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Revenue & Taxation Policy |
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Introduction The Central Government has two primary avenues of budget resources: domestic revenue, which includes both tax and non-tax revenues; and External Assistance , which comprises of grants and loans from bilateral or multilateral agencies. See both the Budget and Expenditure Policy and Management sections of this web site for further information. Domestic Revenue: The majority of domestic revenue collected in Tanzania is in the form of tax revenues, which, in 2003/04 accounted for 92% of the total Central Government domestic revenue. These tax revenues are collected by the Tanzania Revenue Authority (TRA), an executive agency under the Ministry of Finance that was established in 1996. The TRA is mandated to collect major taxes including Income Tax , Value Added Tax , Import Duty and Excise Duty. Between 2000/01 and 2003/04 Tanzania has witnessed an average annual increase in Central Government tax revenues of 12% (adjusted for inflation). These increases have primarily been attributed to economic growth and substantial improvements in the tax administration. In 2003/04 non-tax revenues accounted for 8% of the total Central Government's domestic revenues. Non-tax revenues comprise of fees, levies and dividends etc. and are collected by the Ministry of Finance and other Central Government Ministries. The first of the two pie charts below depicts the structure of Central Government revenue sources; whilst the second provides a breakdown of revenue collections by administrative region. 
External Assistance: External Assistance is the second major avenue of resources for the Central Government’s budget. In 2003-04 it accounted for approximately 42% of the Government’s resource envelope. External assistance is provided in support of the Government’s national development agenda as outlined in the National Strategy for Growth and Reduction of Poverty (NSGRP). The overall strategy guiding effective management of external assistance is outlined in the Tanzania Assistance Strategy (TAS), which is currently being reviewed and updated. The graph beneath illustrates the current reliance of budget resources on donor loans and grants. 
The graph beneath illustrates trends in both domestic revenue and expenditure (for comparison) relative to GDP (mp). 
As is evident in the graphs above, the Government requires more domestic revenue than is collected at present. It is the Government's policy to increase domestic revenue collections at a faster rate than GDP growth in order to finance increased expenditure and reduce dependence on donor funding in the budget. The Government also is committed to taxation policy that does not hinder growth in business and investment, that is equitable and fair, that has low compliance and administrative costs, and that is as simple as possible. The other parts of the revenue section of this website explain the tax rules and policies in more detail. Each year, the Ministry coordinates the Task Force on Tax Reform in the February-April period. This forum invites submission and proposals from other Government institutions, the general public and the private sector, analyses them and makes recommendations to the Minister for the budget revenue measures. For administrative details of taxation see the Tanzania Revenue Authority website. For information on tax incentives for investors, see also Tanzania Investment Centre . Here you can download a discussion paper on revenue policy
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Last Updated ( Friday, 06 October 2006 )
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Revenue-Tax Policy
