Tanzania Tax Update: Finance Act 2026 Highlights

1.1. Mining projects: The finance minister can, by order published in the Government Gazette, grant an income tax exemption to a mining licence or special mining licence holder that has signed a Framework Agreement (FWA) with the Government for a mining project in which the Government holds an ownership interest. The exemption applies only during the mine construction phase and ceases immediately upon commencement of production.

1.2. Deemed dividends: The Commissioner General (CG) for Tanzania Revenue Authority can deem 15% (previously 30%) of undistributed profits to be distributed dividends where dividends are not declared within 12 months after the end of a year of income. This rule does not apply to companies listed on the Dar es Salaam Stock Exchange (DSE), financial institutions, insurance companies, or mining companies that have signed an FWA with the Government.

1.3. Preservation of cost base on exempt intragroup transfers: Where a gain on a transfer of an asset between associates (related parties) is exempt from income tax, any subsequent disposal by the transferee will be computed using the original cost base of the asset (plus any subsequent qualifying costs), effectively ensuring that exempt transfers between associates do not result in a step-up of the cost base of an asset. 

1.4. Taxation of sale of forest produce: A resident person receiving payment for the sale of forest produce must pay income tax in a single instalment at the rate of 2% of the gross payment received. Upon payment, the CG shall issue a tax certificate. The tax is payable upon the occurrence of specified dates, including receipt of payment, transportation of the produce, transfer of possession or control, or payment of forest cess.

1.5. Presumptive income tax: The maximum annual turnover threshold for resident individuals eligible for the presumptive income tax regime has been increased from Tanzania Shillings (TZS) 100 million to TZS 200 million, expanding access to the simplified tax regime for small and medium-sized businesses. Resident individuals with annual turnover exceeding TZS 11 million but not exceeding TZS 200 million pay presumptive tax at the rate of 4% of turnover, up from the previous rate of 3.5%.

1.6. Increase in single instalment tax on electronic services: The rate of single instalment income tax payable by a non-resident person receiving payments from individuals in Tanzania for electronic services has been increased from 2% to 3% of the gross payments received.

1.7. Withholding tax on agricultural and fishery products: The withholding tax rate on payments made by a resident corporation for crops, livestock products, or fishery products supplied by a resident person is 1%. Although the Finance Bill 2026 proposed introducing an obligation on resident corporations to withhold this tax at source, this proposal was not enacted in the Finance Act, 2026 and therefore does not form part of the final law.

2.1. Clarification on VAT withholding mechanism: A VAT withholding agent that withholds VAT at the rate of 3% on the supply of goods and 6% on the supply of services is required to pay the supplier the remaining VAT balance of 15% and 12%, respectively. Previously, the law expressly provided for payment of the VAT balance only in respect of service supplies.

2.2. Apportionment of mixed supplies for VAT withholding: Where a taxable supply comprises both goods and services, the value subject to VAT withholding must be apportioned between the goods and service components in the ratio of 3:2, respectively, for purposes of applying the applicable VAT withholding rates.

2.3. Mining projects: The CG can, upon application, grant a VAT exemption on the importation of goods and services by, or the supply of goods and services to, a holder of a mining licence or special mining licence that has signed a FWA with the Government for a mining project. The exemption applies only to Cabinet-approved FWAs and to goods and services specified in such agreements. 

2.4. Extension of VAT deferment on capital goods: The planned cessation of the VAT deferment regime for specified imported capital goods on 30 June 2026 has been abolished, allowing the deferment regime to continue beyond that date.

2.5. Deemed supplier for digital intermediaries and marketplaces: An operator of an online digital intermediary or digital marketplace is deemed to be the supplier of an electronic service for VAT purposes if such service is supplied to an end user in Mainland Tanzania through an online intermediation platform or other digital marketplace: 

“Digital intermediary” means an electronic interface, including website, internet portal, application, online store or digital market place that allows recipients and persons offering services through the electronic interface to enter contact which results in a sale through that electronic interface. 

2.6. Expansion of the definition of electronic services: Electronic service includes any other service of a similar nature delivered through internet or a telecommunications network.

2.7. VAT withholding compliance: A VAT withholding agent must remit any VAT withheld during a tax period to the CG within 10 days after the end of that tax period. The withholding agent must also file a VAT withholding statement with the Commissioner within 10 days after the end of the month to which the withheld VAT relates.

2.8. Exemption on imports and supplies:

• Exemption limited to supplies of locally manufactured fishing nets. 
• Exemption applies to importation and supply of polyester fishing yarn used exclusively to manufacture fishing nets.
• Exemption on the supply of double refined edible oil manufactured locally from locally grown seeds has been extended for a further one year, to 30 June 2027.
• Exemption applies on supply of:
  • New pneumatic tire of rubber of a kind used on aircraft of HS Code 4011.30.00, turbo-jets, turbo-propellers and other gas turbines of Heading 84.11.
  • Locally manufactured garments made from locally grown cotton from 1 July 2026 to 30 June 2027.

2.9. Exemption on imports:

• Exemption applies on importation of:
  • Paper for printing boarding passes.
  • Liquefied petroleum gas smart meters of by a distributor of liquefied petroleum gas.
  • Electric vehicle charging station by a licensed electric vehicle charging service provider. 

3.1. Annual adjustment of duty rates: Rates are subject to annual adjustment based on the actual year-on-year inflation rate for the period ending in March, plus an additional 2%.

3.2. Digital services supplied by non-residents: Duty is imposed on specified dutiable services provided by a non-resident through the internet or other electronic means to end users in Tanzania. Non-resident suppliers of such services are required to register for excise duty, file returns, and remit excise duty.

3.3. New age-based duty rates on imported used vehicles:

• 18% for imported vehicles aged more than 8 years but not more than 10 years.
• 35% for imported vehicles aged more than 10 years but not more than 20 years.
• 40% for imported vehicles aged more than 20 years.

3.4. Remission for mining projects: The finance minister may, with Cabinet approval and by Gazette order, grant a remission of excise duty to a holder of a mining licence or special mining licence that has signed a FWA with the Government for a mining project. The remission applies only to goods imported or purchased for use during the construction phase of the mining project and does not apply to petroleum products. The Minister is required to specify the duration of the remission, the eligible goods, and any applicable conditions, with detailed procedures for obtaining the remission to be prescribed by regulations.

3.5. Adjusted rates: Specific excise duty rates applicable to various products have increased by 8%. The adjusted rates affect a wide range of products, including alcoholic and non-alcoholic beverages, tobacco products, petroleum products, cement, confectionery, imported powdered beverages, paints, lubricants, matches, and other excisable goods.

4.1. Framework Agreements for tax purposes: The Minister is required to publish a notice in the Government Gazette specifying the Framework Agreements that qualify for purposes of tax laws. 

4.2. Taxpayer Identification Number (TIN) registration: Persons commencing employment, business, or investment activities must apply for a TIN within 15 days of commencing the activity.

4.3. Disclosure requirements for construction and extractive sectors: Entities operating in the construction and extractive sectors must electronically disclose details of all contractors and subcontractors to the CG within 30 days of executing a contract. The disclosure must include their name and address, TIN, contract details, expected withholding tax obligations, and any other prescribed information.

4.4. Sale of perishable charged assets: The Commissioner General can dispose of charged assets comprising perishable goods by way of auction or private treaty, enabling their prompt sale to prevent deterioration and preserve value.

4.5. Transfer pricing penalty for profit-making entities: The penalty for non-compliance with the arm’s length principle is the greater of 30% of the transfer pricing adjustment or 100% of the resulting tax shortfall.

4.6. Offences relating to misuse of tax exemptions and remissions under Framework Agreements: The use of exempted goods for unauthorized purposes, transfer exempted goods without the approval of the CG, or obtaining an exemption through a false or misleading statement is an offence. Upon conviction, the person is liable to a fine equal to 100% of the tax exempted, and the exempted or remitted tax becomes immediately due and payable as if no exemption or remission had been granted.

4.7. Offence for false tax records: Making a false or incorrect entry in any material particular in a book, record, register, or electronic system is an offence and, upon conviction, attracts a penalty equal to twice the amount of tax evaded.

5.1. Expanded definition of property: The definition of property includes movable property, thereby broadening the scope of assets covered under the relevant provisions.

5.2. New duty rates:

• Bill of exchange - TZS 5,000, previously nil
• Bill of sale of by way of security or collateral security - maximum duty is TZS 100,000, up from a maximum of TZS 10,000
• Cheque - TZS 500, up from TZS 100
• Conveyance of agricultural land - 0.5% of the consideration value, up from TZS 500
• Partnership deeds - minimum of TZS 5,000, up from minimum of TZS 1,000

6.1. Levy applies on the following exports:

• Waste and scrap of paper or paperboard – 30% of the free-on-board (FOB) value or TZS 200 per kilogram (kg), whichever is higher
• Cotton cake – TZS 50 per kg
• Sunflower cake – TZS 50 per kg
• Wheat bran – TZS 50 per kg
• Rice bran – TZS 50 per kg
• Maize bran – TZS 50 per kg
• Quartz sands – 10% of the FOB value or TZS 200 per kg, whichever is higher
• Feldspar – 10% of the FOB value or TZS 200 per kg, whichever is higher

7.1. The levy does not apply to goods originating from East African Community (EAC) Partner States that satisfy the EAC Rules of Origin. However, the levy shall apply where a Partner State imposes trade barriers or discriminatory duties, levies, charges, fees, or taxes on goods originating from Tanzania.

7.2. The levy does not apply to road tractors or semi-trailers that are locally assembled or manufactured under bond.

7.3. Levy applies on the following imports:

• Exercise books and notebooks – 5%
• Trailers – 5% 
• Aluminum doors, windows and their frames and thresholds for doors – 5% 
• Fishing nets – 10% 
• Steel structure – 10%

8.1. The Minister for Finance may prescribe, by notice published in the Gazette, payments that must be made through electronic means. 

8.2. Proof of such electronic payment will be a mandatory requirement for obtaining approval of applications relating to the transfer of assets, including land, buildings and motor vehicles.

9.1. The period within which taxpayers and the TRA may amicably settle a pending tax appeal has been extended from 60 days to 90 days from the date the Tax Revenue Appeals Board (TRAB) or the Tax Revenue Appeals Tribunal (TRAT) issues an order permitting the parties to pursue an amicable settlement. 

9.2. Where the parties are unable to finalize the settlement within the 90-day period, the TRAB or TRAT may grant a further extension of up to 30 days, increased from the previous 10-day extension period.