The Presidential Commission on Tax Reforms

By Evelyn Manu

A. Background and Genesis

The Presidential Commission on Tax Reforms was established in July 2024 to address longstanding issues within Tanzania’s tax system.  These include concerns around rising tax burdens and proliferation of levies, complexity and the need to align taxation with the country’s broader economic transformation agenda. 

The Commission conducted benchmarking of Tanzania’s tax system against global peers including the United Kingdom, India, Vietnam and South Korea, to draw lessons on modernisation, competitiveness and revenue efficiency. This exercise was carried out in the context of Tanzania’s relatively strong economic performance with growth projected around 6% in 2025 – 2026. 

The reforms aim to balance revenue mobilization with economic growth, investment competitiveness and compliance fairness, while modernising and simplifying tax administration. A key takeaway is that simplicity, predictability and trust are as critical as enforcement in achieving effective tax systems.

B. Key Observations

The Commission identified several systemic issues:

1. A fragmented and complex legal framework 
2. Multiple government agencies collecting taxes, levies, fees and charges often with overlapping mandates
3. High effective tax rates and proliferation of taxes, levies and charges
4. Frequent policy changes and incremental increase in taxes, creating uncertainty for taxpayers and investors. 
5. A narrow tax base with limited integration of the informal sector, reducing government revenue and fiscal space, and placing a disproportionate burden on formal businesses and compliant taxpayers
6. Low voluntary compliance linked to trust deficits
7. Administrative inefficiencies and inconsistent enforcement

C. Analytical Perspective

The Commission’s approach appears to combine legal, institutional and behavioural analysis. 

D. The 7 Official Categories of the 284 Recommendations

The Commission grouped its proposals into seven main areas: 

1. Legal and Policy Framework – Consolidation into a Principal Taxation Act and development of a National Tax Policy.
2. Tax Administration and Compliance Systems – Streamlining processes and harmonizing agency mandates.
3. Tax Base Expansion and Sector Coverage – Integrating the informal sector and under-taxed segments.
4. Levy Rationalization and Harmonization – Integrating the informal sector and under-taxed segments.
5. Digital Transformation and Integration – Linking systems like TAUSI, TANCIS, IDRAS and TRA platforms, enabling a single, seamless app for taxpayers.
6. Dispute Resolution, Transparency and Governance – Strengthening fairness and accountability mechanisms.
7. Incentives and Support for SMEs and Economic Development – Targeted measures to support growth.

E. Core Recommendations (High-Level)

The proposed 284 reforms focus on:

1. Consolidating tax laws via a Principal Taxation Act and establishing a National Tax Policy, to simplify compliance.
2. Harmonizing collection to reduce duplication and multiple agency interactions. 
3. Rationalizing levies and charges to reduce overlapping costs.
4. Transitioning to a digital, paperless tax administration system

• Integrating existing systems such as TAUSI, TANCIS, GEPG and IDRAS platforms
• Creating a single, faceless and seamless app for taxpayers to manage all obligations

5. Expanding the tax base, including informal sector inclusion.
6. Modernize dispute resolution and reporting systems.
7. Maintaining incentives for SMEs and early-stage enterprises.

F. Potential Implications

If implemented, these reforms may:

• Improve clarity, stability, ease of compliance and reduce administrative burdens
• Enhance predictability for investors and businesses 
• Increase scrutiny in previously under-taxed segments
• Require accelerated adoption of digital tax systems

Short-term uncertainty is expected during the transition phase.

G. Potential Gaps

Several key questions remain:

• Timing and sequencing of implementation – It remains unclear how quickly reforms will be rolled out and whether all components will be enacted simultaneously
• Legislative adoption priorities and readiness
• Institutional capacity for digital transformation
• Sector-specific impacts
• Fiscal implications and overall tax burden – It is not yet clear whether the reforms will reduce, redistribute, or increase the net tax burden for different sectors.
• Regional competitiveness within East Africa

There is also a risk of:

• Continued reliance on new levies or incremental tax increases to meet revenue targets.
• Under-estimating informal sector compliance challenges
• Facing digital infrastructure constraints
• Limited stakeholder engagement during rollout

We will continue to provide updates as more information becomes available.

Connect with Evelyn Manu on +255 717 381 538 for expert insights.