The Finance Act, 2026 came into operation in July 2026, introducing a broad range of legislative amendments that affect taxation, investment, trade, local government finance, land administration, mining, gaming, and several other regulatory sectors in Tanzania.
As is customary, the Finance Act serves as the principal legislative instrument through which the Government implements its fiscal and economic policies by amending various principal statutes to give effect to the national budget and broader development priorities.
The reforms introduced this year are aimed at strengthening domestic revenue mobilisation, enhancing tax compliance, promoting industrialisation, encouraging investment, protecting local industries, improving the efficiency of public revenue administration, and accelerating the digitalisation of government services. While some amendments introduce new tax obligations, others provide tax incentives, simplify administrative procedures, and clarify existing legal provisions.
This article provides an overview of some of the major legislative reforms introduced by the Finance Act, 2026, and highlights their practical implications for businesses, investors, professionals, and taxpayers.
Overview of the Major Reforms
1. Amendments to the Tax Administration Act (Cap. 438)
The Finance Act, 2026 introduces several amendments to the Tax Administration Act, particularly sections 22, 54, 73, 90 and 95 to strengthen tax administration and improve compliance.
One notable amendment concerns section 22, which now sets the timeframe within which individuals who become liable to pay employment income tax must register for a Taxpayer Identification Number (TIN). This amendment seeks to ensure that taxpayers are promptly and consistently brought into the tax system, thereby promoting fairness and improving tax compliance.
The amendment to section 54 permits contractors to submit the required information electronically. Previously, the Act did not expressly recognise electronic submission as a compliance mechanism. This reform aligns tax administration with modern digital practices, reduces administrative burdens, and improves efficiency for both taxpayers and the Tanzania Revenue Authority.
The Finance Act also amends section 73 by empowering the Commissioner to dispose of forfeited goods that are perishable or likely to deteriorate rapidly through a public auction. This amendment ensures that the value of such goods is preserved while enabling efficient revenue recovery.
The Act also amends section 90(2) of the Tax Administration Act concerning penalties for false or misleading statements in relation to transfer pricing arrangements. Before the amendment, a person who entered into controlled transactions and failed to determine income or expenditure in accordance with the arm’s length principle was liable to a penalty equal to one hundred per cent (100%) of the tax shortfall. The amendment replaces this penalty with a penalty equivalent to thirty per cent (30%) of the amount of the transfer pricing adjustment arising from a transaction conducted otherwise than in accordance with the arm’s length principle. The amendment aligns Tanzania’s transfer pricing penalty regime with international best practices while ensuring that penalties remain proportionate to the nature of the non-compliance.
Collectively, these amendments demonstrate the Government’s continued commitment to modernising tax administration, improving compliance, and enhancing efficiency in revenue collection.
2. Amendments to the Bank of Tanzania Act (Cap. 197)
The Finance Act, 2026, also introduces significant amendments to the Bank of Tanzania Act aimed at strengthening prudent public financial management and reinforcing fiscal discipline.
One of the key reforms reduces the maximum amount of short-term credit that the Bank of Tanzania may extend to the Government from 18 per cent to 14 per cent. This amendment reflects the Government’s intention to reduce reliance on central bank financing while promoting sustainable fiscal management.
Additionally, the Act amends section 69 by limiting the circumstances under which the Bank may provide emergency financing to the Government. Under the new framework, such financing may only be extended where there is:
- A legally declared national disaster;
- A significant external economic shock, or
- A state of emergency was declared in accordance with the Constitution.
By clearly defining these exceptional circumstances, the amendment reinforces the principle that emergency borrowing should remain an extraordinary measure rather than a routine source of public financing.
Taken together, these reforms strengthen macroeconomic stability, improve public financial accountability, and align Tanzania’s fiscal framework with internationally recognised principles of sound monetary and fiscal governance.
3. Amendments to the Electronic Transactions Act (Cap. 442)
The Finance Act, 2026, amends section 13 of the Electronic Transactions Act. This is one of the significant reforms that business persons, taxpayers, and other stakeholders should be aware of.”
The amendment to section 13 empowers the Minister responsible for finance, through an Order published in the Gazette, to prescribe payments that must be made through electronic means. In addition, the amendment introduces subsection (3), which requires proof of electronic payment to be submitted to the relevant authority as a mandatory requirement for the approval of applications relating to the transfer of assets, including land, buildings, and motor vehicles.
Consequently, parties involved in transactions relating to the transfer of assets, particularly land, buildings, and motor vehicles, are now required to make payments through approved electronic means and retain proof of such payment. Evidence of electronic payment has become a mandatory requirement during the approval and registration process by the relevant authorities. This amendment promotes transparency, strengthens accountability, and supports the Government’s broader objective of digitising public services while reducing cash-based transactions.
Amendment to the Export Tax Act (Cap.196)
The Finance Act, 2026, also amends the Schedule to the Export Tax Act by expanding the list of commodities subject to export tax. The amendment introduces three additional commodities under Items 7, 8 and 9 of the First Schedule, thereby widening the tax base for export taxation. The objective of this reform is to increase domestic revenue collection while encouraging value addition before export and protecting local industries.
Amendment to the Imports Control Act (Cap.276)
The Act also amends the Import Control Act by revising section 18A relating to the Industrial Development Levy. Under the amendment, goods originating from East African Community Partner States that satisfy the applicable Rules of Origin are exempt from the levy. However, the Act empowers the Government to impose the levy on goods originating from a Partner State that introduces discriminatory trade measures against Tanzanian goods, including taxes, duties, levies, or other trade restrictions. The amendment seeks to safeguard Tanzania’s trade interests while maintaining compliance with regional trade obligations.
Amendment to the Fair Competition Act (Cap. 285)
The Finance Act, 2026 introduced a notable amendment to the Fair Competition Act, Cap. 285 by establishing a sustainable funding mechanism for the Fair Competition Tribunal(FCT). Under the amendment, every regulatory authority established by written law must remit 0.5%of its annual gross revenue to the Fair Competition Tribunal Fund. This reform is intended to strengthen the Tribunal’s financial independence and operational capacity, enabling it to determine competition and consumer protection disputes more efficiently and expeditiously. By enhancing the effectiveness of the Tribunal, the amendment reinforces Tanzania’s competition law framework, promotes fair market practices, protects consumer interests, and fosters a more transparent and predictable business environment that is conducive to investment and economic growth.
Amendment to the Gaming Act (Cap. 41)
The Act also amends section 66 of the Gaming Act by allocating ten per cent (10%) of the excise duty collected on the gross gaming revenue generated from land-based and online betting, casinos, slot machines, and promotional games to the Gaming Board of Tanzania. The amendment is intended to strengthen the financial capacity of the Gaming Board and improve regulation and oversight of the gaming industry.
Major Amendments to the Income Tax Act (Cap.332)
Among all the legislative changes introduced by the Finance Act, 2026, the amendments to the Income Tax Act are arguably the most extensive. They affect companies, investors, farmers, traders, small businesses, and other participants across various sectors of the economy.
One of the key investment incentives introduced by the Finance Act, 2026 is the recognition of tax incentives granted under Framework Agreements entered into between the Government and strategic or large-scale investors. These agreements may provide certainty on the applicable tax treatment throughout the investment period and reinforce Tanzania’s commitment to creating a predictable investment environment. The amendments also extend various incentives to qualifying strategic investments by allowing favourable tax treatment for approved projects operating in priority sectors, thereby encouraging capital investment, industrialisation, employment creation, technology transfer, and long-term economic growth.
The Act also introduces section 109A, which establishes new withholding tax obligations on payments relating to agricultural produce, livestock, and fishery products. The introduction of withholding tax is intended to improve tax collection within these sectors while broadening the national tax base.
Another significant reform is the repeal of the previous single instalment tax provisions and the introduction of section 116A, which establishes a new single instalment tax regime applicable to agricultural and forest produce.
In addition, the Finance Act introduces section 116B, establishing a single instalment tax specifically applicable to food crops. Under this provision, a resident person who is an instalment payer is required to pay income tax by way of a single instalment equivalent to oneper cent (1%) of the value of the food crop.
The instalment tax becomes payable on the earliest of the following events:
- when payment for the crop is received, whether in whole or in part;
- before the crop is transported; or
- When the instalment payer assumes possession or control of the crop.
Upon payment of the instalment, the Commissioner is required to issue a Single Instalment Certificate confirming that the tax has been paid or that no tax is payable. Importantly, these provisions do not apply where the quantity of food crops involved is less than one tonne, thereby excluding smaller-scale transactions from the regime.
In addition to introducing new withholding tax and instalment tax regimes, the Finance Act expressly recognises tax incentives granted under Framework Agreements executed between the Government and strategic investors. The Act also revises the treatment of tax losses and significantly expands access to the turnover tax regime by increasing the annual turnover threshold from TZS 100 million to TZS 200 million. As a result, more micro, small and medium-sized enterprises will qualify for the simplified tax regime, thereby reducing compliance costs and encouraging voluntary tax compliance.
Taken together, these reforms represent a significant shift in Tanzania’s income tax framework. They seek to improve tax compliance, simplify tax administration, broaden the tax base, and support economic growth through targeted investment incentives and more efficient tax collection mechanisms.
Amendments to Land and Local Government Laws
The Finance Act, 2026 also amends several statutes governing land administration and local government finance, including the Land Act, the Local Government Authorities (Rating) Act, and the Local Government Finance Act.
These amendments introduce important reforms relating to the administration and collection of land rent, property rates, and other local government revenues. They also clarify the responsibilities of local government authorities in revenue administration and strengthen enforcement mechanisms for the recovery of unpaid rates. Collectively, these reforms are intended to enhance revenue collection efficiency while improving accountability in local government financial management. The reforms are intended to improve the efficiency of local government revenue collection, strengthen accountability in the management of public resources, and enhance the sustainability of local government financing.
Conclusion
The Finance Act, 2026, represents one of the most comprehensive legislative reform packages enacted in recent years. Through amendments to numerous principal statutes, the Act seeks to strengthen domestic revenue mobilisation, modernise tax administration, promote investment, encourage industrialisation, enhance digital governance, and improve public financial management. While several amendments introduce new compliance obligations for taxpayers and businesses, others create valuable investment incentives and simplify administrative procedures. It is therefore essential for businesses, investors, professionals, and taxpayers to familiarise themselves with these reforms, assess their impact on existing operations, and ensure timely compliance with the amended legal framework. Doing so will minimise legal and tax risks while enabling stakeholders to benefit from the opportunities created under the Finance Act, 2026.
