Tanzania's Shaky Tax System

Farwa Sial       Dar es Salam       4th May 2012

The introduction of business friendly regulations which are conducive to promoting competition, encouraging investment and attracting Foreign Direct investment (FDI) is a continuous struggle for Tanzania. According to the World Bank’s Report ‘Doing Business 2012: Doing Business in a More Transparent World’, Tanzania ranks 127th in the world out of 183 economies  in terms of ease of doing business in areas such as starting a business, resolving insolvency and trading across borders. This is a drop from its previous 125th position in 2011. The report also stated that in Africa, Tanzania is ranked 14th out of 46 African countries. In the East African Community (EAC) Tanzania stands at number 4 amongst the 5 EAC countries. These indicators show that the country needs a functional taxation policy which not only generates revenues through taxation but simultaneously encourages investment through targeted tax incentives. Tanzania faces the challenge of inadequate domestic revenues through taxation, reliance on aid grants which constitute 20% of the government budget and dependency on a few sectors and companies to extract the majority of its tax revenues. Click here to read the full article.