Govt revises Finance Bill, eases tax burden

Tanzania’s government has introduced significant amendments to the Finance Bill 2026, reducing tax burdens across multiple sectors following recommendations from the Parliamentary Standing Committee on Budget. The revisions, announced in the National Assembly, aim to create a more favorable investment climate while supporting key industries including automotive, agriculture, and small businesses. Finance Minister Ambassador Khamis Mussa Omar presented the revised bill to lawmakers in Dodoma yesterday, confirming that the government had incorporated most of the committee’s recommendations after nearly two weeks of intensive consultations. The discussions, which ran from June 14 to June 24, brought together officials from the Attorney General’s Office, legal drafting experts, the Ministry of Finance, the Tanzania Revenue Authority, private sector representatives, financial institutions, and members of the public. The amendments come as Tanzania seeks to balance revenue generation with economic growth, following the approval of the 2026/27 national budget on June 23. The budget had been presented to Parliament on June 11, setting the stage for these legislative adjustments. One of the most substantial changes involves excise duties on imported used vehicles, a sector that significantly impacts transportation costs and accessibility across Tanzania. Under the new proposal, vehicles aged between eight and 10 years will now attract an 18 percent excise duty, reduced from the initially proposed 20 percent. For older vehicles, the government has shown even greater leniency. Vehicles between 10 and 20 years old will be taxed at 35 percent instead of 40 percent, while those exceeding 20 years will face a 40 percent levy rather than the originally proposed 50 percent. The betting industry received welcome relief as the government completely withdrew its proposal to impose a five percent excise duty on betting stake amounts. The decision followed strong concerns raised by stakeholders during committee deliberations, reflecting the government’s willingness to listen to industry feedback. Similarly, motorcycle owners and dealers can breathe easier after the government dropped plans to introduce a five percent excise duty on motorcycles. This move is particularly significant in Tanzania, where motorcycles serve as essential transportation and income-generating tools for thousands of riders and taxi operators. The agricultural sector secured major victories in the revised bill. The government scrapped several proposed taxes that would have affected agricultural produce, livestock, milk, fish, and related products. Additionally, a proposed one percent withholding tax on income earned from agricultural transactions was completely withdrawn. These changes recognize agriculture’s central role in Tanzania’s economy and the livelihoods of millions of rural citizens. Small and medium-sized enterprises, which form the backbone of Tanzania’s economy, also benefited from the revisions. Businesses with annual turnover ranging between 11 million and 200 million Tanzanian shillings will now pay a four percent presumptive income tax instead of the proposed 4.5 percent. This reduction could improve cash flow for thousands of small businesses struggling with operating costs. In the mining sector, the government introduced more targeted reforms by limiting duty relief to the construction phase of mining projects. Once production begins, these incentives will cease. The government warned that companies found abusing these incentives will face legal action, including cancellation of exemptions and recovery of waived taxes, signaling a tougher stance on tax compliance. Conservation funding received attention through amendments allowing revenue collected from protected conservation areas to be used not only for conservation activities but also for infrastructure projects supporting value addition. This broader approach could enhance Tanzania’s tourism infrastructure while maintaining environmental protection. The sugar industry saw a complete reversal of the government’s initial proposal. Instead of imposing a 10 shilling per kilogram levy on locally produced sugar, the government will now charge 20 shillings per kilogram on imported sugar. Proceeds from this levy will be directed to the Universal Health Insurance Fund, creating a direct link between trade policy and healthcare financing. These amendments demonstrate Tanzania’s effort to create a more business-friendly environment while maintaining essential revenue streams for public services and development projects.