Tanzania to leverage Samia’s 4R’s in tax system to boost investment

Dar es Salaam. Vice President Philip Mpango on Tuesday outlined a strategic plan to harness President Samia Suluhu Hassan’s 4R’s – Reconciliation, Resilience, Reforms and Rebuilding – within the tax system.

This is meant to entice both existing and prospective investors and help propel Tanzania towards upper-middle-income status by 2050.

Having inherited a polarised nation, President Hassan adopted her 4R’s in her effort to build a better Tanzania.

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Reconciliation seeks to build a better Tanzania where people live in harmony and understanding irrespective of their political, religious or ethnic differences.

As she once explained in the past, the resilience aspect aspires to build a country that will be irrepressible to political, social and economic challenges.

Meanwhile, she promised to come up with reforms in the politics, economy and in the electoral laws to enable Tanzania’s democracy to flourish.

The three R’s should then result in sustainable economic growth to create employment to Tanzania’s youths and open up opportunities to all social groups in the country.

It was along such a line of thinking that Dr Mpango said the government’s commitment to leveraging the 4R’s strategy in the tax system signals a proactive approach to fostering investment and economic growth in Tanzania.

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Speaking at the Tax and Investment Forum, Dr Mpango emphasized the critical role of integrating the 4R’s into taxation policies to foster a more equitable, efficient, and sustainable tax regime.

The event brought together ministers and stakeholders from diverse sectors, including representatives from the Tanzania National Business Council (TNBC), government officials, and private sector members, to address challenges such as high tax rates, regulatory unpredictability, and insufficient tax revenues.

Under the theme “Policy Improvements in Investment, Domestic Revenue Collection, and Inclusive Economic Growth”, discussions centred on finding solutions to these pressing issues.

Dr Mpango stressed the necessity of striking a balance between facilitating business growth and ensuring adequate revenue collection for national development.

Key concerns raised by the TNBC included the need for streamlined tax regulations and enforcement mechanisms. The government underscored the importance of tax compliance in fulfilling its obligations to provide essential public services and infrastructure.

Dr Mpango highlighted the forum’s role as a platform for stakeholders to contribute to the enhancement of tax policies in the country.

He emphasised the importance of identifying and mitigating risks of tax evasion, including cybercrime and capital flight, while implementing strategies to attract investment and avoid double taxation agreements.

The Vice President underscored the government’s commitment to revising tax systems to reflect significant economic changes since the 1990s. He outlined various improvements already underway, including amendments to tax laws to attract strategic investors, ensuring stability in tax policies, and establishing investment and business service centres.

Planning and Investment minister Kitila Mkumbo emphasised the importance of investment in driving economic transformation. He highlighted Tanzania’s favourable position in terms of political stability, market potential, and infrastructure development, all of which are attractive to investors.

Prof Mkumbo also emphasised the focus on laws, especially property protection, ensuring that individuals’ property remains theirs and safeguarding investors’ assets. Having a stable market for invested products, noting that Tanzania’s large market potential, and its position as a gateway to the EAC, SADC, and AfCFTA markets are also significant advantages.

Economic and financial stability, quality infrastructure, and ongoing projects like the standard gauge railway (SGR) are factors that attract investors. The issue of low tax rates is crucial in attracting investors. Low labour costs, similar to what China once offered, and availability of land and financing for local investors are also important.

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“We have been working to meet these criteria, having made changes in 695 areas of tax and non-tax policies, laws, and regulations in the past five years, with 460 improvements between 2021 and 2023,” he said.

He said the government has improved the environment so that investors pay taxes willingly.

Finance minister Mwigulu Nchemba echoed the sentiment, stressing the need to create a business-friendly environment and overcome challenges facing the private sector. He acknowledged the issue of low voluntary tax payment and emphasized the collective responsibility of all Tanzanians to contribute to national development through tax compliance.

Tanzania Private Sector Foundation (TPSF) CEO Raphael Maganga emphasised the importance of expanding the tax base and ensuring transparency and participation in the budget process.