- Tanzania’s Court of Appeal ruled on 22 May 2026 that demurrage charges are compensatory penalties for breach of contract, not a taxable supply, so they are not subject to VAT.
- The court overturned earlier decisions that had supported the tax authority’s view that demurrage was rent or an ancillary service taxable at 18% VAT.
- The ruling is now the highest-court interpretation of existing law in Tanzania and takes immediate effect.
- It gives clarity to shipping and transport businesses, allowing them to treat demurrage as non-taxable and review past VAT assessments.
Source: globaltaxnews.ey.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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