Government mulls extending VAT exemption to houses worth Sh100 million

Arusha. Following its decision to scrap Value Added Tax (VAT) on newly built houses valued below Sh50 million, the government is now considering extending the tax relief to homes worth up to Sh100 million.

The initiative aims to promote decent housing development, ease the tax burden on citizens, and curb the spread of unplanned settlements in urban areas.

This was announced on Friday, May 16, 2025, by the Minister for Lands, Housing, and Human Settlements Development, Mr Deogratius Ndejebi.

He was speaking during the fifth Annual Conference of the Association of Registered Estate Property Valuers of Tanzania (AREPTA), taking place in Arusha.

“Recently, we scrapped VAT on homes valued under Sh50 million. However, that is not enough. We are now reviewing the possibility of eliminating VAT for houses valued up to Sh100 million,” said Mr Ndejebi.

“Our goal is to ease the financial burden on citizens and encourage the construction of better-quality homes,” he added.

Mr Ndejembi urged private institutions to take advantage of the tax relief by investing in residential property development for commercial purposes or sale to the public at an affordable cost.

In addition, he revealed that the government has begun a comprehensive review of existing land and housing policies and laws to ensure they reflect the country’s evolving socio-economic realities.

“The government welcomes any individual or institution willing to contribute to developing decent houses. We are ready to work together, and that’s why we are taking these steps,” he said.

Mr Ndejebi also disclosed plans to establish a dedicated regulatory authority to oversee the real estate sector and draft new legislation to govern property development in the country.

AREPTA President Mr Andrew Kato said the conference, held under the theme “Improving Transport Infrastructure to Enhance Land Value in the East African Community”, seeks to explore ways to add value to the real estate sector.

“We are calling on the government to enact legislation that will guide building standards and usage, particularly to prevent unregulated construction,” said Mr Kato.

Retired land expert and academic, Prof Joseph Kironde, said the widespread issue of unplanned and unauthorised settlements stems largely from the absence of a comprehensive national housing and land policy.

He urged the government to expedite the formulation of such a policy and its accompanying laws to help prevent land disputes and ensure equitable access to essential services.

“Currently, only 10 percent of housing is situated on surveyed land. The rest is built without planning,” he said.

“People end up living in homes without basic services and later blame the government, unaware that their location lacks the criteria for formal development,” he added.