Understanding Tanzania’s tax landscape

Tanzania Revenue Authority achieved a significant milestone in December last year when it broke its own record by collecting about $900.8 million in taxes, marking the highest amount ever collected since its establishment in 1996. This achievement highlights the positive trajectory of tax compliance and revenue generation in the country, with key improvements seen in tax education, awareness, and the registration of new taxpayers. Over the past five years, monthly tax collections have more than doubled, increasing from approximately 800 billion Tanzanian shillings to 2 trillion shillings, signaling considerable growth in revenue collection. Small and medium enterprises (SMEs), which play a vital role in contributing to the country's revenue, saw an increase of over 18% in tax revenue in December last year. The Tanzanian tax landscape has undergone significant transformations in recent years, particularly since the new administration took office in 2015. The government's commitment to enhancing tax collection has been evident through various measures aimed at boosting revenue streams. The former president, known for his stringent approach to tax collection, implemented tough measures to ensure compliance and generate sufficient revenue for the country's development. Automation of tax collection processes through the introduction of new fiscal devices has streamlined tax administration and contributed to the overall increase in tax revenue. Despite the positive outcomes of enhanced tax collection efforts, there have been challenges and criticisms, particularly from the private sector. Some business players raised concerns about the harshness of tax measures, including the imposition of tax bills dating back up to 10 years. Following engagements between the former president and the business community, adjustments were made to create a more business-friendly environment while maintaining tax compliance. In the global context, Tanzania has been recognized as among countries holding multinational corporations accountable for corporate income tax payments. Efforts to address loopholes, such as transfer pricing regulations and increased scrutiny on the mining industry, have contributed to improved tax compliance and revenue collection. The government's intervention in major mining companies to ensure transparency and fair tax contributions underscores its commitment to strengthening tax systems. Looking ahead, with the recent transition in government leadership, there is anticipation that ongoing reforms and initiatives in tax administration will continue. The new president is expected to uphold the party manifesto and deliver on promised reforms and policies outlined for the next five years. While some adjustments in approach and strategy may occur under the new administration, the general expectation is for continuity and sustained progress in tax collection and compliance for the benefit of Tanzania's economic growth and development.