Tanzania's National Budget Speech 2026

In this article, we provide a high-level overview of Tanzania’s 2026/27 National Budget Speech, outlining key fiscal priorities, macroeconomic targets, and revenue strategies. We also focus on the proposed tax measures, including changes to income tax, VAT, excise duty, and tax administration, and highlights their implications for businesses and investors.

1. Overview

The Minister for Finance delivered the National Budget Speech for the financial year 2026/27 on 11 June 2026, under the theme: “Building a resilient economy through digital transformation, strategic investment, and sustainable fiscal policies for inclusive economic growth.”

1.1 Budget Frame:

• Budget Size: The Government plans to collect and spend TZS 62.33 trillion, representing a 10.3% increase from the 2025/26 budget. This growth reflects continued expansion in public spending aimed at supporting economic development, infrastructure investment, and social services delivery.
• Revenue Composition: The Government expects to mobilize TZS 46.79 trillion in total revenue, with the majority coming from domestic sources:
  • Tax revenue (TZS 36.99 trillion) remains the largest contributor, indicating strengthened tax administration and compliance efforts.
  • Non-tax revenue (TZS 9.24 trillion) includes collections from fees, levies, and TZS 1.97 trillion generated by Local Government Authorities, highlighting decentralised revenue mobilisation.
  • Grants (TZS 563.1 billion) form a relatively small portion, reflecting reduced reliance on external funding.
  • Overall, about 74.2% of the budget will be financed domestically, reflecting a strategic shift toward self-reliance.
• Decline in Grants: Grants from development partners are projected to decline by 39.1% compared to 2025/26, largely due to changing priorities and policies among donors. This decline reinforces the emphasis on self-reliance, encouraging citizens and businesses to actively participate in the economy and contribute through taxation.
• Expenditure (excluding debt repayment): Total Government spending is estimated at TZS 54.50 trillion, allocated across key sectors and obligations:
  • Wages and pensions (TZS 10.13 trillion): Supporting public servants and meeting pension contribution obligations.
  • Goods and services (TZS 5.22 trillion): Financing day-to-day government operations and service delivery.
  • Interest payments (TZS 6.86 trillion): Reflecting the cost of servicing existing public debt.
  • Subsidies (TZS 25.32 trillion): The largest share, indicating strong government support to priority sectors such as energy, agriculture, or strategic industries.
  • Transfers and pension benefits (TZS 1.01 trillion): Supporting social protection and statutory transfers.
  • Development expenditure on non-financial assets (TZS 2.33 trillion): Funding infrastructure and capital investment projects.
  • Other expenditures (TZS 3.63 trillion): Covering additional administrative and operational costs.
• Budget Deficit: The budget projects a deficit of TZS 7.71 trillion.
• Financing Plan: To bridge the deficit and meet financing needs, the Government plans to borrow TZS 15.54 trillion through a combination of sources:
  • Domestic loans (TZS 6.56 trillion): Raised from local financial markets.
  • External concessional loans (TZS 6.55 trillion): Borrowed on favorable terms from development partners.
  • External commercial loans (TZS 2.43 trillion): Sourced from international markets at market rates.
• Debt Repayments (Amortization): In addition to new borrowing, the Government has allocated TZS 7.84 trillion for the repayment of maturing debt obligations.

1.2 Macroeconomic targets and assumptions:

• Stronger Economic Growth Target: The Government aims to accelerate real GDP growth to 6.3% in 2026, up from 5.9% in 2025, reflecting continued recovery and expansion across key sectors of the economy.
• Stable and Low Inflation: Inflation is expected to remain within a single-digit range of 3.0%–5.0% in the medium term, supporting price stability, purchasing power, and a conducive environment for investment.
• Improved Domestic Revenue Mobilisation: Domestic revenue is projected to increase to 17.1% of GDP in 2026/27, up from 16.5% in 2025/26, highlighting efforts to enhance revenue collection and reduce reliance on external sources.
• Higher Tax Revenue Contribution: Tax revenue is targeted to rise to 13.7% of GDP in 2026/27, compared to 13.2% in 2025/26, indicating strengthened tax policy measures and improved compliance.
• Fiscal Discipline on Budget Deficit: The Government plans to contain the budget deficit within 3.0% of GDP, ensuring fiscal sustainability and alignment with regional and international benchmarks.
• Adequate Foreign Reserve Buffer: Foreign exchange reserves will be maintained at levels sufficient to cover at least four months of imports of goods and services, safeguarding external stability and resilience against economic shocks.

2. Proposed Tax Measures

The Minister has proposed the following tax measures:

1. Income Tax

• Informal sector: 
  • Granting a twelve-month income tax holiday to newly registered taxpayers operating exclusively under the presumptive tax regime. The holiday period is to commence from the date of issuance of the Taxpayer Identification Number.
  • Increasing the presumptive tax upper threshold from TZS 100 million to TZS 200 million.
  • Increasing the presumptive tax rate from 3.5% to 4.5% for taxpayers with annual turnover between TZS 11 million to TZS 200 million.
• Digital service providers: Increasing the income tax rate on payments made to foreign digital services providers, from 2% to 3%. 
• Retained earnings: Reducing the portion of undistributed profits deemed distributed for tax purposes from 30% to 15% of such profits. However, the reduced rate is not to apply to small financial institutions, insurance companies, companies listed on the Dar es Salaam Stock Exchange (DSE), and mining companies operating under Framework Agreements. 
• Mining: Recognizing the tax exemption provisions stipulated in Framework Agreements signed between the Government and mining investors, as approved by the Cabinet.
• Agribusiness:
  • Introducing a 1% non-final withholding tax on payments made by corporations to persons for the purchase of food crops, to be applied at the point of sale or transportation of such crops.
  • Introducing a 1% withholding tax on payments made by companies or institutions to suppliers of live animals, unprocessed milk, unprocessed fish, and fish maws.
  • Expanding the definition of “forest produce” to include natural varnish, latex, resin, sap, and gum. These will be subject to the 2% single instalment tax applicable to forest produce.
• Withholding Tax:
  • Increasing the withholding tax rate on royalties paid to sports institutions and the Tanzania Football Federation (TFF) from 5% to 10%.
  • Requiring Ministries, Independent Departments, Institutions, Government Agencies, Regional Secretariats, and Local Government Authorities to withhold income tax on payments made for the purchase of goods within the country. The current framework applies withholding obligations to resident corporations whose budgets are wholly or substantially financed by Government subventions, thereby expanding the scope of withholding agents across the public sector.

2. Value-Added Tax (VAT)

• VAT Refunds: Processing and paying VAT refunds within 30 days from the date of submission of the refund application and paying interest to taxpayers in cases where refunds are delayed.
• VAT Deferment: Abolishing the sunset clause on VAT deferment for imported capital goods, thereby allowing the deferment regime to continue.
• Mining: Recognizing the tax exemption provisions stipulated in Framework Agreements signed between the Government and mining investors, as approved by the Cabinet.
• Airline: Granting VAT exemption on:
  • Airline boarding passes.
  • Turbojets, turboprops and other gas turbines under HS Heading 84.11.
  • Aircraft tires under HS Code 4011.30.00.
• Agribusiness: Abolishing VAT exemption on:
  • Imported fishing nets under HS 5608.11.00.
  • Imported and locally produced dog and cat food under Heading 23.09.
• Clean Fuel: Granting VAT exemption on:
  • Imported equipment to be used in electric vehicle charging stations under HS Code 8504.40.00.
  • Imported LPG smart meters classified under HS Code 9028.10.00, with the exemption to apply only to licensed LPG distributors.

3. Excise Duty

• General Adjustment: 
  • Enhancing the current excise duty adjustment framework by shifting from periodic lumpsum increases to a more gradual and predictable approach. 
  • While the second phase of adjustments is set to commence in 2026/27, petroleum products will be excluded due to global price volatility and inflation concerns. 
  • The revised approach will introduce an initial 8% increase in 2026/27, followed by annual adjustments based on inflation plus 2%.
• Mining: Recognizing the tax exemption provisions stipulated in Framework Agreements signed between the Government and mining investors, as approved by the Cabinet.
• Agribusiness: Imposing excise duty at a rate of 20% on imported artificial flowers, foliage, artificial fruits, and similar products classified under HS Heading 67.02.
• Digital Services: Expanding the scope of excise duty to cover non-resident suppliers providing excisable services through online platforms directly to consumers (B2C), even where such suppliers have no physical presence in Tanzania.
• Cosmetic Products: 
  • Imposing duty at the rate of 10% duty on imported ultraviolet/light-emitting diodes (UV/LED) gel nail curing machines used for manicure or pedicure, under HS Code 8516.79.00.
  • Increasing duty on beauty products classified under HS Headings 33.03, 33.04, 33.05, and 33.07 from 10% to 15%.
• Clean Fuel: 
  • Imposing a 5% excise duty on motorcycles, while excluding motorcycles designed for emergency medical transport (motorcycle ambulances), natural gas-powered motorcycles, and electric motorcycles,
  • Imposing a 5% duty on vehicles classified under HS Code 8703.21.90 with engine capacities of 1,000cc and below.
  • Increasing the duty rate on imported used vehicles from 15% to 20% for vehicles aged over 8 years but not exceeding 10 years.
  • Increasing the duty on imported used vehicles from 30% to 40% for vehicles aged above 10 years but not exceeding 20 years.
  • Imposing a 50% duty on vehicles exceeding 20 years.
• Gaming: Imposing a 5% duty on the value of bets in gambling activities, including land-based or online/internet sports betting, land-based or online/internet casino gaming, forty-machine slot games, and virtual games operations.
• Shoe Manufacturers: Imposing a 10% duty on imported plastic or rubber clogs classified under HS Code 6402.99.00.

4. Tax Administration

• Sale of Perishable Goods: Empowering the Commissioner General of the Tanzania Revenue Authority to sell perishable goods that have been distrained or seized, including in cases of tax violations or unpaid tax debts, through public auction or private treaty, upon notifying the taxpayer.
• Customs Processing Fees: Increasing the Customs Processing Fee from 0.6% to 1% of the free on board value of imported goods.

5. Tax Appeals

• Settlement of Tax Disputes: Increasing the statutory timeline for out-of-court amicable settlement of tax disputes between the Commissioner General of the Tanzania Revenue Authority and taxpayers from 60 days to 90 days, effective from the date the Tax Revenue Appeals Board (TRAB) or Tax Revenue Appeals Tribunal (TRAT) grants approval for alternative dispute resolution.

6. Road and Fuel Tolls

• Mining: Recognizing the tax exemption provisions stipulated in Framework Agreements signed between the Government and mining investors, as approved by the Cabinet.

7. Industrial Development Levy

• EAC Products:
  • Exempting products manufactured within EAC Partner States from the industrial development levy, provided they meet the EAC Rules of Origin requirements
  • Introducing reciprocal measures, whereby tariffs and levies will be imposed on EAC Partner States that apply discriminatory or unfair trade barriers, such as unilateral taxes, fees, or other levies, on goods originating from Tanzania.
• Imposing:
  • 5% levy on imported exercise books and notebooks under HS Codes 4820.10.00 and 4820.20.00.
  • 5% levy on imported trailers under HS Codes 8716.31.90, 8716.39.90, and 8716.40.90.
  • 10% levy on imported fishing nets under HS Code 5608.11.00.
  • 5% levy on imported doors, windows, and their frames under HS Code 7610.10.00.
  • 10% levy on imported steel structure products under HS Code 7308.90.99.
  • 5% levy on imported aluminum structures under HS Code 7610.10.00.

8. Export Tax

• Imposing export tax at:
  • 30% or TZS 200/kg whichever is higher on wastepaper under H.S. Code 4707.00.00.
  • 10% or TZS 200/kg whichever is higher on quartz minerals under Heading 25.06, and Feldspar under HS Code 2529.10.00.
  • TZS 50/kg on:
    • wheat bran under HS Code 2302.30.00;
    • cotton cake under HS Code 2306.10.00;
    • rice bran under HS Code 2302.40.00;
    • maize bran under HS Code 2302.10.00;
    • sunflower cake under HS Code 2306.30.00.

9. Stamp Duty

• Expanding the definition of the term ‘lease’ to include documents of exchange of moveable property, subject to stamp duty.
• Increasing duty on bills of sale by way of collateral security from TZS 1,000 to TZS 10,000.
• Increasing the maximum limit for the levy of duty on bills of sale by way of security from TZS 10,000 to TZS 100,000.
• Changing the scope of capital value on partnership deeds as well as the duty rates to TZS 5,000 for deeds with a capital value not exceeding TZS 1 million and a rate of TZS 10,000 for deed exceeding TZS 1 million. 
• Increasing duty on cheques from TZS 100 to TZS 500.
• Increasing duty on surrender of lease documents from TZS 1,000 to TZS 2,000.
• Imposing duty at TZS 5,000 on bills of exchange of property.
• Imposing duty at ad valorem rate of 0.5% on the transfer document for agricultural land, amending the current fixed rate of TZS 500.

10. Investment and Special Economic Zone

• Denying tax exemption on road tractors for semi-trailers under HS Codes 8701.21.90, 8701.22.90, 8701.23.90, and 8701.24.90. 

3. Other Proposed Reforms:

• Employment and Informal Sector: Increasing the allocation of Local Government Authorities’ revenues for community development lending from 10% to 15%, aimed at expanding access to finance and promoting employment opportunities, whereby:
  • 10% will be maintained for loans to women, youth, and persons with disabilities; and
  • 5% will be directed toward market and business infrastructure development to promote employment and formalization.

• Cashless Economy: Introducing measures to reduce cash transactions by promoting greater adoption of digital payments across the economy through:
  • Requiring certain business and service payments to be conducted through digital channels.
  • Phasing out the use of scratch airtime vouchers in urban areas where digital payment infrastructure is available.
  • Making the use of digital payment platforms (e.g., Lipa Namba and TANQR) a requirement for the issuance and renewal of business licenses.
  • Requiring businesses in key sectors – including minerals, livestock, agriculture, timber, and fisheries – to open and maintain bank accounts as a condition for licensing, with all transactions to be routed through these accounts.
  • Requiring proof of digital payment as part of the approval process for the transfer of assets, including land, buildings, and motor vehicles.

• Presidential Commission on Tax Reforms: The Government intends to implement the following recommendations submitted by the Commission:
  • Strengthening the use of ICT systems, Artificial Intelligence (AI), big data, and blockchain by the Tanzania Revenue Authority (TRA) to improve efficiency, reduce administrative costs, enhance data security and transparency, and minimize physical interactions with taxpayers.
  • Establishing a framework for joint inspections by regulatory institutions, led by the President’s Office – Planning and Investment in collaboration with the Ministry of Industry and Trade, to reduce duplication and inconvenience to businesses and investors.
  • Issuing standardized guidelines for levies charged by Local Government Authorities, including the introduction of maximum caps, to ensure consistency and fairness in local taxation.
  • Completing the integration of TAUSI and IDRAS systems to enable seamless data exchange, including automatic retrieval of Tax Clearance Certificates, thereby eliminating the need for manual uploads by taxpayers.
  • Establishing a TAUSI system module to track building ownership, usage, and valuation, integrated with other government systems, to improve tax and levy collection and support land ownership formalization.
  • Increasing the number of TRA offices, Tax Service Centers, and mobile service units in areas with high economic activity to bring services closer to taxpayers.
  • Introducing a TAUSI module enabling local government officials (street and village executives) to register all traders, including those without formal business licenses, to enhance tax base coverage.
  • Developing and providing a free application for traders to issue receipts equivalent to Electronic Fiscal Devices (EFDs), promoting compliance and simplifying tax processes.

• NIDA Database: Amending the Registration and Identification of Persons Regulations, 2014 by introducing:
  • A fee of TZS 500 for citizens requesting access to their personal information from the NIDA database, including details such as parents’ names, education history, and contact information.
  • An additional fee of TZS 1,000 for citizens who require printed extracts of such information, aimed at supporting the administration and management of the national identification system.

• Universal Health Coverage: Introducing additional revenue measures to support the financing of Universal Health Coverage (UHC) through:
  • Increasing excise duty on cigarettes under HS Headings 24.02 and 24.03 by TZS 20 per-mil. 
  • Increasing sugar levy by TZS 10 per kilogram on both imported and locally produced sugar. The levy will be collected by the Sugar Board of Tanzania and remitted to the Universal Health Fund.

• Online Content Service Fees: Reducing online content service fees as follows:
  • Application fee for an online content service licence from TZS 50,000 to TZS 10,000.
  • Initial, annual and renewal fees for an online content service licence from TZS 500,000 to TZS 50,000.
  • Application fee for an Online Content Aggregator licence from TZS 100,000 to TZS 20,000.
  • Initial, annual and renewal fees for an Online Content Aggregator licence from TZS 1,000,000 to TZS 100,000.

• Ministry of Natural Resources and Tourism: Introducing registration, supervision and operation fees for private museums as follows:
  • Registration of a private museum for Tanzanian citizens at a rate of TZS 50,000.
  • Registration of a private museum for Tanzanian institutions at a rate of TZS 100,000.
  • Registration of a private museum for foreign citizens at a rate of TZS 500,000.
  • Annual licence fee for operating a private museum by Tanzanian citizens at a rate of TZS 20,000.
  • Annual licence fee for operating a private museum by a Tanzanian institution at a rate of TZS 100,000.  
  • Annual licence fee for operating a private museum by foreign institutions at a rate of TZS 300,000.

• Petroleum Verification Fee: Increasing the fee from TZS 0.15 per litre to TZS 1 per litre on petroleum products.

• Mining Sector: Proposing the establishment of a Mineral Research Fund under the Ministry for Minerals, to be financed by retaining 10% of gross mineral revenue collections, with the objective of strengthening research and investment in the mining industry.

• Government Borrowing: Reducing the maximum allowable threshold for short-term Government borrowing from the Bank of Tanzania (overdraft) from 18% to 14% of the previous fiscal year’s actual revenue, aimed at strengthening fiscal discipline and limiting reliance on central bank financing.