DAR ES SALAAM: A presidential commission reviewing Tanzania’s tax system has identified widespread structural weaknesses, including high tax rates, weak dispute resolution and a narrow tax base, warning these issues are undermining investment and compliance.
The commission, formed in August 2024 and chaired by former chief secretary Ombeni Sefue, presented its findings to President Samia Suluhu Hassan on Thursday.
It said frequent changes in taxes, levies and fees had created uncertainty for businesses, while high rates were placing a heavy burden on taxpayers.
“This has created unpredictability and negatively affected investment and the business environment,” Sefue said during the presentation at State House in Dar es Salaam.
The report highlighted strong dissatisfaction with the tax dispute resolution system, which many stakeholders view as lacking independence, eroding trust among taxpayers.
It also pointed to overlapping mandates among multiple revenue-collecting authorities, including central and local bodies, which has led to duplication of charges, higher compliance costs and, in some cases, incentives for corruption.
Tanzania’s tax base remains narrow, with a small number of formal businesses bearing much of the burden, while complex and costly procedures continue to discourage informal enterprises from registering.
Despite this, the commission said most citizens are willing to formalise their businesses and pay taxes if the system becomes simpler, fairer and more transparent.
“Citizens are asking for a system they can trust,” Sefue said.
The report also cited outdated tax laws, limited use of digital systems and low taxpayer awareness as key constraints, alongside gaps in professionalism within parts of the tax administration.
Tax collection remains below the Southern African Development Community (SADC) average of around 16% of gross domestic product, and below the more than 20% level seen as necessary to support Tanzania’s long-term development ambitions under Vision 2050.
While digital platforms such as TANCIS and GePG have improved administration, the commission said systems remain fragmented and need better integration, particularly to support small businesses and expand cashless transactions.
To address the challenges, the commission proposed 284 reforms covering legal and policy changes, digital systems, administration, tax base expansion, dispute resolution and institutional restructuring.
It said a fair, predictable and transparent tax system would be critical to boosting investment, improving compliance and supporting inclusive economic growth.