MWE Correspondent
Despite having nearly five million registered taxpayers, Tanzania continues to suffer major losses in potential public revenue, largely due to expansive incentives offered to both domestic and foreign investors. These incentives—ranging from tax holidays to exemptions on customs duties—are intended to attract capital, but experts now question whether they’re doing more harm than good.
A report presented in Parliament by the Ministry of Finance in September 2023 revealed that by June 30 of the same year, the Tanzania Revenue Authority (TRA) had registered around 4.7 million taxpayers. This represents only 16 percent of the national labour force—raising alarms about the country’s narrow tax base.
Meanwhile, tax breaks under the Export Processing Zones Authority (EPZA) allow investors to benefit from various exemptions: customs duties, port charges, and VAT on imports of raw materials and essential services. While such incentives aim to spur economic growth and industrialisation, critics argue they may be enabling illicit financial flows (IFFs).
According to a study by Global Financial Integrity, Tanzania loses more than TSh4.79 trillion annually due to the illegal movement of money out of the country. This figure represents a major blow to national development, undermining public investment in healthcare, education, clean water, electricity, and infrastructure.
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In February 2025, the Tanzanian government passed the Investment and Special Economic Zones Bill. This law merged the Tanzania Investment Centre (TIC) and EPZA into a single authority—the Tanzania Investment and Special Economic Zones Authority (TISEZA)—tasked with overseeing all investment frameworks and curbing revenue leakages. The reform also aims to simplify investor services, enforce compliance, and boost accountability within Special Economic Zones (SEZs).
Despite this legal overhaul, analysts remain cautious. Experts have recommended increased capacity for the Financial Intelligence Unit (FIU) to better trace illicit money transfers and tax fraud. Some also propose the creation of a national recovery fund where reclaimed revenue can be reinvested into priority sectors like rural electrification and healthcare.
Beyond institutional reforms, many civil society organizations and independent journalists are advocating for transparency in how tax incentives are granted and evaluated. They warn that without public scrutiny, certain investors may continue to take advantage of weak enforcement to transfer wealth abroad—leaving Tanzanians with little to show for the trade-offs.
