A tax reform commission established by President Samia Suluhu Hassan in October 2024 has warned that Tanzania’s current tax system is eroding public trust and requires a comprehensive overhaul.

 

Presenting its findings at State House in Dar es Salaam on March 18 after a 17-month delay, the nine-member commission proposed new tax policies and legal frameworks aimed at curbing malpractice and improving transparency from central to local government.

It issued 284 recommendations to reform the system, address entrenched administrative weaknesses and introduce digital tools, investment incentives and more taxpayer-friendly dispute resolution mechanisms.

The commission was formed after sustained complaints from local businesses and foreign investors over what they described as unfair and opaque practices by the Tanzania Revenue Authority (TRA).

Around the same time, diplomatic missions wrote to the then Foreign Affairs minister, January Makamba, seeking talks with senior officials over similar concerns.

The envoys cited “unevidenced” back tax claims dating up to 15 years, “extraordinary” tax bills lacking legal basis and TRA’s rejection of tax incentives approved by the Tanzania Investment Centre on grounds they had not been “gazetted.”They also relayed investor complaints that TRA officials threatened to freeze or seize assets and bank accounts without notice if firms challenged the demands.

Trust deficitThree months later, in October, Makamba, the then TRA commissioner-general Alphayo Kidata, and Trade and Industries minister Ashatu Kijaji were removed in a broader administrative shake-up by President Suluhu, who then formed the commission.

At the State House briefing on Wednesday, chairperson Ombeni Sefue said overlapping taxes and poor coordination were driving up costs and fuelling corruption.

He cited instances where TRA and local government authorities targeted the same businesses with multiple levies.

Such duplication, he said, was pushing businesses towards informal payments as a coping mechanism and increasing the cost of doing business.

The commission also flagged “unnecessarily high and unpredictable tax rates”, with authorities introducing new charges without considering wider economic goals.“Nowhere across the country did we meet citizens who said they were not willing to formalise their businesses or to pay taxes. Their main request… is for a taxation system that is simple, transparent and fair, plus satisfaction with how the government spends the revenue collected,” said Sefue, a former State House chief secretary, who has also served as envoy to Canada, the US and the United Nations.

System overhaulThe report also criticises existing tax dispute mechanisms as weak, leaving taxpayers feeling unprotected when challenging TRA decisions.

It recommends tighter coordination among all revenue-collecting bodies to eliminate overlaps and improve efficiency without coercive enforcement.

The commission also proposes integrating payment systems into a single digital platform, including a unified card covering services such as healthcare and the bus rapid transit system.

It further recommends expanding mobile wallet use and integrating citizen data, such as birth certificates, national IDs, tax numbers and licences, into a central e-government system.

According to Sefue, the aim is to shift Tanzania towards a largely cashless economy in line with global trends.

The commission includes former central bank governor Prof Florens Luoga, former auditor-general Prof Mussa Assad and former TRA commissioner-general Rished Bade, alongside private sector representatives - Leonard Mususa, Aboubakar Mohamed, Mwanaidi Sinare Maajar, David Tarimo and Maimuna Kibenga.

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