Tanzania

Finance Act 2025

Some of the significant changes brought in by the Finance Act 2025 include the following:

Tax administration 

• Introduction of a requirement for the Commissioner General (of TRA) to establish an electronic tax administration system, with the requirement for taxpayers (upon request by the Commissioner General) to interface their electronic systems with it. Offences and penalties introduced for unauthorised access, misuse, or failure to interface with the electronic system (up to 3 years imprisonment or fines).
• Introduction of prescribed criteria for recognition and registration of small-scale traders, with the Commissioner empowered to assess tax if turnover exceeds the minimum taxable income (currently TZS 4 million).
• Update of the disclosure requirement for entities in the extractive or construction sectors to include names, contract value, nature, and duration of subcontracted works, including amending the timeline for such disclosure to within 30 days from commencement of the works (previously from execution of the contract).
• Clarification that objections are deemed admitted when the objection is filed, or tax deposit requirement is met or, if no tax is due, on service of the objection;
• Introduction of additional conditions for determination of an objection as follows:

• Failure to respond to a TRA proposal letter results in the proposal being treated as the objection decision.
• Where a proposal letter was issued by the TRA before the expiry of six months from date of admission of the objection, the position in the letter is treated as an objection decision.

• Introduction of a time limitation on the Commissioner’s power to restrain an asset for unpaid taxes being a maximum of three months.
• Expansion of the transfer pricing penalty regime to introduce a penalty on a transfer pricing adjustment when an entity is in a tax loss position with the penalty being 30% of the adjusted loss.
• Powers granted to the Commissioner General to recognise and issue certificates for tax residency.

Income tax 

• Expansion of the definition of “equity”, for thin capitalisation purposes, to include positive retained earnings (previously limited to paid up share capital).
• Introduction of a provision (anti-avoidance measure) empowering the Commissioner to deem 30% of an entity’s profits as distributed if no distribution is made within 12 months after the end of the accounting period, with an exemption for resident entities that are covered under the controlled foreign corporation (CFC) rules.
• Mining and petroleum companies may now only offset up to 60% (previously 70%) of current year profits using unrelieved tax losses.
• Removal of the exemption of withholding tax on payments by a resident person  for the purchase of raw salt from primary mining licence holders or artisanal miners (which applies at 2%).
• Introduction of a 2% single instalment income tax (representing final liability) on gross payments received by resident person from the sale of forest produce (defined to include timber, logs, mirunda and poles), effective 1 January 2026.
• Small enterprises exempted from the requirement of having a Certified Public Accountant in Public Practice (CPA PP) prepare or certify income tax returns – threshold for exemption is turnover of up to TZS 500 million for individuals and gross income of up to TZS 100 million for corporations.

Value-added tax (VAT)

• Introduction of Withholding VAT (WVAT) at the rate of 3% for goods and 6% for services
• Introduction of a new VAT collection agency mechanism for Assisted Government entity
• Introduction of 16% VAT for B2C purchases where payments are made via bank or electronic payment system approved by the CG of TRA. To be effective from date of Public Notice issued by the Commissioner and for specified suppliers.  
• VAT return filing due on the 20th, regardless of weekends or public holiday
• Commissioner General is now required to make a decision on whether to grant or refuse extension requested upon notification from intending traders on reasons for failure to start operations by date stated in their applications. Should the request be denied, the taxpayer is automatically deemed VAT de-registered.
• Expansion of the definition electronic services to include online intermediation services or platform, including an including an accommodation, online marketplace and payment services platform
• • Extension of zero rating
    • Locally produced fertilisers (three years) to 30th June 2028
    • Locally manufactured garments made from locally grown cotton (one year) to 30th June 2026
  • Exemptions
    • Extension of exemption of edible oil produced locally using locally grown seeds (one year) to 30th June 2026 
    • Abolished exemption of Bitumen (HS codes 2713.20.00, 2715.00.00)
    • Introduction of exemption
      • Pesticides under HS Codes 3808.61.00, 3808.62.00, 3808.69.00
      • Re-insurance transactions
      • Supply of piped natural gas specifically for being converted to Compressed Natural Gas (CNG) to be used exclusively for fuelling motor vehicle from 1 July 2025 to 30 June 2028
      • Liquefied Petroleum Gas tanks or cylinders for cooking (HS Code 7311.00.10) - replacing (HS code 7311.00.00)
      • An import of carbonization furnace (HS code 8417.80.00) for exclusive use in manufacturing of briquettes
    • Amendment/ clarifications on various exemptions
      • Exemption for solar battery is now limited to batteries specifically designed for exclusive use in storage of solar power
      • Exemption for aircraft, engines, and parts is now limited to specific HS codes
      • VAT exemption on importation of new pneumatic tyre of a kind used in agricultural and forest vehicles (HS codes specified), tractor trailers, dam liners, forks, rakes, and axes for agriculture, now subject to Minister’s (responsible for agriculture) approval
      • Exemption for importation of CNG plants equipment is narrowed. Focuses on core CNG equipment for compression, storage, transport, and dispensing excluded processing and distribution
      • Broadening the exemption exclusion from ‘rental cars’ to ‘rental motor vehicles’ under the VAT exemption on transportation of person by means of conveyance
      • Amendment of the newspapers exemption to apply only on newspapers printed and published locally by a person licensed under the Media Services Act

Excise duty

• The new filing deadline for monthly returns is the 25th day of the following month (previously the last working day of the following month to which the return related). 
• Excise duty rate on bottled water reduced to TZS 56 per litre from TZS 63.8 per litre. 
• Introduction of excise duty imposition to service provider(s) for commercial advertisement on betting, gaming, or lotteries through print media, television, or radio broadcasting, excluding service provider(s) conducting non-commercial advertisement of promotions, national lottery, and licensed trial games.
• Introduction of excise duty on undenatured ethyl alcohol with an alcohol strength of 80% by volume or higher. Licensed manufacturers who acquire this alcohol, paid the excise duty, and use the alcohol as a raw material to produce finished alcoholic products, such as spirits, liqueurs, and other beverages under HS Code 2208, are allowed to offset the excise duty against that which ought to have been payable on the finished goods.
• Introduction of duty remission (subject to Commissioner’s approval) on undenatured ethyl alcohol under HS Code 2207, which should have been charged, levied, or collected. This applies when alcohol is used solely as a raw material for (i) the production of industrial energy by the producer of the undenatured ethyl alcohol and (ii) medical or laboratory use.

Other taxes and levies

• Service levy now at a fixed rate of 0.25% of gross revenue (previous up to 0.3%)
• Removal of loading/offloading fees by Local Government Authorities on goods transportation
• Introduction of 5% to 15% Industrial Development Levy (IDL) on various imported goods (kitchenware, tractors, prefabricated buildings, bars/rods, nails, furniture, flat rolled products, glass, ceramic tiles).