, which is exactly the liability the Fund exists to carry.
The mistakes we see most
- Deducting SDL or WCF from staff. Both are employer costs by law. A payslip showing either as a deduction is wrong.
- Using the old rates. 4% SDL and 1% WCF are superseded on the Mainland.
- Counting only permanent staff when testing the ten-employee SDL threshold.
- Charging WCF on overtime and bonuses, or SDL on basic pay only. The two bases are different.
- Paying WCF quarterly without approval. Monthly is the default; anything else needs the Director General's consent.
A payroll system that knows the rules removes all five. Tawala HR & Payroll applies the right base to each levy, tracks the SDL headcount threshold, and produces the monthly figures for TRA and WCF from the same payroll run.
Sources: Tanzania Revenue Authority, Skills Development Levy (SDL) (tra.go.tz/page/skills-development-levy-sdl) and Interest, Penalties & Offences (tra.go.tz/page/interest-penalties-offences); TRA, Taxes and Duties at a Glance 2025/26 (Zanzibar SDL); Association of Tanzania Employers circular on the Finance Act 2023 amendments to the VET Act, Cap. 82; Workers Compensation Fund, Contributions (wcf.go.tz/pages/contribution). Checked 24 October 2026.