Importing a used car now costs more as Finance Act takes effect

Among the most significant changes is an increase in excise duty on imported used vehicles. Following amendments by Parliament, vehicles aged between eight and 10 years will now attract an 18 percent excise duty, down from the 20 percent proposed in the Finance Bill.

However, vehicles aged between 10 and 20 years will continue to attract a 35 percent duty, while those older than 20 years will be taxed at 40 percent. In addition, vehicles with engine capacities not exceeding 1,000cc, previously exempt, will now attract a five percent excise duty.

Industry players say the changes are likely to push up vehicle prices as importers pass on part of the tax burden to consumers.

A Kinondoni-based car dealer, Mr Emmanuel Mkonyi, said although vehicle financing schemes were becoming more common, buyers would still need bigger budgets.

“Import taxes will certainly go up, but vehicle financing schemes will provide some relief. In some arrangements, a customer pays a 50 percent deposit while the financing company covers the balance, which is repaid in instalments,” he said.

He said that the new taxes were unavoidable if the government is to finance development projects.

For Mr Shukuru Mabala, a resident of Mbezi Luis, the changes have already disrupted his plans to import a Toyota Harrier.

“I had planned to buy the vehicle in September, but I will now have to postpone the purchase to October because I need additional money beyond what I had budgeted,” he said.

The beauty industry is also expected to be affected. Excise duty on imported cosmetic products under headings 33.03, 33.04, 33.05 and 33.07 has increased from 10 percent to 15 percent, while nail polish drying machines will now attract a 10 percent excise duty.

Presenting the Finance Bill 2026 in Parliament, Finance Minister Khamis Mussa Omar said the higher taxes were intended to boost revenue, align Tanzania’s tax regime with other East African Community states and reduce health risks linked to certain cosmetic products.

At Mwenge, nail technician Davis Katunzi said the changes would likely push up service costs.

“If taxes increase, we will have to adjust because the machines we use will become more expensive.

Nail beauty has become an important source of income for many young people. I earn about Sh50,000 a day from this business, which supports my family,” he said.

The Finance Act also introduces new levies on tobacco and imported sugar, with a charge of Sh20 on every 1,000 cigarettes and every kilogramme of imported sugar to finance the Universal Health Insurance scheme. Small businesses, however, have received some relief.

The annual turnover threshold under the presumptive tax regime has been raised from Sh100 million to Sh200 million, allowing more businesses to qualify for the simplified tax system.

At the same time, the tax rate for businesses earning between Sh11 million and Sh200 million annually has been reduced from the proposed 4.5 percent to four percent, while newly registered taxpayers will enjoy a one-year income tax holiday.

In the mining sector, tax incentives under framework agreements have been tightened. Exemptions will now apply only during the construction phase of projects and will exclude petroleum products.

Companies found abusing incentives risk losing them and repaying previously waived taxes.

In another reform, property tax collection has been transferred from the Tanzania Revenue Authority (TRA) to local government authorities to improve efficiency in revenue collection.

The Act also expands the use of the Railway Development Levy to support infrastructure linked to industrial processing and value addition, in line with the government’s industrialisation agenda.

Despite the revenue-raising measures, Parliament dropped some contentious proposals, including a planned Sh10 levy on locally produced sugar. The government also retained a one-year VAT exemption on edible oil produced from locally sourced oil seeds to support domestic production and stabilise prices.