Tanzania Private Sector Embraces 2026/27 Budget Reforms but 10% GDP Growth Needed to achieve Vision 2050

Tanzania’s private sector embraces the investment reforms, VAT refunds, extended investment incentives, and tax relief measures contained in the 2026/27 Budget.

These views were presented on 12th June 2026, during budget review events organized by the Tanzania Private Sector Federation (TPSF) and professional services firm EY in Dar es Salaam.

The events brought together business executives, tax experts, and industry representatives to assess the budget’s implications for private sector growth.

During the TPSF’s budget review, participants described the budget as an important starting point for the implementation of the Tanzania Development Vision 2050.

However, they emphasized that economic growth will need to accelerate significantly beyond current levels to achieve that ambition.

Speaking during the event, Deloitte Consulting Partner Samuel Ndandala described the 2026/27 Budget as an anchor budget for Tanzania’s Vision 2050.

He noted that Tanzania’s economy is projected to grow by 6.3% in 2026 but said annual growth of between 10% and 15% will be required to meet long-term development objectives.

Ndandala also highlighted several measures welcomed by businesses, including the government’s decision to pay interest on VAT refunds delayed beyond 30 days, the extension of VAT deferment on imported capital goods, and the reduction of deemed profit distribution subject to withholding tax from 30% to 15%.

On his part, TPSF’s Board Member and Transport and Logistics Chair, Lusekelo Lukumay aired that the key question is whether the budget was creating the conditions necessary for private sector-led growth.

TPSF’s Manager for Research, Policy and Advocacy, Mercy Philipo, added that the federation had submitted 727 budget proposals, of which approximately 25% to 30% were reflected in the final budget.

“The budget is just not a government document, but rather it is an economic or a national economic contract between the private sector and the government,” Philipo explained.

The Director of Business Development and Corporate Affairs at Azania Group, Joel Laizer, cited hidden compliance costs, lengthy administrative procedures, and port delays that increase the cost of doing business as areas for improvement.

During a panel discussion, the Chief Executive Officer of DM Group, Bridget Temba, noted that implementation remains the biggest concern for the construction sector.

She noted that delayed payments totaling approximately TZS 1.3 trillion owed by institutions have created significant financial pressure for contractors.

The CEO of the Agriculture Council of Tanzania, Mark Magilla, urged the government to expand risk-sharing mechanisms to unlock commercial lending to agriculture, while several participants called for industrial financing facilities capable of providing single-digit interest rates.

Participants also addressed concerns that vessel delays can cost between USD 25,000 and USD 65,000 per day, while other speakers highlighted continued border and logistics bottlenecks despite significant infrastructure investments.

Similar views were expressed during EY‘s Annual Budget Briefing held on the same day by the professional services firm, where tax experts welcomed several reforms aimed at improving the business environment.

During her presentation, EY’s Senior Tax Manager, Happiness Gherabaster, highlighted the reduction in VAT refund processing timelines from 90 days to 30 days, automatic interest on delayed refunds, and incentives supporting electric vehicle charging infrastructure.

She noted that the budget introduces a 12-month tax holiday for newly registered taxpayers and doubles the presumptive tax threshold from TZS 100 million to TZS 200 million in a move intended to encourage the formalization of businesses.

Professor Abel Kinyondo from the University of Dar es Salaam said Tanzania’s economy reached USD 91.8 billion in 2025 and remains among Africa’s fastest-growing economies.

However, he urged that growth of approximately 10% per year will be necessary to achieve the Vision 2050 target of a USD 1 trillion economy.

The participants also pointed to new tax burdens, including an increase in the Digital Service Tax from 2% to 3%, a rise in the Customs Processing Fee from 0.6% to 1%, higher withholding tax rates on payments to sports institutions, and new withholding taxes on selected agricultural products.

Private sector representatives concluded that while the 2026/27 Budget contains several positive reforms that reflect business recommendations, achieving Vision 2050 will depend on effective implementation, faster execution of public projects, improved access to finance, reduced logistics costs, and policies that encourage greater private sector investment and formalization.

The Confederation of Tanzania Industries (CTI) also welcomed the 2026/27 Budget, describing it as a balanced and growth-oriented package that seeks to improve the business environment while supporting domestic revenue mobilization and industrial development.

In a statement issued on 15 June 2026, CTI said the budget demonstrates the Government’s commitment to creating a more competitive business environment through tax, regulatory and administrative reforms aimed at supporting local industries, increasing domestic production, promoting value addition and improving the competitiveness of Tanzanian products in local and export markets.

CTI highlighted several measures that it believes will benefit the private sector, including the requirement for VAT refunds to be processed within 30 days, the continuation of VAT deferment on imported capital goods, the introduction of a one-year income tax exemption for newly registered businesses, and efforts to formalize informal enterprises through simplified tax and regulatory procedures.

The manufacturers’ association also welcomed the Government’s plans to reduce overlapping regulatory mandates, introduce a Single Window Payment System for regulatory fees and charges, expand the use of digital technologies and artificial intelligence in tax administration, integrate government revenue systems, and establish joint inspection mechanisms among regulators.

According to CTI, these reforms are expected to reduce compliance costs, improve transparency, simplify interactions with government agencies and strengthen the investment climate.

At the same time, CTI noted that some budget measures could increase costs for manufacturers. These include annual upward adjustments of excise duty rates, higher excise duties on cigarettes, a new export tax on wheat bran, a 10% import duty on crude edible oils, and an increase in the sugar levy.

Nevertheless, CTI said the overall direction of the budget remains supportive of industrial growth and private sector development, adding that effective implementation will be critical to achieving the objectives of the Tanzania Development Vision 2050 and the Annual Development Plan 2026/27.

Tanzania’s 2026/27 Budget

The Government of Tanzania has tabled a budget of TZS 56.49 trillion for the 2026/27 financial year under the theme “Industries: Increasing Production, Tax Base, Employment and Foreign Exchange Earnings,” targeting 6.3% GDP growth.

The budget is the first to be aligned with the Tanzania Development Vision 2050, which aims to transform the country into a USD 1 trillion economy by 2050, with the private sector expected to drive the majority of economic growth and investment.