Tanzania has officially reduced its Value Added Tax (VAT) rate from 18 per cent to 16 per cent, under the Finance Act 2025. The Tanzania Revenue Authority (TRA) confirmed the move in a public notice, stating that implementation will follow once the Commissioner General issues guidelines specifying eligible taxpayers and operational procedures.
“The public is hereby informed that the Finance Act 2025, which came into force on 1st July, 2025, amended S.5 of the VAT Act Cap. 148 by introducing a reduced VAT Standard rate of 16% under subsection (6),” the TRA notice stated.
Although the reduction is not yet in force, it signals a clear policy shift aimed at easing the tax burden in Tanzania.
Kenya had proposed similar reforms in its Finance Bill 2024, including lowering VAT from 16 per cent to 15 per cent and raising the VAT registration threshold to Ksh8 million. However, these measures were later shelved, leaving the country’s VAT unchanged.
Experts warn that Tanzania’s move may put Kenya at a competitive disadvantage in regional markets. Kenyan exporters and retailers could face pricing pressures, potentially affecting business performance and the economy.
The East African Community (EAC) has long advocated for harmonized tax policies among member states. Kenya’s hesitation to implement VAT reforms may slow regional integration and delay progress toward a unified tax framework.
 rate from 18 per cent to 16 per cent, under the Finance Act 2025. The Tanzania Revenue Authority (TRA) confirmed the move in a public notice, stating that implementation will follow once the Commissioner General issues guidelines specifying eligible taxpayers and operational procedures.){kind=link}