Tanzania Vice President urges reforms in tax, procurement systems

Dr Mpango, who formerly served in the capacities of Finance minister as well as in that of the Commissioner General for Tanzania Revenue Authority (TRA), called for an urgent review of policies, laws and procedures related to business and investment to boost domestic revenue mobilisation and ease the cost of doing business.

“We must identify the necessary reforms to make it easier for people to invest and do business, while also increasing government revenue through taxes and other channels,” he said.

Despite ongoing efforts to reform regulatory frameworks, Dr Mpango acknowledged persistent weaknesses in tax governance, citing a narrow tax base, low financial inclusion and illicit financial flows as major challenges.

He stressed the need to develop local business, services, and production sectors, noting their potential to significantly contribute to government revenues.

Dr Mpango further noted that the 2025/26 budget policy must prioritise improving the business environment, fostering investment and accelerating sustainable economic growth.

“One of the major issues we face is the overburdening of a small pool of taxpayers. The clear solution lies in expanding the tax base,” he said.

He revealed that the number of active registered taxpayers had declined from 3.3 million in 2021/22 to just 2.18 million in 2024/25.

Dr Mpango also highlighted disparities in the allocation of investment incentives, despite guidelines outlined in the 2022 Investment Act. 

He said that high interest rates, stringent collateral conditions, and the lack of intellectual property protection are among the barriers stifling the growth of small and medium enterprises (SMEs).

“In the procurement process, both large and small investors are treated the same, which often disadvantages smaller businesses,” he noted. “Furthermore, many government institutions owe large sums to contractors. I urge the Minister of Finance to ensure these long-standing arrears are settled.”

He also drew attention to external shocks — such as geopolitical conflicts, pandemics, climate change, and natural disasters — which have disrupted supply chains, escalated production costs, and impacted exports.

“These challenges have also limited access to concessional aid and loans, while commercial borrowing has become increasingly expensive,” he said.

Dr Mpango called for enhanced transparency and consistency in tax administration, and proposed broadening the tax net to include sectors such as agriculture, the informal economy, and emerging industries like the creative arts and sports.

“To increase domestic revenues, we must strengthen the tax collection system and support the personnel behind it,” he added.

He called for the elimination of outdated practices, a review of tax exemptions, and greater use of digital tools such as Electronic Fiscal Devices (EFDs) to improve compliance and revenue tracking.

Dr Mpango also advocated for the re-establishment of the Tax Ombudsman’s office to resolve disputes and restore public trust in the system.

In her remarks, the Tanzania Private Sector Foundation (TPSF) Chairperson Angelina Ngalula urged the government to pursue independent economic strategies to reduce reliance on foreign donors.

“Donor support often comes with restrictive conditions that limit our progress. We must work towards economic self-reliance,” said Ngalula, who also chairs Bravo Group and Agricom Africa.

Citing the example of the United States, she warned that legal changes in foreign jurisdictions can adversely affect Tanzanian businesses, and emphasised the importance of economic resilience.

She commended the Ministry of Finance for implementing the President’s 4Rs—Reforms, Rebuild, Reconciliation, and Resolve—and for curbing aggressive tax collection practices.

Ngalula called for more support for local value addition and a broader tax base, noting that over four million businesses remain informal due to complex tax procedures and limited awareness.

The Ministry of Finance’s Permanent Secretary, Dr Natu Mwamba, said the government continues to incorporate stakeholder feedback in budget planning to ensure alignment with national development goals. 

Presidential Commission for Tax Reforms Chairperson, Ambassador Ombeni Sefue, also stressed the importance of cooperation and efficiency in tax administration. 

He noted that since its formation in October 2024, the Commission has engaged over 2,300 people, conducted 160 stakeholder meetings across 29 regions, and received 1,000 SMS contributions.