Dar - June 13 ; The Parliament of Tanzania approved the Ministry of Finance’s TZS 20.19 trillion budget for the 2025/26 fiscal year, designated for both recurrent and development expenditures across its eight budget votes.
Out of the total amount, TZS 19.43 trillion (96.2%) has been allocated for recurrent expenditure, while TZS 757.79 billion (3.8%) has been set aside for development expenditure.
The approval followed a request presented by the Minister for Finance, Dr. Mwigulu Nchemba, in Parliament in Dodoma, outlining the ministry’s financial plans and five priorities for the upcoming fiscal year.
The key priorities of the Ministry of Finance for the 2025/26 fiscal year include mobilizing and collecting a total of TZS 50.17 trillion to implement the Government Budget, and servicing government debt amounting to TZS 14.22 trillion that is due for repayment.
Other priorities include establishing a unified invoicing system for government payments to enhance revenue collection efficiency, improving, integrating, and strengthening the security of electronic systems used for managing public finances and assets, and formulating a Public Assets Management Policy.
Dr. Nchemba further explained that, “The Ministry of Finance aims to mobilize and collect financial resources amounting to TZS 50.17 trillion for the implementation of the Government Budget for the 2025/26 fiscal year.
Out of the total, the Tanzania Revenue Authority (TRA) is projected to collect TZS 34.10 trillion, TZS 1.07 trillion is expected from grants, concessional and commercial loans from domestic and external sources will amount to TZS 14.95 trillion, and non-tax revenue is projected at TZS 53.54 billion.”
He noted that the National Audit Office is also expected to generate TZS 843 million from hall rentals and office building leases across various regions of the country.
“The Ministry of Finance will continue improving, integrating, and securing electronic systems for managing public finances and assets. It will also develop a centralized system for issuing Government payment invoices to enhance revenue collection efficiency,” added Dr. Nchemba.
For the fiscal year 2024/25, Tanzania’s Ministry of Finance received a budget of TZS 17.99 trillion, later revised to TZS 16.55 trillion.
As of April 2025, TZS 13.71 trillion had been disbursed, representing 86.5% of the revised budget, with actual expenditures reaching TZS 13.46 trillion, equivalent to 98.2% of funds disbursed.
In terms of revenue performance, the Ministry had targeted TZS 45.10 trillion for 2024/25—equivalent to 89.7% of the national revenue goal of TZS 50.29 trillion. By April 2025, TZS 37.91 trillion had been collected (84.1%), of which TZS 24.45 trillion was collected by TRA, TZS 5.32 trillion from concessional loans and grants, and TZS 8.14 trillion from commercial loans.
Budget structure.
The total budget proposed for 2025/2026 is TZS 56.49 Trillion, which marks a 12% increase from the 2024/2025 budget of TZS 50.29 Trillion.
Domestic revenue is projected at TZS 40.47 Trillion (71.6% of total budget), comprising TZS 34.1 Trillion in tax revenue and TZS 6.3 Trillion in non tax revenue.
Significant tax proposals.
The tax proposals in Tanzania are expected to increase government revenue by TZS 4.2 Trillion in 2025/2026.
Income Tax.
• Introduction of 10% withholding tax on retained earnings not distributed within six months.
• Increase in Alternative Minimum Tax (AMT) Rate to 1% of Turnover (currently 0.5%).
• Interest Restriction (Thin Capitalization) Rules Amended to Include “Retained Earnings” in “Equity” Definition.
• Removal of 10-Year Corporate Income Tax Holiday for EPZ and SEZ Operators selling locally.
• Withholding tax rates to be introduced/increased on the following: 2% on payments arising from purchase of raw salt from holders of a primary mining license (PML) or artisanal miners. 10% final WHT on commission payments derived from sport betting advertisements. 10% on insurance and re-insurance premium payments made to non-resident companies (currently 5%). 10% on payments for professional and management services provided in the extractive sector (currently 5%).
Value Added Tax.
• Introduction of a withholding VAT system by establishing a VAT collection agency system on payments made to a registered seller. Through this system agents will be required to collect 3% of VAT and submit it to TRA.
• Some of the items to be exempted from VAT include re-insurance transactions between insurance companies and re-insurance companies, edible oil produced locally using locally grown seeds (exemption was expiring on 30 June 2025 but now extended to 30 June 2026), cooking gas tanks & cylinders (HS Code 7311.00.10) as well as carbonization furnace (HS Code 8417.80.00) used in the production of briquettes, natural gas sold to CNG stations for motor vehicles use only, etc.
• To repeal VAT exemptions on purchase and importation of gaming supplies and bitumen classified under HS Codes 2713.20.00 and 2715.00.00.
Customs, Excise And Other Reforms.
• To introduce carbon-based excise at a rate of TZS 22,000 per metric ton of carbon produced from coal and natural gas.
• To introduce excise duty at a rate of 10% to other service providers of money transfer and payment system who employs independent systems other than financial or telecommunication systems.
• To reduce city service levy from current rate of not exceeding 0.3% to fixed rate of 0.25%.
• To reduce the hotel levy rate from 10% to 2%.
• To introduce travel insurance for foreigners entering the country at the rate of US$ 44 (will not include EAC and SADC citizens).
• To include goods originating from East African Community Partner States that meets EAC Rules of Origin into industrial development levy for the purpose of protecting local manufacturers, enhancing competition and increase Government revenue.
• Industrial development levies introduced on various products including steel and iron products at various rates between 5% to 15%.
• To include provision that grants 75% exemption of import duty for deemed capital goods imported by the investors registered under Investment and Special Economic Zones Act, 2025.
• EAC Partner States have agreed to introduce the East African Community Assembling and Manufacturing of Goods Regulations with the implementation set to take effect on 1 July 2026.
