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Taxes

Fees, Taxes and Other Costs: What to Ask Before You Invest

Withholding tax on bills and bonds, accrued interest, premiums, CDP and bank charges, and the questions to ask.

Published 13 Oct 2026 · 2 min read

The yield is not the whole story. Before you invest, know what is deducted, what you pay on top, and what to ask your CDP and bank.

Withholding tax

  • Treasury bills: interest is subject to 10% withholding tax (notice for bills auction No. 1208). For bills, the interest is the face value minus the price you paid.

  • Treasury bonds of 5 years and longer: interest is exempt from withholding tax (Bank of Tanzania bond guidelines, 2022; for example the notice for 25-year bond No. 722).

  • 2-year bonds: interest is subject to withholding tax; the rate is in the notice.

  • If you are tax-exempt (some institutions are), give the Bank of Tanzania a tax exemption certificate from the Tanzania Revenue Authority (TRA), through your CDP.

Tax rules can change: the notice for your auction is what applies. For your own situation, ask a tax adviser or TRA. More: Withholding tax on bonds and bills.

Money you pay on top of the price

  • Accrued interest on reopened bonds. It is not a cost: it comes back with your first coupon. See the worked example.

  • A premium when you buy above 100. This one is a cost, because only the face value is repaid; the yield already accounts for it.

Fees: ask before you sign

The Bank of Tanzania's notices and guidelines do not list an auction fee for investors. Others may charge:

  • Your CDP (bank or broker): account opening, bid handling or yearly custody fees, if any. Ask for its tariff in writing.

  • Your bank: the charge for sending payment through TISS on the settlement date.

  • Selling before maturity on the DSE: broker commission and market fees. Ask your stockbroker for the full schedule before you sell.

The cost you don't see: inflation

Inflation reduces what your interest can buy. Your real return is roughly your yield minus inflation. Today's figures are on Rates & economy.

The penalty you can avoid

If your bid wins and you don't pay on the settlement date, the notices say you are barred from auctions for at least 30 days. Have the money in your bank account the day before.

Questions to ask your CDP

  • What fees do you charge, and when?

  • What is your deadline for receiving my bid on auction day?

  • How do I pay for a winning bid, and by what time?

  • How will I receive my bid code and statements?

  • Can you sell my bond on the DSE, or do I need a stockbroker?

Next: After the auction, or back to the investment journey.

Sources: Bank of Tanzania, Guidelines for Participation in Primary and Secondary Markets for Treasury Bonds (2022), section 4.3; Bank of Tanzania auction notices. This article is for education only and is not investment or tax advice.