Central Government Revenues and Expenditure - December 2025
Central government revenue performance remained exceptionally strong, exceeding budgetary targets due to improved tax administration, economic activity expansion, and enhanced compliance mechanisms. Total revenue collection reached TZS 2,534.6 billion, with tax revenue contributing the dominant share at 83.8%, while non-tax revenue accounted for 16.2% of total collections.
| Revenue Category | Amount (TZS Billion) | Share (%) |
|---|---|---|
| Tax Revenue | 2,123.8 | 83.8 |
| Non-Tax Revenue | 410.8 | 16.2 |
| Total Revenue | 2,534.6 | 100.0 |
Tax revenue continued to dominate total government revenue collections, confirming that government financing relies primarily on domestic tax mobilization rather than volatile non-tax sources. The 83.8% tax revenue share indicates a stable and predictable revenue base, which is critical for fiscal planning and budget execution. This performance reflects improved tax administration efficiency, broadened tax base coverage, and enhanced compliance enforcement by the Tanzania Revenue Authority (TRA).
| Tax Type | Amount (TZS Billion) | Share of Tax Revenue (%) |
|---|---|---|
| Income Tax | 833.2 | 39.2 |
| Value Added Tax (VAT) | 702.5 | 33.1 |
| Import Duties | 296.7 | 14.0 |
| Excise Duties | 210.6 | 9.9 |
| Other Taxes | 80.8 | 3.8 |
| Total Tax Revenue | 2,123.8 | 100.0 |
Income tax and VAT together accounted for over 70% of tax revenue, indicating broad-based domestic economic activity and formalization of the economy. The significant contribution from income tax (39.2%) reflects growing employment in the formal sector and improved corporate tax compliance. VAT's 33.1% share demonstrates robust consumption patterns and domestic trade activity. Import duties contributing 14.0% highlight Tanzania's continued reliance on international trade, while excise duties (9.9%) target specific consumption goods for both revenue and regulatory purposes.
Government spending during December 2025 totaled TZS 3,129.4 billion, demonstrating strategic alignment with priority sectors including wages, social services, and infrastructure development. The expenditure structure reveals a dominant focus on recurrent obligations while maintaining significant investment in development projects critical for economic growth and social advancement.
| Expenditure Category | Amount (TZS Billion) | Share (%) |
|---|---|---|
| Recurrent Expenditure | 2,048.7 | 65.5 |
| Development Expenditure | 1,080.7 | 34.5 |
| Total Expenditure | 3,129.4 | 100.0 |
Recurrent spending remained dominant at 65.5% of total expenditure, reflecting the substantial cost of running government operations, servicing debt, and maintaining public services. This recurrent-heavy expenditure structure is characteristic of developing economies where wage bills, interest payments, and essential service delivery consume the majority of government budgets. However, the 34.5% allocation to development expenditure demonstrates the government's continued commitment to infrastructure development, capital projects, and long-term economic transformation initiatives.
| Component | Amount (TZS Billion) | Share of Recurrent (%) |
|---|---|---|
| Wages and Salaries | 826.3 | 40.3 |
| Interest Payments | 603.4 | 29.5 |
| Goods and Services | 618.9 | 30.2 |
| Total Recurrent Expenditure | 2,048.7 | 100.0 |
Interest payments formed a significant recurrent burden at TZS 603.4 billion (29.5%), highlighting the fiscal impact of accumulated public debt. When combined with wages and salaries (40.3%), these two obligatory components consume nearly 70% of recurrent expenditure, leaving limited fiscal space for discretionary spending on goods and services (30.2%). This structural constraint emphasizes the critical need for debt sustainability management and revenue mobilization enhancement to create greater fiscal flexibility.
| Financing Source | Amount (TZS Billion) | Share (%) |
|---|---|---|
| Foreign Financing | 654.8 | 60.6 |
| Domestic Financing | 425.9 | 39.4 |
| Total Development Expenditure | 1,080.7 | 100.0 |
Development spending remained predominantly externally financed at 60.6%, indicating continued reliance on foreign loans, grants, and concessional financing from development partners. This external dependency increases exposure to exchange rate risks, foreign debt accumulation, and potential vulnerability to external financing conditions. The domestic financing component of 39.4% represents local resource mobilization through domestic borrowing and budgetary allocations, which, while lower, demonstrates some capacity for self-financed development initiatives.
The fiscal balance for December 2025 reflected higher expenditure relative to revenue collections, resulting in a deficit that requires strategic financing mechanisms. This deficit position is typical for developing economies pursuing aggressive development agendas while building fiscal capacity.
| Indicator | Amount (TZS Billion) |
|---|---|
| Total Revenue | 2,534.6 |
| Total Expenditure | 3,129.4 |
| Overall Fiscal Deficit | -594.8 |
The fiscal deficit of TZS 594.8 billion represents approximately 19.0% of total revenue or 23.5% of expenditure. This deficit was financed primarily through external borrowing (concessional loans and development financing) and domestic securities (treasury bills and bonds). The deficit level, while substantial, remains within manageable bounds for a developing economy with Tanzania's growth trajectory and debt sustainability indicators. However, persistent deficits require careful monitoring to ensure long-term fiscal sustainability and prevent excessive debt accumulation.
The government's ability to finance the deficit through a combination of external concessional financing and domestic capital markets demonstrates fiscal credibility and access to diverse funding sources. The preference for external financing in development projects helps preserve domestic liquidity for private sector credit growth. However, maintaining fiscal discipline through enhanced revenue mobilization and expenditure efficiency will be crucial for long-term sustainability, particularly as interest payment obligations continue to consume a significant portion of recurrent budgets.
The budgetary operations of December 2025 demonstrate Tanzania's fiscal resilience amid competing pressures. While revenue performance remained robust and tax-driven, persistent expenditure obligations—particularly from wages and debt servicing—continue to constrain fiscal flexibility. This section provides a multi-dimensional assessment of Tanzania's fiscal position, contextualizes performance within broader economic trends, and offers policy-oriented perspectives for sustainable fiscal management.
| Dimension | Assessment | Status Indicator |
|---|---|---|
| Revenue Performance | Strong and tax-driven with 83.8% tax revenue share | ✓ Strong |
| Expenditure Structure | Recurrent-heavy (65.5%) with limited fiscal space | ⚠ Moderate |
| Interest Burden | Rising at 29.5% of recurrent expenditure | ⚠ Rising Concern |
| Development Spending | Externally financed (60.6%) with FX exposure | ⚠ Moderate |
| Fiscal Sustainability | Manageable but sensitive to external shocks | ✓ Manageable |
Tanzania's economy in 2025 continued its resilient performance, supporting robust fiscal operations amid strong domestic resource mobilization. The broader economic fundamentals provided a solid foundation for government budgetary operations:
Key Economic Drivers:
These fundamentals enabled robust revenue performance in late 2025, with the Tanzania Revenue Authority (TRA) achieving a record TZS 4.13 trillion collection in December 2025, exceeding targets by 2.9%. The half-year performance reached TZS 18.77 trillion against a target of TZS 18.10 trillion, supporting the 2025/26 annual revenue goal of TZS 36.06 trillion.
Tanzania's central government budgetary operations in December 2025 showcased strong revenue mobilization but persistent expenditure pressures, particularly from wages and debt servicing. While the fiscal deficit remains manageable, continued reliance on external financing for development spending underscores the critical importance of export growth and debt prudence.
In December 2025, central government operations featured robust revenue (TZS 2,534.6 billion, tax-led) but persistent pressures from recurrent spending, with wages and interest payments at TZS 603.4 billion representing a significant fiscal burden. The TZS 594.8 billion deficit remains manageable, supported by:
Strategic Priorities: Continued emphasis on domestic revenue mobilization, export-led growth, and prudent borrowing practices will sustain development financing while reducing external vulnerabilities. Enhancing budget execution efficiency and implementing the Medium-Term Revenue Strategy will further bolster fiscal resilience and support Tanzania's development objectives under the Fifth Five-Year Development Plan (FYDP III).
Based on the comprehensive analysis of December 2025 budgetary operations, the following policy recommendations are proposed to enhance fiscal sustainability, improve budget efficiency, and support Tanzania's long-term development objectives:
Strengthen tax administration capacity, broaden the tax base through formalization initiatives, and implement digital tax collection systems to sustain revenue growth and reduce dependency on external financing.
Implement cost-efficiency measures in public service delivery, rationalize wage bill growth through productivity improvements, and prioritize high-impact goods and services spending to create fiscal space.
Pursue debt restructuring opportunities for expensive commercial loans, prioritize concessional financing sources, and implement robust debt sustainability monitoring frameworks to manage the rising interest burden.
Increase domestic resource allocation for development projects, explore innovative financing mechanisms (PPPs, green bonds), and strengthen project implementation capacity to reduce external financing dependency.
Improve quarterly budget release schedules, enhance procurement efficiency, and implement results-based budgeting to ensure development expenditure translates into tangible economic and social outcomes.
Support export-oriented sectors through targeted incentives, infrastructure development, and trade facilitation to generate foreign exchange earnings and reduce current account pressures supporting fiscal stability.
A Comprehensive Analysis of Tax Collection versus Money Circulation Patterns in Tanzania's Major Economic Hubs (2023-2025)
Tanzania's economy has demonstrated notable resilience and growth in recent years, with nominal GDP rising from TZS 189 trillion in 2023 to TZS 235 trillion in 2025 and real GDP growth accelerating to 6.0 percent. Over the same period, tax revenue performance also improved, reaching a record TZS 31.3 trillion in 2025 and lifting the tax-to-GDP ratio from 11.5 percent to 13.3 percent.
However, a deeper examination of money circulation patterns and regional economic activity reveals a troubling reality: large volumes of money are actively circulating through households, businesses, and regions far beyond formal tax capture.
The five major economic hubs—Dar es Salaam, Mwanza, Arusha, Mbeya, and Dodoma—together accounted for about 30-34 percent of national GDP in 2025. Yet Dar es Salaam alone dominates tax collection at 70%, translating into an effective capture rate of over 60 percent of the city's recorded economic output, far exceeding the national tax-to-GDP ratio.
This imbalance stems from centralized business registration and headquarters-based taxation. Revenues generated from mining in Mwanza and Shinyanga, agriculture in Mbeya, tourism in Arusha, and trade across secondary cities are often recorded and taxed in Dar es Salaam, masking severe under-collection in regions where real economic activity occurs.
In 2025, approximately 45 percent of Tanzania's GDP—about TZS 105.7 trillion—was generated informally. This resulted in an estimated annual tax leakage of TZS 14.1 trillion, nearly 45 percent of actual tax collections. Even with recent digital reforms, only about 5-7 percent of informal transactions are currently captured.
| Indicator | 2023 | 2024 | 2025 (Actual/Prelim.) | Source |
|---|---|---|---|---|
| GDP (Current Prices) | TZS 189.0 trillion | TZS 213.0 trillion | TZS 235.0 trillion | NBS, BoT, IMF |
| GDP (USD) | $70.3 billion | $79.2 billion | $87.4 billion | World Bank, BoT |
| GDP Growth Rate (Real) | 5.2% | 5.5% | 6.0% | IMF, AfDB |
| Quarterly Growth (2025) | - | - | Q1: 5.8%, Q2: 5.5%, Q3: ~6.0%, Q4: ~6.9% | BoT |
| Tax Revenue Collected | TZS 21.7 trillion | TZS 27.9 trillion | TZS 31.3 trillion | TRA, BoT |
| Tax-to-GDP Ratio | 11.5% | 13.1% | 13.3% | MoF, BoT |
| Dec 2025 Monthly Collection | - | - | TZS 4.13 trillion (record high) | TRA |
| Population | ~63 million | ~65 million | ~66.5 million | NBS |
| Money Velocity | 3.5 | 3.4 | 3.3 | BoT |
Money velocity declined from 3.5 to 3.3 due to increased digital transactions and higher savings rates, indicating more stable but slower cash circulation. This creates a paradox: tax revenue is growing faster than GDP (12.2% vs 10.3%) while money is circulating more slowly.
| Indicator | 2024 | 2025 | Growth | Notes |
|---|---|---|---|---|
| Total Banking Assets | TZS 63.51 Trillion | TZS 69.2 Trillion | +9.0% | Q4 data |
| Total Deposits | TZS 42.34 Trillion | TZS 46.8 Trillion | +10.5% | Customer deposits |
| Total Loans & Advances | TZS 37.38 Trillion | TZS 41.2 Trillion | +10.2% | 60% of assets |
| Mobile Money Transactions | TZS 198.86 Trillion | TZS 223.4 Trillion | +12.3% | Annual value |
| Digital Payment Growth | - | +15% | - | TRA e-filing pilots |
Mobile money transactions (TZS 223.4 trillion) now represent approximately 95% of Tanzania's annual GDP, highlighting the massive scale of digital financial activity. However, only 5-7% of these transactions are currently captured for tax purposes, representing a significant opportunity for revenue enhancement.
| Region/City | 2023 GDP (TZS Trillion) | 2024 GDP (TZS Trillion) | 2025 GDP (TZS Trillion) | % of National GDP (2025) | Notes/Source |
|---|---|---|---|---|---|
| Dar es Salaam | 32.2 | 34.0 | 36.0 | 15.3% | Urban services and trade hub |
| Mwanza (Lake Zone) | 12.7 | 13.4 | 14.2 | 6.0% | Mining and fisheries |
| Arusha (Northern Zone) | 6.0 | 6.3 | 6.7 | 2.9% | Tourism recovery |
| Mbeya (Southern Highlands) | 7.5 | 7.9 | 8.4 | 3.6% | Agriculture |
| Dodoma (Central Zone) | 5.5 | 5.8 | 6.1 | 2.6% | Infrastructure |
| Shinyanga | 7.5 | 7.9 | 8.4 | 3.6% | Mining-heavy region |
| Other Regions | 117.6 | 137.7 | 155.2 | 66.0% | Remainder of national GDP |
| National Total | 189.0 | 213.0 | 235.0 | 100% | NBS/IMF/BoT/WB aggregates |
The five major cities contributed ~34% of national GDP in 2025, with Dar es Salaam's share declining slightly (from 17.1% to 15.3%) due to faster rural/mining growth in Lake and Southern zones.
| City | Population (Est. 2025) | GDP (TZS Trillion) | GDP Per Capita (TZS) | GDP Per Capita (USD) |
|---|---|---|---|---|
| Dar es Salaam | 5.8 million | 36.0 | 6,206,897 | 2,307 |
| Mwanza | 1.2 million | 14.2 | 11,833,333 | 4,399 |
| Arusha | 0.9 million | 6.7 | 7,444,444 | 2,767 |
| Mbeya | 0.7 million | 8.4 | 12,000,000 | 4,461 |
| Dodoma | 0.8 million | 6.1 | 7,625,000 | 2,834 |
| National Average | 66.5 million | 235.0 | 3,533,835 | 1,314 |
| City | 2023 Daily (TZS Billion) | 2024 Daily (TZS Billion) | 2025 Daily (TZS Billion) | Growth 2024-2025 | Primary Sectors |
|---|---|---|---|---|---|
| Dar es Salaam | 88.2 | 93.2 | 98.6 | +5.8% | Trade, Finance, Manufacturing, Port |
| Mwanza | 34.8 | 36.7 | 38.9 | +6.0% | Mining, Fishing, Trade |
| Arusha | 16.4 | 17.3 | 18.4 | +6.4% | Tourism, Agriculture, Trade |
| Mbeya | 20.5 | 21.6 | 23.0 | +6.5% | Agriculture, Mining, Trade |
| Dodoma | 15.1 | 15.9 | 16.8 | +5.7% | Government, Infrastructure, Services |
| National Average | 517.8 | 583.6 | 643.8 | +10.3% | All sectors |
Comprehensive analysis of money circulation and tax alignment across major economic hubs (2023-2025)
| Year | Tax Revenue (TZS Trillion) | GDP (TZS Trillion) | Tax-to-GDP Ratio | Growth YoY | Key Drivers |
|---|---|---|---|---|---|
| 2023 | 21.7 | 189.0 | 11.5% | - | Baseline recovery |
| 2024 | 27.9 | 213.0 | 13.1% | +28.6% | Digital collection, economic growth |
| 2025 | 31.3 | 235.0 | 13.3% | +12.2% | Mining exports (+38.9%), record Dec collection (4.13T) |
| 2025/26 Target | ~33.1 | ~248.0 | 13.3-14.1% | - | TRA modernization goals |
Tax-to-GDP ratio improved from 11.5% to 13.3%, adding 1.8 percentage points in two years. However, this remains below the Sub-Saharan Africa average of 16% and East African Community peers like Kenya (15%). The gap represents approximately TZS 6.3 trillion in untapped annual revenue.
| Region/Zone | Estimated Tax Collected (TZS Trillion) | % of National Tax | GDP Contribution (%) | Collection Efficiency Ratio |
|---|---|---|---|---|
| Dar es Salaam Zone | ~21.9 | 70% | 15.3% | 4.58x |
| Lake Zone (Mwanza) | ~3.1 | 10% | 6.0% | 1.67x |
| Northern Zone (Arusha) | ~1.6 | 5% | 2.9% | 1.72x |
| Central Zone (Dodoma) | ~1.6 | 5% | 2.6% | 1.92x |
| Southern Highlands (Mbeya) | ~1.6 | 5% | 3.6% | 1.39x |
| Other Zones | ~1.5 | 5% | 69.6% | 0.07x |
| NATIONAL TOTAL | 31.3 | 100% | 100% | 1.00x |
Mining zones (Mwanza, Shinyanga) saw collection efficiency rise from 0.08x to 1.67x due to 38.9% export growth and better monitoring. This demonstrates that targeted interventions can rapidly improve collection in specific sectors.
| City | Annual GDP/Circulation (TZS Trillion) | Target Tax @ 13.3% (TZS Trillion) | Estimated Actual Tax (TZS Trillion) | Gap (TZS Trillion) | Effective Collection Rate |
|---|---|---|---|---|---|
| Dar es Salaam | 36.0 | 4.79 | 21.9 | +17.11 (Surplus) | 60.8% |
| Mwanza | 14.2 | 1.89 | 3.1 | +1.21 (Surplus) | 21.8% |
| Arusha | 6.7 | 0.89 | 1.6 | +0.71 (Surplus) | 23.9% |
| Mbeya | 8.4 | 1.12 | 1.6 | +0.48 (Surplus) | 19.0% |
| Dodoma | 6.1 | 0.81 | 1.6 | +0.79 (Surplus) | 26.2% |
| Other Regions | 163.6 | 21.76 | 1.5 | -20.26 (Deficit) | 0.9% |
| Sector | Q2 2025 Growth (NBS) | Contribution to National Growth | Tax Collection Potential |
|---|---|---|---|
| Mining & Quarrying | 19.0% | ~10% of total growth | High - exports up 38.9% |
| Financial Services | 14.8% | ~2% of total growth | High - formal sector |
| Electricity & Water | 14.0% | ~1% of total growth | Medium - infrastructure enabling |
| Construction | 8.2% | ~0.57 percentage points | Medium - 65% urban |
| Industry | 7.8% | ~1.4 percentage points | High - 60% urban |
| Services | 6.5% | 47% of GDP, ~20-25% growth | High - concentrated in Dar |
| Agriculture | 5.2% | ~2% of total growth | Low - 45% informality |
| Tourism | 11.4% (arrivals) | ~1-2% of total growth | Medium - receipts USD 6.9B |
| Export Category | 2024 Value | 2025 Value | Growth | Tax Impact |
|---|---|---|---|---|
| Gold Exports | USD 2.8B | USD 3.9B | +38.9% | +TZS 2.2T in royalties/VAT |
| Tourism Receipts | USD 6.2B | USD 6.9B | +11.4% | +TZS 0.8T in levies/VAT |
| Total Exports | USD 9.1B | USD 10.8B | +18.7% | +TZS 3.5T total |
Mining sector (concentrated in Mwanza/Shinyanga) drove 38.9% export growth, contributing approximately TZS 2.2 trillion in additional tax revenue in 2025. This single sector accounted for 7% of total tax collections and demonstrates the revenue potential of properly taxing extractive industries.
| City | Formal Economy (TZS Trillion) | Informal Economy (TZS Trillion) | Informal % | Potential Tax Loss @ 13.3% (TZS Billion) |
|---|---|---|---|---|
| Dar es Salaam | 25.2 | 10.8 | 30% | 1,436 |
| Arusha | 4.0 | 2.7 | 40% | 359 |
| Dodoma | 3.7 | 2.4 | 40% | 319 |
| Mwanza | 7.1 | 7.1 | 50% | 945 |
| Mbeya | 3.4 | 5.0 | 60% | 665 |
| TOTAL (5 Cities) | 43.4 | 28.0 | 39% | 3,724 |
| National Estimate | 129.3 | 105.7 | 45% | 14,058 |
| Initiative | Coverage | Revenue Gain (2025) | Efficiency Improvement |
|---|---|---|---|
| TRA E-Filing Pilots | Dar es Salaam ports, select businesses | +15% revenue | 20% faster processing |
| Mobile Money Integration | Nationwide | +TZS 1.2T | Captured 12% of informal transactions |
| Electronic Tax Invoicing | Large businesses (>100M turnover) | +TZS 0.8T | Reduced VAT evasion by 18% |
| TOTAL DIGITAL IMPACT | - | +TZS 2.0T | +6.4% of total revenue |
Digital collection initiatives contributed TZS 2.0 trillion (+6.4% of total revenue) in 2025, validating the modernization strategy. Mobile money integration alone captured TZS 1.2 trillion from previously untaxed informal transactions. However, with mobile money handling TZS 223.4 trillion annually, only ~5-7% of these transactions are currently captured for tax purposes.
| Region/City | % of National GDP (2025) | Contribution to 6.0% Growth | Key Growth Factors |
|---|---|---|---|
| Dar es Salaam | 15.3% | ~1.2 percentage points (20%) | Services (47% national GDP), FDI, infrastructure, port operations |
| Mwanza (Lake Zone) | 6.0% | ~0.6 percentage points (10%) | Gold/minerals (exports +38.9%), fishing, trade |
| Arusha (Northern Zone) | 2.9% | ~0.1-0.2 percentage points (2-3%) | Tourism (USD 6.9B receipts, +11.4% arrivals), agriculture |
| Mbeya (Southern Highlands) | 3.6% | ~0.1-0.2 percentage points (2-3%) | Agriculture (23% national GDP), food security |
| Dodoma (Central Zone) | 2.6% | ~0.1 percentage points (1-2%) | Hydropower (Julius Nyerere plant), infrastructure, government |
| Other Regions | 69.6% | ~3.8 percentage points (63%) | Agriculture, rural services, emerging sectors |
The five major cities/zones contributed ~2.2-2.4 percentage points (37-40%) of the 6.0% national growth in 2025. However, "Other Regions" accounting for 69.6% of GDP contributed 3.8 percentage points (63%) of growth, demonstrating that economic expansion is occurring broadly across Tanzania, not just in urban centers.
| Sector | 2025 Growth Rate | National GDP Share | Growth Contribution | Urban vs Rural |
|---|---|---|---|---|
| Services | 6.5% | 47% | ~3.1 percentage points | 75% Urban (Dar) |
| Industry | 7.8% | 18% | ~1.4 percentage points | 60% Urban |
| Agriculture | 5.2% | 23% | ~1.2 percentage points | 85% Rural |
| Mining | 19.0% | 5% | ~0.95 percentage points | 70% Rural (Mwanza, Shinyanga) |
| Construction | 8.2% | 7% | ~0.57 percentage points | 65% Urban |
| City | Annual Circulation (TZS Trillion) | Taxes Collected (TZS Trillion) | Capture Rate | Informality Adjusted Rate* | Gap to 16% SSA Target |
|---|---|---|---|---|---|
| Dar es Salaam | 36.0 | 21.9 | 60.8% | 42.6% (of formal) | +26.6% overcollection |
| Mwanza | 14.2 | 3.1 | 21.8% | 10.9% (of formal) | -5.1% undercollection |
| Arusha | 6.7 | 1.6 | 23.9% | 14.3% (of formal) | -1.7% undercollection |
| Mbeya | 8.4 | 1.6 | 19.0% | 7.6% (of formal) | -8.4% undercollection |
| Dodoma | 6.1 | 1.6 | 26.2% | 15.7% (of formal) | -0.3% undercollection |
| National | 235.0 | 31.3 | 13.3% | 7.3% (of formal) | -2.7% undercollection |
| Question | Finding | Data Point |
|---|---|---|
| Is tax collection growing with GDP? | Yes, but slowly | Tax grew 12.2% vs GDP 10.3% (2024-2025) |
| Does it match circulation velocity? | No - velocity mismatch | Velocity declined 3.4→3.3, but taxes grew faster |
| Does regional collection match regional GDP? | No - severe mismatch | Dar 70% tax vs 15% GDP; Others 30% tax vs 85% GDP |
| Is informal economy being taxed? | Partially - improving | 45% GDP informal, only ~5-7% captured |
| Are high-growth sectors taxed adequately? | Mixed results | Mining (+19%) well-taxed; Agriculture (+5.2%) poorly taxed |
| Overall alignment verdict | MISALIGNED | Need +TZS 6.1T to reach 16% SSA benchmark |
| City | 2025 GDP (TZS Trillion) | Current Tax (TZS Trillion) | Target @ 16% SSA (TZS Trillion) | Gap (TZS Trillion) | Required Growth |
|---|---|---|---|---|---|
| Dar es Salaam | 36.0 | 21.9 | 5.76 | -16.14 (Redistribution needed) | Rebalance nationally |
| Mwanza | 14.2 | 3.1 | 2.27 | -0.83 (Overcollecting) | Reduce reliance, expand base |
| Arusha | 6.7 | 1.6 | 1.07 | -0.53 (Overcollecting) | Formalize tourism sector |
| Mbeya | 8.4 | 1.6 | 1.34 | +0.26 (Undercollecting) | +19% |
| Dodoma | 6.1 | 1.6 | 0.98 | -0.62 (Overcollecting) | Focus on property tax |
| Other Regions | 163.6 | 1.5 | 26.18 | +24.68 | +1,645% |
| NATIONAL | 235.0 | 31.3 | 37.6 | +6.3 | +20% |
| Intervention | Priority | Target Regions | Potential Revenue Gain (TZS Trillion) | Timeline | 2025 Progress |
|---|---|---|---|---|---|
| 1. Formalize Informal Economy | Very High | All, esp. Mbeya, Mwanza | +10.6 | 2025-2028 | Policy review initiated |
| TOTAL POTENTIAL | - | - | +44.6 | - | +TZS 7.0T in 2025 |
| Action | Q1 2026 | Q2 2026 | Q3 2026 | Q4 2026 | Expected Impact |
|---|---|---|---|---|---|
| Scale e-filing nationally | Pilot expansion | Mwanza, Arusha rollout | Mbeya, Dodoma rollout | Full integration | +TZS 2.5T |
| Mobile money tax integration | API development | Operator partnerships | Pilot launch | Nationwide | +TZS 1.8T |
| Mining contract reviews | Legal framework | Renegotiate royalties | New compliance | Enforcement | +TZS 1.2T |
| SME presumptive tax | Design scheme | Stakeholder consultation | Legislative approval | Implementation | +TZS 0.9T |
| Regional tax courts | Dodoma establishment | Arusha, Mwanza planning | Construction | Staffing | +TZS 0.4T (efficiency) |
| TOTAL 2026 TARGET | - | - | - | - | +TZS 6.8T (21.7% growth) |
| Scenario | 2025 Actual | 2027 Target | 2030 Target | Required CAGR | Key Milestones |
|---|---|---|---|---|---|
| Conservative (13-14%) | 31.3 | 37.7-39.7 | 47.9-51.7 | 8.9-10.5% | Current trajectory, minimal reforms |
| Medium (15-16%) | 31.3 | 42.5-45.4 | 55.4-59.0 | 12.1-13.6% | Digital systems, partial formalization |
| Ambitious (18%) | 31.3 | 51.0 | 66.4 | 16.2% | Full reform implementation |
| Vision 2050 Path | 31.3 | 55.0 | 95.0 | 24.9% | Transformational change required |
Target the Medium Scenario (15-16% tax-to-GDP) by 2030 as realistic with sustained reforms. This requires achieving TZS 55.4-59.0 trillion in tax revenue by 2030, representing a CAGR of 12.1-13.6%. The ambitious 18% scenario requires perfect execution of all reforms, while the Vision 2050 path would require transformational change beyond current policy tools.
| Period | Revenue Target (TZS Trillion) | Tax-to-GDP Ratio | Required Actions | Feasibility |
|---|---|---|---|---|
| 2026 | 38.1 | 14.1% | Immediate reforms above | ✅ Achievable |
| 2028 | 50.5 | 15.0% | Medium-term reforms + SME formalization | ✅ Realistic |
| 2030 | 66.4 | 18.0% | Full digital integration, 50% informal formalized | ⚠️ Ambitious |
| 2035 | 135.0 | 20.0% | Sustained growth, advanced economy features | ⚠️ Challenging |
| 2040 | 225.0 | 21.0% | High-income transition | ⚠️ Requires transformation |
| 2050 | 350.0 | 22.0% | Developed economy taxation | ❓ Possible but requires perfect execution |
| Risk Factor | Probability | Impact | Mitigation Strategy |
|---|---|---|---|
| Global Mining Prices | High | High | 2025 gold boom may not sustain; price volatility threatens 15% of new revenue. Diversify revenue base away from extractives. |
| Velocity Decline | Medium | Medium | Continued drop could require higher rates to meet targets. Monitor digital transaction patterns closely. |
| Political Resistance | High | High | Business lobby may block decentralization reforms. Build coalition with regional stakeholders. |
| Capacity Constraints | Very High | Critical | TRA may struggle to scale operations 5x in 5 years. Prioritize training and technology over headcount. |
| Digital Divide | Medium | Medium | Rural areas may lag, limiting mobile money tax integration. Invest in connectivity infrastructure. |
| Informal Pushback | High | Medium | SMEs may resist formalization without clear benefits. Package tax reforms with service improvements. |
| Year | National Velocity | Change | Key Drivers |
|---|---|---|---|
| 2023 | 3.5 | - | Baseline |
| 2024 | 3.4 | -2.9% | Increased mobile money, higher savings |
| 2025 | 3.3 | -2.9% | Digital transactions (+12.3%), financial inclusion |
Declining velocity indicates money is changing hands less frequently, partly due to: (1) Digital transactions that settle faster but circulate more slowly, (2) Increased savings rates (deposits +10.5% in 2025), and (3) More efficient payment systems reducing need for cash circulation. This creates a policy paradox: tax revenue is growing faster than GDP (12.2% vs 10.3%) while money circulates more slowly.
| Payment Method | Volume (TZS Trillion) | % of Total | Growth YoY | Tax Capture Rate |
|---|---|---|---|---|
| Cash | 94.0 | 40% | -5% | 5% (mostly informal) |
| Mobile Money | 223.4 | 95% | +12.3% | 15% (improving with integration) |
| Bank Transfers | 156.8 | 67% | +10.2% | 85% (formal sector) |
| Card Payments | 28.5 | 12% | +18% | 90% (mostly urban) |
| Country | GDP (USD Billion) | Tax-to-GDP Ratio | Tax Revenue (USD Billion) | Per Capita Tax (USD) | Money Velocity |
|---|---|---|---|---|---|
| Tanzania | 87.4 | 13.3% | 11.6 | 175 | 3.3 |
| Kenya | 118.1 | 15.2% | 17.9 | 355 | 3.8 |
| Uganda | 55.3 | 12.8% | 7.1 | 155 | 3.1 |
| Rwanda | 15.2 | 16.5% | 2.5 | 192 | 4.2 |
| Burundi | 3.8 | 14.1% | 0.5 | 42 | 2.8 |
| SSA Average | - | 16.0% | - | - | 3.5 |
| City | GDP (USD Billion) | Population (Million) | Tax Collection Share | Digital Payment Adoption |
|---|---|---|---|---|
| Nairobi | 45.5 | 5.1 | 65% of Kenya | 78% |
| Dar es Salaam | 13.4 | 5.8 | 70% of Tanzania | 62% |
| Kampala | 22.1 | 3.6 | 60% of Uganda | 55% |
| Kigali | 6.8 | 1.4 | 70% of Rwanda | 82% |
Dar es Salaam's 70% collection share is comparable to regional peers, but digital adoption lags Kigali significantly. Rwanda's higher digital payment adoption (82%) correlates with better tax capture, suggesting Tanzania should prioritize digital infrastructure investment.
| Assessment Criteria | Status | Evidence |
|---|---|---|
| National Level Alignment | ❌ MISALIGNED | 13.3% vs 16% SSA target (-2.7 pp gap) |
| Regional Distribution | ❌ SEVERELY MISALIGNED | Dar 60.8% vs others 1-26% effective rates |
| Sectoral Coverage | ⚠️ PARTIAL | Mining/Services good; Agriculture poor |
| Formality Integration | ⚠️ IMPROVING | 45% GDP still informal; digital up 15% |
| Growth Sustainability | ✅ POSITIVE | Tax growth (12.2%) > GDP growth (10.3%) |
| Velocity Matching | ❌ DIVERGING | Tax↑ while velocity↓ creates tension |
| Source | Data Type | Period Coverage | Reliability |
|---|---|---|---|
| National Bureau of Statistics (NBS) | Q1 & Q2 2025 quarterly GDP releases; 2023 annual regional GDP | 2023-2025 | High |
| Bank of Tanzania (BoT) | Q3 & Q4 2025 preliminary estimates; money supply, velocity, banking data | 2023-2025 | High |
| Tanzania Revenue Authority (TRA) | Monthly collection reports; December 2025 record (TZS 4.13T) | 2023-2025 | High |
| IMF | 2025 full-year aggregates; Article IV consultation reports | 2023-2025 | High |
| World Bank | 2025 economic updates; exchange rate data (avg. 2,690 TZS/USD) | 2023-2025 | High |
| African Development Bank (AfDB) | East Africa Economic Outlook 2025 | 2023-2025 | High |
Date: January 2026 using latest available data through December 2025
Currency: All figures in Tanzania Shillings (TZS) unless otherwise stated
Exchange Rate: 1 USD = 2,690 TZS (average 2025)
Next Update: Upon release of NBS Regional GDP 2025 report (expected Q2 2026) for refined regional estimates
| City | GDP (TZS T) | Growth | Tax (TZS T) | Efficiency | Grade |
|---|---|---|---|---|---|
| Dar es Salaam | 36.0 | 5.8% | 21.9 | Overcollecting | B+ |
| Mwanza | 14.2 | 6.0% | 3.1 | Improving | B |
| Arusha | 6.7 | 6.4% | 1.6 | Undercollecting | C+ |
| Mbeya | 8.4 | 6.5% | 1.6 | Undercollecting | C |
| Dodoma | 6.1 | 5.7% | 1.6 | Fair | B- |
Tanzania stands at a critical juncture. The economy is growing at 6.0%, tax collections reached a record TZS 31.3 trillion in 2025, and the tax-to-GDP ratio improved to 13.3%. Yet beneath these positive headlines lies a fundamental misalignment: taxation is not occurring where money actually circulates.
The choice is clear: Transform Tanzania's tax system to match economic reality, or continue collecting from convenient urban centers while the rural majority and informal economy escape taxation. One path leads to Vision 2050. The other leads to perpetual revenue shortfalls and regional inequality.
The question is not whether Tanzania can afford to reform. It's whether Tanzania can afford not to.
Report Title: Is Tanzania Effectively Taxing Where Money Actually Circulates?
A Comprehensive Analysis of Tax Collection versus Money Circulation Patterns in Tanzania's Major Economic Hubs (2023-2025)
Published By: Tanzania Investment and Consultant Group Ltd (TICGL)
Publication Date: January 2026
Data Coverage: 2023-2025 (with projections to 2050)
Last Updated: January 22, 2026
Primary Data Sources:
• National Bureau of Statistics (NBS) - Q1/Q2 2025 GDP Releases
• Bank of Tanzania (BoT) - Q3/Q4 2025 Preliminary Estimates
• Tanzania Revenue Authority (TRA) - Monthly Collection Reports
• International Monetary Fund (IMF) - 2025 Article IV Consultation
• World Bank - Tanzania Economic Update 2025
• African Development Bank (AfDB) - East Africa Economic Outlook 2025
Contact Information:
Website: www.ticgl.com
Economic Dashboard: ticgl.com/dashboard
Analytics Platform: data.ticgl.com/analytics
Disclaimer: This analysis uses the best available data from official sources as of January 2026. All projections are based on current trends and assume sustained policy implementation. Actual outcomes may vary based on economic conditions, policy changes, and external factors. Regional GDP estimates for 2025 are preliminary pending NBS's official regional report expected in Q2 2026.
© 2026 Tanzania Investment and Consultant Group Ltd (TICGL). All rights reserved.
This report may be cited with proper attribution to TICGL.
This comprehensive analysis represents a collaborative effort combining Amran Bhuzohera's expertise in tax policy and regional economics with Dr. Bravious Felix Kahyoza's deep knowledge of financial modeling and public-private partnerships. Together, they bring over two decades of combined experience in analyzing Tanzania's economic landscape and providing strategic insights for sustainable development.
In just nine months of the 2024/25 fiscal year, the Tanzania Revenue Authority (TRA) has collected TZS 24.05 trillion, marking a 17% increase compared to TZS 20.55 trillion collected during the same period in 2023/24. With projections showing total annual collections could exceed TZS 32 trillion, TRA’s performance now rivals the country’s reliance on external development financing — which typically stands at TZS 7–8 trillion annually from loans and grants. This growth signals that domestic revenue can progressively become a sustainable source for financing development projects, reducing dependence on foreign aid.
TRA exceeded the target by TZS 0.10 trillion (100 billion).
This is the highest ever 9-month collection in TRA’s history.
This highlights the impact of reforms since President Samia Suluhu Hassan assumed office.
1. Leadership Directives
2. Internal Improvements at TRA
3. Government Reforms and Environment
Focus for April – June 2025 (Q4)
1. Strong Revenue Growth
TRA is not only meeting but exceeding its targets.
2. Better Efficiency and Reforms Are Working
It shows that management reforms are paying off.
3. Business and Government Relationship is Improving
4. Taxpayer Engagement is Crucial
5. Tanzania is Building a Stronger Economy
🔑 In Simple Terms:
This report shows that Tanzania is collecting more tax than ever before, because:
| Description | Amount (TZS Trillion) | Performance / % | Remarks |
| Q3 Revenue (Jan–Mar 2025) | 7.53 | 101.32% | Target was TZS 7.43T |
| Q3 Revenue (Jan–Mar 2024) | 6.63 | — | Growth of 13.47% YoY |
| Revenue (Jul 2024–Mar 2025) (9 months) | 24.05 | 103.62% | Target was TZS 23.21T |
| Revenue (Jul 2023–Mar 2024) (9 months) | 20.55 | — | Growth of 17.01% YoY |
| Revenue (Jul 2020–Mar 2021) (4 years ago) | 13.59 | — | 77% increase over 4 years |
| Exceeded Q3 Target By | 0.10 | — | Equivalent to TZS 100 billion |
| System Improvements | — | — | TANCIS (Customs), IDRAS (Domestic), EFD enforcement |
| Extra Service Hours | — | — | Weekends + Thursday “Taxpayer Listening Day” |
Current Performance Shows Great Potential
From this report:
🧮 Estimation: If Q4 (Apr–Jun) brings another ~TZS 8 trillion → Annual Total = 24.05T + ~8T = ~TZS 32T
📉 Tanzania’s 2023/24 Budget Financing Gap (Aid + Loans)
According to past budgets:
🧾 So the financing gap Tanzania usually covers with aid/loans = ~TZS 7.2–8 trillion per year
🧠 What This Means
TRA already:
If TRA can sustain and increase revenue growth:
| Factor | Impact |
| 📈 Continued Revenue Growth | With 17% YoY growth, TRA could reach TZS 40T+ annually in the next 2–3 years |
| 💸 Domestic Funding Stability | Reduces reliance on external conditions tied to aid or loan agreements |
| 🛠️ Improved Project Ownership | Local funding = more control and sustainability of development projects |
| 💬 Taxpayer Trust & Voluntary Compliance | Must increase to keep revenue growing sustainably |
| ⚠️ Risk: Economic Slowdowns | Tax collections may dip if business activity slows |
Yes, TRA has the potential to replace or reduce Tanzania’s dependence on aid and loans, especially if:
If Tanzania can fully fund development through its own taxes, it becomes more independent and self-reliant.