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Tanzania Announces Further VAT Reductions To Boost Housing Supply In 2016


The Tanzanian government has recently announced that the process for further reductions in the Value Added Tax (VAT) on houses is at advanced levels and will be included in the country’s budget for the period 2016/2017.

The announce was done by Deputy Minister for Lands, Housing and Human Settlement Development, Mrs. Angelina Mabula and follows a plan undertook by the Ministry during the H1-2015 that seeks to boost investments in the Real Estate sector to raise supply and living standards.

Since the evaluation of a possible reduction for VAT on houses, the government has done so many efforts to keep the process going and ensure that the high demand from low-income earners will be supplied with decent homes at affordable prices, Mrs. Mabula explained.

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Even though the VAT was reduced from 20% at the end of 2009 to 18% in 2010 and that the government established the Tanzania Mortgage Refinancing Company (TMRC) to refinance mortgage loans from commercial banks in the same year, the growth in demand has overshadow the growth in supply to yield to a current 3 million houses shortage.

According to the National Housing Corporation (NHC), Tanzania has a housing deficit of around 3 million units which is growing at the rate of about 200,000 units per annum, representing an investment of approximately TZS 19 trillion.

On the other hand, the CEO of Watumishi Housing Company (WHC), Dr. Fred Msemwa, explained that further reductions in the VAT will not only increase the supply but also improve land taxes collections.

Both NHC and WHC are working together with the Tanzanian government towards a solution to the current housing shortage.

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The NHC started last year a plan to establish 15,000 houses in the country during the period 2015/2016 while the WHC undertook a project to construct 50,000 houses in 11 regions in the same period.

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