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Tanzania will reduce VAT on electronic payments from 18% to 16% effective 1 September 2025, aiming to promote digital transactions, reduce cash usage, and enhance data availability for government oversight and compliance.
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The reduced 16% VAT applies only to B2C transactions made via bank or TRA-approved electronic payment systems, encouraging businesses and consumers to adopt traceable, non-cash payment methods such as mobile money or card.
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To benefit from the reduced rate, suppliers must receive payment electronically, retain transaction proof, and comply with guidelines set by the Commissioner General, including system, reporting, and documentation requirements.
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While the reform promotes transparency and formalisation, businesses may face operational challenges in implementing dual VAT rates, especially SMEs that lack digital infrastructure or funding for necessary system and training upgrades.
Source: vatcalc.com
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