Do current treaties enhance Tanzania as a preferred investment destination?
Over the last five years, Tanzania has introduced good policies and institutional reforms aimed at enhancing investment and addressing existing challenges faced by investors. PHOTO | FILE
By Yusuph Jackson
Among the factors investors consider before investing is the tax environment of a particular country. Key questions asked by foreign investors include: What options are available to repatriate profits or other forms of income; what are the applicable taxes; are there any reduced tax rates provided by the Double Tax Treaties (DTAs)? In a capitalist economy, the end goal of investment is for the investors to get profits out of their capital injected into businesses.
Over the last five years, Tanzania has introduced good policies and institutional reforms aimed at enhancing investment and addressing existing challenges faced by investors.
In July 2025, the government introduced the Tanzania Investment and Special Economic Zones Authority (TISEZA), merging the Tanzania Investment Centre (TIC) and the Export Processing Zones Authority (EPZA) in an effort to reduce bureaucracy and unnecessary duplication that existed amongst the two bodies.
The National Land Policy 2023 allowed long-term lease access to foreign investors, a one-stop facilitation centre with various regulatory bodies under one roof and the Tanzania Electronic Investments Window (TeIW), which has reduced the investment registration from 60 days to 30 days.
These are some of the many positive developments.
These policies and reforms aim at fast-tracking Foreign Direct Investments (FDI) in Tanzania. FDI comes with a lot of associated benefits, not only from the tax revenue point of view, but also has a direct impact on the economy through job creation and technology transfer.
FDI also impacts business and operations expansion, and new investments. Tanzania Investment Report 2025 highlights that Tanzania’s share of FDI in East Africa has increased year by year since 2020, reaching $1.72 billion in 2024 from $0.94 billion in 2020.
The question now is how Tanzania will enhance the benefits alongside the FDI. Geographically, nature has done its job, placing Tanzania strategically as the door to inland Africa and on top of various natural resources, with a lot of opportunities in various sectors: agriculture, services, construction, mining, tourism, and manufacturing.
Now it is the responsibility of policymakers to ensure alignment exists between the strategic-geographical advantage and implemented policies. One area that could be beneficial in promoting FDI is tax treaties DTAs.
Apart from eliminating double taxation of various forms of income, DTAs play an important role in attracting FDI, which in fact brings new investments that will broaden the tax base and subsequently increase tax collections.
In June 2026, we witnessed a DTA signing ceremony between Tanzania and Singapore. The DTA, once ratified, will reduce taxation of dividend and royalty payments to 7.5 percent and 10 percent, compared to 10 percent and 15 percent tax rates in most old treaties with other countries and the Income Tax Act, respectively.
United Arab Emirates has also signed a DTA with Tanzania since 2022, which is yet to be ratified. It is important to speed up the ratification process to unlock further opportunities. Self-reliance is the theme for the 2026/2027 budget, with 74 percent of the budget to be financed by domestic revenue, with tax revenues contributing a huge percentage.
This self-reliance will grow to 80 percent by 2028/2029. Further, Tanzania aspires to reach $15 billion in annual FDI by 2030, creating 1 million jobs, resolving the unemployment question, and having 50 percent of FDI projects be on Public-Private joint ventures.
To achieve these aspirations, the government must explore ways of broadening the tax base, and FDI is one of the answers. As much as there are many benefits in making Tanzania a tax-attractive and an East African investment destination for foreign direct investments.
There is, therefore, a need for Tanzania to review and renegotiate the old tax treaties and to pursue attractive new treaties that could increase the flow of foreign capital, helping Tanzania become an investment hub.
Reducing tax rates under the DTAs should not be seen as an obstacle to the benefits that would come with FDI. Well-drafted and favourable DTAs will promote a direct flow of capital to Tanzania.
It is wise, as a nation, to promote mutual benefits by allowing investors to also see returns on their investments, even if it means sacrificing a portion of tax revenues collected at the end of the investment for the massive benefits.
Yusuph Jackson is a Tax & Legal Manager at Deloitte Consulting Tanzania. The views presented are his own, not necessarily those of Deloitte. He can be reached at [email protected]
