What You Need to Know About Tanzania Sales Tax (VAT)

Tanzania charges VAT at 18%, but a reduced rate of 16% applies to business-to-consumer transactions made through approved electronic payment systems, making it one of the few African countries to incentivise digital payments through the tax code. You are also required to use an Electronic Fiscal Device (EFD) for every sale, and designated withholding agents may withhold VAT on payments they make to you. Here is how the system works from registration to filing.

1. What is VAT?

VAT is a consumption tax charged on the supply of goods and services in Tanzania. The standard rate is 18%. A reduced rate of 16% applies to certain business-to-consumer (B2C) purchases made via approved electronic payment systems. Some supplies are zero-rated (such as exports) and others are exempt (such as unprocessed food and healthcare). The Tanzania Revenue Authority (TRA) administers VAT.

2. Who does it apply to?

This usually applies to:

Businesses with annual taxable turnover exceeding TZS 200 million (mandatory registration)
Businesses below the threshold that register voluntarily
Importers of goods and services into Tanzania
Designated VAT withholding agents (required to withhold VAT on payments to suppliers)

3. Why does it matter?

Understanding VAT helps you:

Stay compliant with tax laws
Avoid penalties and late fees
Keep proper records
File and pay correctly
Plan your cash flow better

4. How does it work?

Here's the basic process:

Register for VAT with the TRA if your turnover exceeds TZS 200 million
Charge VAT at 18% on taxable goods and services (or 16% for qualifying B2C electronic payments)
Issue Electronic Fiscal Device (EFD) receipts for every sale
Track input VAT on your business purchases
Calculate the difference between output VAT and input VAT
File your monthly VAT return by the 25th of the following month
Pay any net VAT due by the same deadline

5. What forms are involved?

VAT Return - Monthly return filed via the TRA online portal
VAT Registration Application - Filed with TRA to register for VAT
EFD Receipts - Electronic Fiscal Device receipts issued for every sale
VAT Withholding Certificate - Issued by designated withholding agents

6. What information do you need?

Before handling VAT, make sure you have:

Your TRA Taxpayer Identification Number (TIN)
TRA online portal login credentials
EFD machine and receipts
All tax invoices for sales and purchases
Records of zero-rated and exempt supplies
Import duty and VAT receipts from customs
VAT withholding certificates received from agents

7. Important deadlines

Filing frequency: Monthly
Payment deadline: By the 25th of the month following the reporting period
Year-end requirements: Ensure all 12 monthly VAT returns are filed and reconciled
VAT withholding: Withheld amounts must be remitted to TRA by the 20th of the following month

8. Common mistakes to avoid

Not using an Electronic Fiscal Device (EFD) for issuing receipts
Missing the 25th deadline for VAT return filing
Claiming input VAT on exempt supplies
Not accounting for VAT withheld by designated agents (3% for goods, 6% for services)
Failing to register when turnover exceeds TZS 200 million
Not maintaining records for the required five-year period
Confusing the 18% standard rate with the 16% electronic payment rate

9. Simple example

Your business sells goods worth TZS 100,000,000 (excluding VAT) in a month.

Output VAT collected: TZS 100,000,000 x 18% = TZS 18,000,000
Your business purchases total TZS 60,000,000 (excluding VAT)
Input VAT paid: TZS 60,000,000 x 18% = TZS 10,800,000
Net VAT payable: TZS 18,000,000 - TZS 10,800,000 = TZS 7,200,000

If a designated withholding agent withheld 3% of the VAT on a TZS 20,000,000 supply:

VAT withheld: TZS 3,600,000 x 3% = TZS 108,000
This amount is credited against your VAT liability

You owe TRA approximately TZS 7,092,000 for that month.

10. FAQ

Q: What is the VAT rate in Tanzania? A: The standard rate is 18%. A reduced rate of 16% applies to B2C transactions made through approved electronic payment systems.

Q: What is VAT withholding? A: Effective July 2025, designated agents must withhold 3% of the VAT amount on goods and 6% on services, remitting the withheld amount directly to the TRA by the 20th of the following month.

Q: When must I register for VAT? A: Registration is mandatory when your annual taxable turnover exceeds TZS 200 million.

Q: What is an EFD? A: An Electronic Fiscal Device is a TRA-approved machine that issues fiscal receipts. All VAT-registered businesses must use an EFD to issue receipts for every sale.

Q: What is the penalty for late VAT filing? A: TRA charges a penalty of 1% of the outstanding tax per month, plus interest. Failure to use an EFD can result in additional fines.

11. Final takeaway

Tanzania's VAT rate is 18%, and filing your monthly return with the TRA by the 25th while using EFD receipts for all sales keeps your business compliant.

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What you need to know about Tanzania VAT: Charge 18% on taxable supplies, use EFD receipts for every sale, and file your monthly VAT return by the 25th with the TRA.

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