Analysis of the Tax Changes Introduced by the Finance Act, 2025

While most of the amendments took effect on 1 July 2025, certain provisions will commence at later dates. Notably, the introduction of a reduced value added tax (VAT) rate of 16% on supplies made to unregistered persons, where payment is made through a bank or other electronic payment system approved by the Commissioner, will come into effect on 1 September 2025. Additionally, the single instalment tax of 2% on the sale of forest produce will take effect from 1 January 2026.

These changes are intended to enhance revenue collection, promote investment, streamline tax compliance, and support domestic resource mobilisation.

We note that, pursuant to the Laws Revision (Date of Coming into Force of the Revised Editions, 2023) Proclamation, 2025, issued by the President on 23 April 2025, various laws were revised to reflect the 2023 edition, effective 1 July 2025. These revisions include the tax laws, which have also been further amended by the Finance Act. As part of the revision process, certain provisions in the tax laws were renumbered, and as a result, some commonly cited sections have changed.

At a glance, the key changes may be summarised as follows:

• Capital Gains Tax
  Instalment payment increased from 20% to 30% for non-resident sellers.
• Alternative Minimum Tax
  Rate doubled to 1% for companies in continuous loss.
• Deemed Distribution
  10% WHT on 30% of retained earnings if not distributed within 12 months.
• Loss Offset Limits
  Reduced to 60% for extractives and processing sectors.
• Expanded Withholding Tax regime
  Now applies to new payments such as to vehicle hire and gaming commissions.
• EPZ/SEZ Incentives
  Limited to export-only activities.
• VAT Reforms
  Differential withholding introduced, 16% VAT for e-payments to unregistered persons.
• Expanded requirement for certification of financial statements by Certified Public Accountants
  New thresholds for individuals and companies.
• Electronic Tax Filing
  Mandatory for all taxpayers.
• Stricter Penalties
  On loss overstatements and estimated tax shortfalls.

We have set out in this alert an analysis of the key tax changes introduced by the Finance Act and their potential impact on doing business in Tanzania.

Click here to download the analysis of the tax changes introduced by the Finance Act, 2025.

Should you have any questions on this legal alert, please do not hesitate to contact Daniel Ngumy,  Shemane Amin or Chris Green. 

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Contributors

1. Juliana Mosha – Senior Associate, ALN Tanzania
2. Dennis Chiruba – Senior Associate, ALN Kenya
3. Muna Abdullahi – Principal Associate, ALN Kenya
4. Anwaar Katakweba – Associate, ALN Tanzania
5. Elizabeth Tarimo – Associate, ALN Tanzania