In mid-June 2026, the Tanzanian Parliament published the 2026/2027 national budget prepared by the Ministry of Finance. The presented 2026/2027 budget outlines a wide range of tax, customs, and digital compliance measures. More specifically, the proposed measures will affect VAT, customs duties, digital services taxation, and tax administration.

Main 2026/2027 Budget Measures

To strengthen its enforcement capacity, the Tanzania Revenue Authority (TRA) plans to broaden its physical reach by opening additional offices and deploying mobile tax service centers in busy commercial areas, making it easier for taxable persons to access services. One of the key parts of the tax administration reform is digital transformation, where the TRA intends to use AI, big data, and blockchain technologies to improve efficiency, transparency, and control in tax collection processes.

Regarding the VAT changes, the government plans to reform the tax procedures so that VAT refunds are processed within 30 days, with interest applying if the TRA fails to meet this deadline. This creates stronger incentives for timely repayment and improves taxable persons' cash flow certainty. 

The VAT amendments also introduce VAT exemptions for equipment used in electric vehicle charging and for LPG smart meters, reflecting a push toward cleaner energy adoption and more efficient energy consumption monitoring. The budget measures further include a reduction in customs duties on specified electric vehicles from 25% to 10%.

Furthermore, the measures also include excise duty adjustments. Specifically, new excise duties will apply to imported artificial flowers, UV and LED nail curing machines, and motorcycles. This expands the range of goods subject to indirect taxation and increases revenue collection from imported consumer and lifestyle products as well as transport-related items. 

Notably, the scope of excise duty obligations is extended to non-resident digital service providers, bringing foreign-based companies offering digital services within the tax net. Non-resident digital service providers are additionally affected by the 2026/2027 budget as the Tanzanian government aims to increase the Digital Services Tax rate applicable to them from the current 2% to 3%.

Conclusion

The 2026/2027 budget includes several significant changes, with the increase in the DST rate applicable to non-resident digital service providers standing out. Even though most of the measures came into effect on July 1, 2026, the government is expected to adopt and publish further Regulations to confirm and clarify the amendments.