The measures will apply from 1 July 2025, unless otherwise specified. 

Tanzania’s Finance Act 2025 was enacted on 30 June 2025, implementing tax measures from the 2025-26 Budget Speech with some adjustments to the initially announced proposals.

The measures will apply from 1 July 2025, unless otherwise specified.

Earlier, Tanzania’s Minister of Finance, Mwigulu Nchemba, presented the 2025-26 budget to Parliament on 12 June 2025.

The key tax measures are:

Withholding tax on retained earnings

A 10% tax on 30% of retained earnings undistributed after 12 months has been introduced.

Alternative minimum tax (AMT) 

The AMT for companies with losses over three consecutive years has been increased from 0.5% to 1.0%.

Transfer pricing penalty

The 2025-26 budget has introduced a new 30% penalty on adjusted losses for loss-making companies failing to apply the arm’s length principle.

VAT rate for online payments

The VAT rate has been reduced to 16% (from 18%) for B2C online payments via approved systems, effective 1 September 2025.

New VAT withholding rules

New VAT withholding rules outlined in the 2025-26 budget mandate that government entities and designated withholding agents must withhold:

  • 3% VAT on goods, with the remaining 12% VAT paid to the supplier.
  • 6% VAT on services, with the remaining 9% VAT paid to the supplier.

Loss carry-forward limit

The loss carry-forward limit has been reduced from 70% to 60% of current year profits for the mining, petroleum, oil, and gas sectors.

EPZ/SEZ tax exemption removal

The 10-year income tax exemption for investments in Export Processing Zones (EPZ) and Special Economic Zones (SEZ) has been removed for goods and services sold domestically.

Equity definition amendment 

The definition of equity has been amended to include positive retained earnings, which impacts the thin capitalisation rules.

Tax on forest products

A 2% individual income tax on revenue from forest products, payable per cargo value, has been introduced.

Gambling advertisement tax

A 10% final withholding tax on commissions from gambling ads has been introduced.

Insurance premium tax

The 2025-26 budget increased the withholding tax on non-resident insurance and reinsurance premiums from 5% to 10%.

Extractive sector services tax

The withholding tax on professional and management services in the extractive sector has been increased from 5% to 10%.

Share listing requirements

The share listing requirement has been reduced from 30% to 25% for companies to qualify for a 25% corporate tax rate on the Dar es Salaam Stock Exchange.

Local service levy

The local service levy has been reduced to a flat rate of 0.25% on gross income.