Africa-Press – Tanzania. STAKEHOLDERS are calling for significant reforms to Tanzania’s tax system, urging the adoption of smarter and more efficient revenue collection mechanisms following the work of the Presidential Commission on Tax Reforms.
Their proposals centre on improving tax payment systems to boost revenue collection, reduce administrative burdens and create a more conducive environment for business and investment.
Business owners, industry groups and other stakeholders argue that the current tax framework is burdensome, complex and unpredictable—factors that hinder a thriving business environment and make it difficult for enterprises to operate efficiently.
They point to a lack of transparency and frequent regulatory changes as key challenges, particularly for small and medium-sized enterprises (SMEs), which bear the brunt of administrative inefficiencies.
According to stakeholders, the cumbersome nature of the system discourages investment, increases the cost of doing business and ultimately hampers economic growth.
They have therefore urged the government to simplify the tax system, noting that such reforms would streamline collection processes, improve compliance and create a more predictable business environment, leading to increased revenue.
Among the proposals are userfriendly systems that enhance transparency, reduce bureaucracy and encourage voluntary compliance.
Stakeholders have also called for practical interventions, including designated spaces for street vendors, lower import duties on buses, tailored tax systems for seafarers and improved professionalism among tax collectors
Mr Steven Lusinde, Vice-Chairman of the Street Vendors Association of Tanzania, highlighted the lack of designated business spaces as a major challenge.
He said vendors have surrendered several areas for development projects on the understanding that alternative locations would be provided—yet many remain without clear solutions.
“We have surrendered several areas for various projects, with the assurance that alternative spaces would be provided. However, to this day, we remain uncertain about our future,” he said.
Mr Lusinde cited the DDC area in Kariakoo, which was planned to accommodate more than 6,000 vendors, but noted that implementation has yet to begin.
The Tanzania Business Owners Association (TABOA) has proposed reducing bus import duty from 25 per cent to between 5 and 10 per cent, with payments made in instalments.
Its Executive Secretary, Mr Raymond Samson, argued that lowering these costs would encourage more imports, thereby increasing overall tax revenue.
He also proposed introducing a flat annual tax of 1m/- per bus and establishing a single payment window for municipal bus terminals under the President’s Office, Regional Administration and Local Government (PORALG).
“When renewing licences, the tax should be included in the renewal fee. This would eliminate the inconvenience of multiple payments at every station,” he said.
The Dar es Salaam Seafarers Association pointed to a major gap in the tax system, noting that a large portion of seafarers working abroad remain outside the tax net.
Its Secretary, Mr Frank Linkamba, said about 80 per cent of seafarers work overseas and do not pay taxes due to a lack of recognition within local systems.
“Some neighbouring countries have monitoring desks where seafarers declare their contracts and salaries for taxation. This would increase revenue collection,” he said.
He questioned the fairness of taxing a local teacher earning 600,000/- while a seafarer earning up to 2,500 US dollars remains untaxed.
Mr Linkamba noted that Zanzibar has systems enabling salary payments through the People’s Bank of Zanzibar (PBZ), allowing the government to collect foreign currency—an approach not replicated on the mainland.
“A good tax system will encourage voluntary compliance, and the nation will benefit from foreign currency,” he added.
Traders decry complexity and corruption risks
Mr Frederick Lutindi, representing the Tanzania Business Community and a trader at Kariakoo International Market, cited lack of clarity in tax systems as a major concern.
He criticised the use of dual tax rates—high and low—which he said creates room for negotiations and corruption.
“The government should ensure that all taxes are set at a single rate. Multiple rates open the door for corruption,” he said.
He also raised concerns about service taxes, noting that multiple levies on a single transaction increase the burden on businesses. Mr Lutindi argued that current rates, ranging from 0.1 to 0.3 per cent, are unfriendly and prone to abuse.
“The government should abolish this tax altogether because it is levied on gross sales, affecting capital. If it must remain, it should be incorporated into the business licence or set as a flat rate,” he said.
He further called for stricter enforcement of VAT compliance, suggesting penalties for delayed remittances.
Kariakoo traders raise valuation concerns
Mr Renatus Mlelwa, SecretaryGeneral of the Kariakoo Business Community, said traders are heavily burdened by customs duties linked to cargo valuation systems.
He noted that valuation tables include up to 72 items, often inflating tax obligations.
“A trader importing goods worth 400m/- may be required to pay 80m/- in duties, which does not reflect the true value,” he said.
Mr Mfaume Mfaume, ViceChairman of the Kariakoo Market Traders Association, called for policy reforms to attract traders from across East Africa and boost foreign currency inflows.
Calls for VAT reform and contract clarity
Mr Peter Marealle, Vice-Chairman of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) in Dar es Salaam, highlighted inefficiencies in the VAT system. He noted confusion arising from dual invoice systems—cash and credit—and questioned the requirement for payment within 20 days without mechanisms to ensure timely settlement.
“Consider a contractor who pays VAT upfront but faces penalties within 18 days. Profits are wiped out by penalties,” he said.
He also raised concerns about foreign investment practices, arguing that local businesses are often drawn into agreements without proper contracts.
“There should be a law requiring foreign investors to provide formal contracts to avoid turning local businesses into creditors,” he said.
Freight forwarders question institutional roles
The Tanzania Freight Forwarders Association (TAFFA) called for clarity in institutional responsibilities for tax collection.
Its President, Mr Edward Urio, noted that multiple institutions, including those under the Tanzania Shipping Agencies Corporation (TASAC) Act of 2016, are involved in customs processes.
He urged the government to reconsider directives assigning the Government Procurement Services Agency (GPSA) responsibility for handling all government-related logistics.
“GPSA does not have the capacity to handle all these functions at once,” he said.
A call for practical reform Across sectors, stakeholders emphasised the need for practical, implementable solutions that address systemic inefficiencies.
They argued that simplifying procedures, reducing duplication and enhancing transparency would not only improve compliance but also create an environment in which businesses can operate more efficiently.
Ultimately, they contend, smarter revenue collection—rather than heavier taxation—holds the key to increasing government revenue while supporting economic growth.
