#EconomicGrowth - TICGL | Tanzania Investment and Consultant Group Ltd

Executive Summary

This comprehensive study examines the impact of tax laws on investments and investors in Tanzania, analyzing challenges posed by the country's tax system and suggesting evidence-based solutions. Tanzania's tax structure, characterized by a high corporate tax rate of 30%, frequent policy changes, complex compliance procedures, and persistent delays in VAT refunds, continues to significantly hinder both local and foreign investments despite recent reforms.

🎯 Critical Research Findings 2025

67% of surveyed investors reported that policy instability remains a key barrier to investment decisions. Tanzania's corporate tax rate of 30% is among the highest in East Africa, surpassing Kenya (25%), Rwanda (28%), and Ethiopia (25%). The Finance Act 2025, effective July 1, 2025, introduces significant new measures including a controversial 10% withholding tax on undistributed profits after 12 months, potentially discouraging business expansion and reinvestment.

However, positive developments emerged in 2024-2025. Foreign Direct Investment (FDI) reached $1.7 billion in 2024, marking a 28% increase from 2023 and the highest level since 2014 according to UNCTAD's World Investment Report 2025. The Tanzania Investment Centre (TIC) registered 842 projects worth $7.7 billion in 2024, the highest investment value since 1991, with manufacturing and transport sectors leading.

📈

FDI Growth 2024

$1.7 Billion

28% increase from 2023 ($1.34B), highest since 2014. FDI stock rose to $21-22 billion. Tanzania ranks 11th in Africa for FDI inflows.

🏭

TIC Registered Projects 2024

842 projects

Worth $7.7 billion - highest investment value since 1991. Manufacturing led with 377 projects ($3.1B), transport 138 projects ($1.2B).

📊

Economic Growth Q3 2025

6.4% GDP

Strong momentum driven by agriculture, mining, construction, and financial services. Inflation stable at 3.6% within 3-5% target.

💼

Job Creation

523,000+ jobs

Created by 2,020 projects registered between March 2021-February 2025 under President Samia (177% increase).

These tax-related challenges continue to affect business profitability and undermine investor confidence, particularly in manufacturing, agriculture, and tourism sectors. Through surveys and interviews with 150 local and foreign investors, plus analysis of policymaker perspectives, this study identifies specific tax law issues including multiple taxation, inefficient VAT refund processes, and the new Finance Act 2025 provisions.

Disclaimer: This report reflects data and trends up to early 2026. The Finance Act 2025 (effective July 1, 2025) and ongoing policy reforms may further impact the investment climate. Tanzania targets attracting $15 billion in annual FDI by 2026, requiring significant policy improvements.

Year	FDI Inflows (USD)	Growth Rate	Key Drivers
2020	$685 million	-	COVID-19 impact, policy uncertainty
2021	$922 million	+34.6%	Post-pandemic recovery, new administration
2022	$1.1 billion	+19.3%	Mining expansion, infrastructure projects
2023	$1.34 billion	+21.8%	Improved business climate, services growth
2024	$1.7 billion	+26.9%	Record TIC registrations, infrastructure boom
2026 Target	$15 billion	+782%	Requires major policy reforms, tax improvements

Company Type/Sector	Tax Rate	Status	Additional Notes
Resident Companies (Standard)	30%	Current	On taxable corporate profits
Non-Resident with PE	30% + 15% WHT	Current	15% withholding tax on repatriated profits
Newly Listed Companies (DSE)	25%	Updated 2025	3 years if ≥25% public equity (reduced from 30%)
Vehicle/Tractor/Boat Assemblers	10%	Incentive	First 5 years for new assemblers
Pharmaceutical Manufacturers	20%	Incentive	First 5 years with government performance agreement
Leather Manufacturers	20%	Incentive	First 5 years with government performance agreement
EPZ/SEZ Domestic Sales	30%	New 2025	Tax exemption removed for domestic market sales

New Measure	Rate/Details	Effective Date	Impact Assessment
Undistributed Profits Tax	10% WHT on 30% of profits undistributed after 12 months	July 1, 2025	⚠️ Major concern: May discourage reinvestment and business expansion. Exempts resident entities under CFC rules.
Alternative Minimum Tax (AMT)	1% on turnover (increased from 0.5%)	July 1, 2025	⚠️ Affects loss-making entities, particularly startups and businesses with thin margins. Agricultural, health, education exempt.
Thin Capitalization Update	Retained earnings now included in equity definition	July 1, 2025	✅ Positive: Improves debt-to-equity ratios, better for interest deductibility, benefits banking sector.
Forestry Products Tax	2% single instalment tax (was 3.5%)	January 1, 2026	Sector-specific impact on timber, logs, poles sales. Final tax paid before transportation.
Hired Motor Vehicles WHT	10% on rental payments	July 1, 2025	New withholding obligation affecting vehicle rental businesses and logistics companies.
CPA Certification Requirement	Mandatory for individuals (turnover >TZS 500M) & corporations (income >TZS 100M)	July 1, 2025	Increased compliance costs and administrative burden for medium and large businesses.
Electronic Tax System Integration	Mandatory taxpayer system interface with TRA	July 1, 2025	⚠️ Penalties include up to 3 years imprisonment or fines for non-compliance. Requires system upgrades.

VAT Category	Rate	Status	Products/Services
Standard Rate	18%	Current	Most goods and services
Electronic Payments	16%	From Sept 1, 2025	B2C goods paid via electronic means (mobile money, cards, bank transfers)
Zero-Rated	0%	Various	Exports, locally produced fertilizers (3 years to June 2028), cotton garments (1 year to June 2026)
Exempt (New)	0%	2025	Pesticides (specific HS codes), reinsurance, piped natural gas for CNG (3 years), edible oil from local seeds (1 year)

Income Type	Rate	Status	Impact Notes
Dividends	10%	Current	Affects profit repatriation for foreign investors. Higher than Uganda (5%).
Interest Payments	10%	Current	On interest paid to residents and non-residents. Impacts financing costs.
Undistributed Profits (New)	10%	From July 1, 2025	On deemed distribution (30% of profits after 12 months). Controversial new measure discouraging reinvestment.
Technical/Management Services (Extractive)	10%	Increased 2025	Increased from 5%. Affects mining and oil/gas sectors.
Motor Vehicle Rental	10%	From July 1, 2025	New withholding on vehicle rental payments by resident persons.
Service Payments (General)	5-15%	Current	Varies by type of service and residence status of recipient.

Year	Major Tax Changes	Investor Impact
2018	New withholding tax rates, VAT adjustments	Companies had to revise budgets mid-year
2019	Mining sector tax overhaul, royalty increases	Mining FDI dropped 30% from 2016 levels
2020	Service payment WHT increased 5% to 10%	Telecoms and financial sectors halted expansion
2021	COVID-19 relief measures, some exemptions	Temporary improvement in sentiment
2022	Digital services tax introduced	Tech companies delayed market entry
2023	Multiple amendments to VAT, excise duties	72% investors cite complexity as barrier
2025	Finance Act: 10% WHT on undistributed profits, AMT increase to 1%, electronic payment VAT 16%	Mixed reception; concerns about reinvestment disincentive

Tax/Levy	Rate	Impact on Investors
Corporate Income Tax	30%	Primary profit reduction
Value-Added Tax (VAT)	18% (16% electronic payments)	Increases product prices, cash flow issues
Withholding Tax	5-15%	Affects payments and profit repatriation
Skills & Development Levy (SDL)	4%	Additional labor cost burden
Pay As You Earn (PAYE)	Up to 30%	Increases total employment costs
Local Government Service Levy	Varies by location	Unpredictable additional costs
Business License Fees	Annual, varies	Administrative burden
Land Rent	Based on location/size	Significant for large operations
Stamp Duty	Various rates	Transaction cost increase
Excise Duties	Sector-specific	Varies by industry

Country	FDI 2022 ($B)	FDI 2024 ($B)	Key Incentives
Tanzania	$1.1	$1.7	EPZ/SEZ, sector incentives (reduced attractiveness 2025)
Kenya	$2.0	$2.3 (est.)	Lower CIT (25%), streamlined incentives
Ethiopia	$3.1	$3.5 (est.)	Industrial parks, 25% CIT, export incentives

Sector	Local Investors	Foreign Investors	Total Sample
Manufacturing	15	10	25
Agriculture	12	8	20
Tourism	10	12	22
Technology	8	10	18
Energy & Mining	5	10	15
Others (Services, Real Estate)	25	25	50
TOTAL	75	75	150

Measure	Positive View	Negative View	Net Sentiment
10% WHT on Undistributed Profits	15%	72%	❌ Highly Negative
VAT Reduction to 16% (Electronic Payments)	68%	12%	✅ Positive
AMT Increase to 1%	8%	64%	❌ Negative
Listed Company Incentives (25% public)	58%	18%	✅ Moderately Positive
Mandatory Electronic Integration	35%	48%	⚠️ Mixed/Negative

Element	Details
Cash Payment	$300 million paid to Tanzanian government
Government Stake	16% free carried shareholding in each of three mines (Bulyanhulu, North Mara, Buzwagi)
Economic Benefits	50/50 split of economic benefits through taxes, royalties, clearing fees, and cash distributions
New Entity	Twiga Minerals Corporation created, headquartered in Mwanza
Government Participation	Full visibility and participation in operational decisions

Country	Corporate Tax Rate	VAT Rate	Ease of Paying Taxes (Rank)	Compliance Time (hrs/yr)	FDI 2024 ($B)
Tanzania	30%	18% (16% digital)	163rd / 190	248 hours	$1.7
Kenya	25%	16%	94th / 190	180 hours	$2.3 (est.)
Rwanda	28% (20% priority)	18%	38th / 190	150 hours	$1.4
Ethiopia	25%	15%	137th / 190	190 hours	$3.5 (est.)
Uganda	30%	18%	115th / 190	207 hours	$1.6 (est.)
Ghana	25%	15%	106th / 190	210 hours	$2.8

Reform Area	Regional Best Practice	Tanzania Current Status	Gap to Close
Corporate Tax Rate	25% (Kenya, Ethiopia, Ghana)	30%	5 percentage points
Tax Compliance Time	150 hours/year (Rwanda)	248 hours/year	98 hours (40% reduction needed)
VAT Rate	15% (Ethiopia, Ghana)	18% (16% digital)	2-3 percentage points
Digital Tax Systems	Fully integrated (Rwanda, Kenya)	Partial (mandatory integration from July 2025)	Complete digital transformation
Policy Stability	5-year frameworks (proposed in several countries)	15+ changes (2018-2023)	Implement multi-year tax policy framework
VAT Refund Processing	30-90 days (statutory in most countries)	12-24 months (actual)	Reduce to 30-60 days

Timeline	Priority Actions	Expected Impact
Immediate (0-6 months)	• Clear VAT refund backlog • Suspend 10% WHT on undistributed profits • Launch one-stop digital tax portal beta • Establish investor services unit at TRA	Restore investor confidence Free up TSh 1.5T in business capital Signal commitment to reform
Short-term (6-12 months)	• Reduce CIT to 28% (first phase) • Implement 30-day VAT refund standard • Announce 5-year tax stability framework • Consolidate local government levies	Improve regional competitiveness Reduce compliance burden by 20% Increase policy predictability
Medium-term (1-2 years)	• Reduce CIT to 25% (final phase) • Reduce VAT to 16% • Launch reformed incentive framework • Full digital tax system operational	20-30% FDI increase Match regional best practices Reduce compliance time to 150 hrs/year
Long-term (3-5 years)	• Achieve $15B annual FDI target • Rank in top 50 globally for Ease of Paying Taxes • Expand tax base through formalization • Zero VAT refund backlog maintained	Transform investment climate Sustainable revenue growth Regional leadership in tax reform

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Abstract & Key Findings

Microfinance Institutions (MFIs) play a critical role in financial inclusion by providing capital to Micro and Small Enterprises (MSEs) in Tanzania. Despite their importance, MFIs face challenges such as high default rates, limited access to funding, regulatory barriers, and operational inefficiencies. This study examines the landscape of MFIs, their risk management strategies, loan portfolio allocations, and recommendations for strengthening financial access for MSEs.

30%

Trade & Retail — Largest Loan Sector

22%

Agriculture Loan Share

18%

Manufacturing Share

62%

Loans Below TZS 5 Million

49%

MFIs: Default Rate 5–10%

44%

MFIs Cite High Borrowing Costs

28%

See Govt-Backed Funding as Key

25%

Emphasise Digital Finance

Loan Portfolio by Business Sector

Distribution of MFI loan allocation across five key economic sectors (TZS 800 billion total)

MFI Default Rate Distribution

Percentage of surveyed MFIs reporting each default rate band (n = 410 MFIs)

Conclusion:

To enhance financial access, MFIs must adopt alternative credit scoring models, expand digital lending platforms, and strengthen public-private partnerships. Policymakers should consider tiered regulatory frameworks, interest rate flexibility, and credit guarantee programmes to support sustainable lending to MSEs.

#	Challenge	% MFIs Affected	Impact	Indicator
1	High Default Rates	12%	Stricter lending conditions, higher interest rates	12%
2	High Operational Costs	17%	Limits rural expansion, raises interest rates	17%
3	Limited Access to Capital	25%	Restricts lending capacity and growth	25%
4	Regulatory Barriers	39%	Interest rate restrictions limit flexibility	39%
5	Limited Client Financial Literacy	22%	Loan mismanagement, increased defaults	22%

Opportunity	% MFIs	Description	Trend
Digital Financial Services	25%	Mobile banking, fintech partnerships, digital payments	▲ Rising
Government-Backed Loan Guarantees	31%	Credit guarantees to mitigate defaults and enhance lending	▲ Rising
Capacity Building & Financial Literacy	N/A	Expanding MSE education programmes on loan & digital finance	→ Stable
Fintech Strategic Partnerships	27%	MFI–fintech collaboration for risk assessment & credit scoring	▲ Rising
Regulatory Reforms	N/A	Flexible interest rate policies, reduced compliance costs	→ Proposed

Category	MFI Count	Share (%)	Distribution
1 – 5 Years Operation	230	55%	55%
6 – 10 Years Operation	80	19%	19%
Less than 1 Year	90	21%	21%
Over 10 Years	20	5%	5%
Serves Micro-enterprises primarily	37%	37%
Mixed Client Base (Micro + Small)	39%	39%
Serves Small Enterprises	24%	24%

Dimension	Established MFIs (10+ yrs)	Young MFIs (<5 yrs)	Trend
Loan Default Rate	Below 5%	Up to 15%	▼ Higher Risk for Young MFIs
Investor Confidence	High — proven track record	Low — unproven viability	▲ Improves with age
Operational Costs	Lower — economies of scale	Higher — setup & hiring costs	▲ Decreases with experience
Regulatory Compliance	Resilient — adapted over time	Challenging — capital adequacy gaps	→ Policy support needed
Risk Assessment Quality	Strong frameworks	Underdeveloped	▼ Training gap critical

Client Category	MFIs (Frequency)	Share (%)	Typical Loan Size	Risk Profile	Distribution
Micro-enterprises	150	37%	Small, short-term	High Risk	37%
Mixed (Micro & Small)	160	39%	Varied	Medium Risk	39%
Small enterprises	100	24%	Larger, longer-term	Lower Risk	24%
Total	410	100%	—	—	—

Challenge	Frequency	Share (%)	Key Impact	Priority
Insufficient Funds for Lending	300	25%	Leaves many MSEs unserved	CRITICAL
Lack of Collateral from Clients	290	24%	Forces higher rates, limits approval	CRITICAL
Limited Client Financial Literacy	270	22%	Leads to missed repayments	HIGH
High Operational Costs for Small Loans	210	17%	Reduces profitability & rural reach	HIGH
High Default Rates	150	12%	Stricter lending, higher interest rates	MEDIUM
Total	1,220	100%	—	—

Risk Strategy	Frequency	Share (%)	How It Works	Key Limitation	Trend
Credit Risk Assessment & Scoring	280	26%	Creditworthiness based on financial history & repayment behaviour	Limited MSE financial records	▲ Growing
Group Lending & Social Collateral	250	23%	Peer-guarantee groups share loan responsibility	Group conflicts can weaken model	→ Established
Strict Loan Monitoring & Follow-ups	200	19%	Regular visits & digital tracking of repayments	Raises operational costs for rural	▲ Digital shift
Loan Portfolio Diversification	180	17%	Spread exposure across sectors & geographies	Requires strong financial expertise	▲ Growing
Credit Guarantee Schemes	170	15%	Government / donor partial risk coverage	Bureaucratic delays, access issues	▲ Needed more
Total	1,080	100%	—	—	—

Business Sector	Allocation (TZS Bn)	Share (%)	Growth Driver	Trend
Trade & Retail	250	30%	Dominance of small trading businesses	→ Dominant
Agriculture & Agribusiness	180	22%	Government food security policy support	▲ Growing
Manufacturing & Processing	150	18%	Industrialisation & value-addition drive	▲ Rising
Services (Transport, ICT)	120	14%	Digital economy expansion	▲ Rising
Construction & Real Estate	100	12%	Urbanisation & infrastructure demand	→ Stable
TOTAL	800	100%	—	—

Loan Size (TZS)	Number of Loans	Share (%)	Typical Borrower	Distribution
< 2 Million	5,000	32%	Street vendors, market traders	32%
2 – 5 Million	4,500	30%	Small shop owners, small farmers	30%
5 – 10 Million	3,000	20%	Growing businesses, agribusiness	20%
10 – 20 Million	1,500	10%	Small enterprises, manufacturers	10%
> 20 Million	1,000	8%	Established SMEs, construction	8%
TOTAL	15,000	100%	—	—

Section 3.1

Years of Operation of MFIs

The duration of operation is a key proxy for stability and financial sustainability. Most MFIs in Tanzania are relatively young, with more than three-quarters having operated for 10 years or less — signalling a rapidly expanding but still maturing sector.

55%

Operate 1–5 years

21%

Less than 1 year

19%

6–10 years

Over 10 years

Distribution

MFI Age Profile (n=420)

Trend Analysis

Sectoral Impact by Operational Age

Years in Operation	No. of MFIs	Share
Less than 1 year	90	21%
1–5 years	230	55%
6–10 years	80	19%
Over 10 years	20	5%
Total	420	100%

The prevalence of young MFIs (76% operating ≤ 10 years) reflects Tanzania's rapidly expanding microfinance market. However, only 5% have survived more than a decade, underscoring long-term sustainability as a sector-wide challenge that requires targeted policy support.

📈

Access to Capital

MFIs with longer track records attract stronger investor confidence and better financing terms. Newer MFIs often struggle to access funding before proving financial viability.

⚙️

Operational Efficiency

Experienced MFIs benefit from economies of scale and streamlined lending processes. Newer entrants face higher administrative costs as they build client trust.

🏛️

Regulatory Resilience

MFIs that have survived over 10 years have demonstrated adaptability to regulatory changes — a key indicator of institutional health and long-term sustainability.

Section 3.2

Type of Clients Served

Client segmentation directly shapes an MFI's lending strategy, risk exposure, and financial product portfolio. The near-equal distribution across client types highlights the diversity of Tanzania's MFI landscape.

Client Segmentation

MFIs by Primary Client Category

Influence on Strategy

Lending Strategy by Client Type

Client Category	Frequency	Percentage
Micro-enterprises	150	37%
Mixed (Micro & Small)	160	39%
Small enterprises	100	24%
Total	410	100%

How Client Segmentation Influences Lending Strategies

🏪

Micro-Enterprise Focus (37%)

Higher risk profiles driven by irregular income and low financial literacy. MFIs use group lending and peer guarantee models to minimize defaults, and charge higher interest rates to offset costs.

🏢

Small Enterprise Focus (24%)

Better creditworthiness enables individual lending with collateral requirements. MFIs can offer lower interest rates as larger loans reduce per-unit administrative costs.

🔀

Mixed-Client Focus (39%)

The largest segment combines micro-loans, SME loans, working capital facilities and trade credit — diversifying both the product range and risk exposure of the institution.

Section 3.3

Challenges in Providing Loans to MSEs

MFIs face five key barriers that reduce their capacity to extend credit. Insufficient lending funds and lack of borrower collateral emerge as the dominant constraints, together accounting for nearly half of all reported challenges.

25%

Insufficient Funds

24%

Lack of Collateral

22%

Low Financial Literacy

17%

High Operational Costs

12%

High Default Rates

Key Lending Barriers

Main Challenges MFIs Face in Providing Loans to MSEs (n=1,220 responses)

Challenge	Frequency	Percentage	Key Impact
Insufficient funds for lending	300	25%	Limits credit supply; many MSEs left unserved
Lack of collateral from clients	290	24%	Blocks informal and women-led businesses
Limited client financial literacy	270	22%	Increases default and misuse of funds
High operational costs for small loans	210	17%	Reduces rural outreach; drives up interest rates
High default rates	150	12%	Strains liquidity and limits new disbursements
Total	1,220	100%

⚠️ Critical finding: The top two barriers — insufficient funds (25%) and lack of collateral (24%) — together explain why many creditworthy MSEs remain financially excluded. Addressing these requires systemic policy intervention, not just institutional adjustment.

Section 3.4

Risk Management Strategies

Given the high-risk profile of MSE lending, MFIs deploy a combination of strategies to manage credit risk. Credit scoring and group lending dominate, collectively accounting for nearly half of all reported approaches.

Strategy Prevalence

Risk Management Strategies Used by MFIs

Effectiveness Radar

Strategy Effectiveness vs Coverage

Risk Management Strategy	Frequency	Percentage
Credit risk assessment and scoring	280	26%
Group lending and social collateral	250	23%
Strict loan monitoring and follow-ups	200	19%
Loan portfolio diversification	180	17%
Credit guarantee schemes	170	15%
Total	1,080	100%

Best practice: MFIs with the lowest default rates consistently apply a combination of credit scoring, group lending, and strict monitoring — rather than relying on a single approach. A multi-strategy framework is the most effective risk mitigation model.

Section 3.5

Loan Portfolio Allocation to MSEs

With a total MFI loan portfolio of TZS 800 billion, trade and agriculture dominate allocations, reflecting Tanzania's economic structure. A shift toward manufacturing and digital lending is also underway.

TZS 800B

Total Loan Portfolio

30%

Trade & Retail

62%

Loans Below TZS 5M

32%

Loans Below TZS 2M

Sectoral Distribution

Loan Portfolio by Business Sector (TZS Billion)

Loan Size Distribution

MSE Loan Size Breakdown (n=15,000 loans)

Table 3.4: Loan Portfolio Allocation by Business Sector

Business Sector	Loan Allocation (TZS Billion)	Percentage
Trade & Retail	250	30%
Agriculture & Agribusiness	180	22%
Manufacturing & Processing	150	18%
Services (Transport, ICT)	120	14%
Construction & Real Estate	100	12%
Total	800	100%

Table 3.5: Loan Size Distribution Among MSEs

Loan Size (TZS)	Number of Loans	Percentage
< 2 Million	5,000	32%
2 – 5 Million	4,500	30%
5 – 10 Million	3,000	20%
10 – 20 Million	1,500	10%
> 20 Million	1,000	8%
Total	15,000	100%

Section 3.6

Default Rates for MSE Loans

Loan repayment performance varies significantly across MFIs, with the majority reporting moderate default rates. However, a substantial minority — more than one in four — face defaults above 10%, posing serious sustainability risks.

24%

Default < 5%

49%

Default 5–10%

27%

Default > 10%

Default Rate Distribution

MFI Default Rate Bands (n=420)

Causes of Default

Primary Drivers of MSE Loan Defaults

Key Causes of Default Among MSE Borrowers

1
Poor Financial Management
MSEs frequently mix personal and business finances, struggle with cash flow planning, and lack structured financial records — making meeting repayment deadlines difficult.
2
Limited Financial Literacy
Many borrowers misunderstand loan terms, interest rate structures, and penalty clauses — leading to unintentional defaults and disputes with MFIs.
3
Economic & Market Fluctuations
Seasonal revenue disruptions, supply chain volatility, and price shocks reduce business income below repayment thresholds — especially in agriculture and trade.
4
High Interest Rates
MFIs charge premium rates to compensate for operational costs and risk exposure. For thin-margin MSEs, cumulative interest obligations often exceed cash flow capacity.
5
Inadequate Risk Assessment
Incomplete financial histories, lack of collateral documentation, and limited credit scoring tools result in loans being extended to clients with insufficient repayment capacity.
6
External & Regulatory Barriers
Delayed payments from clients and government contracts, combined with licensing costs and tax burdens, compress disposable income available for loan repayment.

⚠️ 27% of MFIs face default rates above 10% — a threshold that strains liquidity, limits new loan disbursements, and reduces investor confidence. Without intervention, this segment risks institutional collapse.

Section 3.7

Challenges in Accessing Capital

Securing adequate funding is a persistent structural problem for Tanzanian MFIs. High borrowing costs and regulatory constraints are the dominant barriers, limiting the sector's ability to expand lending and reduce interest rates for MSE clients.

44%

Cite High Borrowing Costs

29%

Stringent Collateral Requirements

Capital Access Barriers

Key Challenges MFIs Face in Securing Funds

Role of Regulatory Policies in Financing Accessibility

📋

Licensing & Compliance Costs

Capital adequacy and reporting standards increase operating costs. Smaller MFIs often struggle to meet requirements, reducing their eligibility for external funding.

📊

Interest Rate Caps

Imposed caps limit MFI profitability and exclude high-risk borrowers, as MFIs cannot compensate for lending risks through flexible pricing.

🌍

Foreign Investment Restrictions

International investors face lengthy regulatory approvals. Delays discourage capital inflows that could significantly expand MFI lending capacity.

🏦

Central Bank Policies

Limited access to central bank refinancing forces costly commercial bank borrowing. Tight liquidity controls restrict expansion in underserved regions.

Section 3.8

Preferred Financing Options

MFIs rely on a mix of debt, equity, grants and retained earnings to fund their lending operations. Commercial bank loans dominate despite their high cost — reflecting limited availability of alternative financing.

Financing Mix

Preferred Financing Sources (n=430 MFIs)

Cost vs. Availability

Financing Source Trade-offs

Financing Option	Frequency	Percentage	Key Advantages
Commercial Bank Loans	160	40%	Readily available; consistently accessible but expensive due to high interest rates
Government & Donor Grants	120	30%	Low-cost funding; highly preferred but with inconsistent availability
Equity Investments	90	22%	Attracts long-term patient capital; requires profit-sharing arrangements
Retained Earnings	60	15%	Most sustainable source; but limited by operational profitability levels
Total	430	100%

Section 3.9 – 3.11

Regulatory Environment for MFIs

Tanzania's regulatory framework receives mixed reviews from MFIs. While a majority view it as broadly supportive, significant policy bottlenecks — particularly around interest rate flexibility and compliance burdens — constrain institutional growth.

Perceptions Survey

MFIs' View of Tanzania's Regulatory Landscape (n=420)

Key Bottlenecks

Regulatory Challenges Faced by MFIs

Table 3.9: MFI Perceptions of Regulatory Environment

Perception	Frequency	Percentage	Interpretation
Very Supportive	120	29%	Encourages growth with flexible policies
Somewhat Supportive	170	40%	Moderate support but with operational challenges
Neutral	70	17%	Neither strongly favorable nor restrictive
Somewhat Restrictive	40	10%	Regulations pose challenges requiring adjustment
Very Restrictive	20	5%	Stringent policies actively hinder MFI growth
Total	420	69% broadly supportive; 15% restrictive

Table 3.10: Regulatory Bottlenecks

Regulatory Challenge	Frequency	Percentage	Implications for MFIs
Limited interest rate flexibility	250	39%	Prevents risk-based pricing; reduces high-risk lending capacity
Extensive reporting requirements	140	22%	Increases administrative burden and operational costs
High compliance costs	130	20%	Reduces funds available for lending, especially for small MFIs
Strict licensing & registration	120	19%	Limits new market entrants; slows sector innovation
Total	640	100%

Recommended Regulatory Reforms (Table 3.11)

Regulatory Change	Frequency	Percentage	Expected Impact
More flexible lending guidelines	300	39%	Expands financial access for underserved MSEs; improves approval rates
Government-backed guarantees for MSE loans	240	31%	Reduces lending risks; enables more loans to MSEs with limited collateral
Streamlined reporting requirements	120	16%	Frees resources for service delivery; reduces administrative costs
Reduction in compliance costs	110	14%	Lowers barriers for smaller MFIs; promotes inclusive market growth
Total	770	100%

Sections 3.12 – 3.14

Financial Products & Service Gaps

Tanzania's MFIs are primarily loan-focused, with micro-loans and group loans accounting for 97% of all financial products. Critical non-lending services — savings accounts, insurance, and mobile banking — remain severely underdeveloped relative to MSE demand.

Products Offered

Financial Products Currently Offered by MFIs

Services Requested

Most Requested Financial Services by MSEs

Demand vs. Supply Gap Analysis (Table 3.13)

Financial Service	MSE Demand (%)	MFI Supply (%)	Assessment
Small Business Loans	60%	55%	Mostly Met More flexible products needed
Financial Literacy Training	21%	2%	Critical Gap MFIs must integrate structured programs
Savings & Investment Products	10%	2%	Underprovided Expansion needed urgently
Mobile Banking Options	9%	5%	Demand Exceeds Supply Mobile-first investment needed

Key Barriers to Expanding Financial Products (Table 3.14)

Barrier	Frequency	Percentage	Core Impact
High development & operational costs	230	31%	Prevents introduction of new products due to high administrative and tech expenses
Regulatory restrictions	230	31%	Capital requirements and licensing limit savings, insurance and fintech services
Lack of technical expertise	210	28%	Skill gaps in risk assessment, digital finance and product innovation
Limited client demand	70	9%	Low awareness and financial literacy reduce uptake of non-lending products
Total	740	100%

Section 3.15

Barriers to Digital Financial Integration

Digital financial services (DFS) hold transformative potential for Tanzania's MFI sector. However, infrastructure costs, security concerns and low digital literacy among clients are slowing the pace of adoption.

Digital Barriers

Primary Barriers to Digital Financial Integration (n=740 responses)

Barrier	Frequency	Percentage	Impact on Digital Integration
High costs of digital infrastructure	250	34%	Fintech platforms, mobile apps and cloud systems remain unaffordable for smaller MFIs
Data privacy & security concerns	200	27%	Cyber threats and weak data protection frameworks deter MSE adoption
Low digital literacy among clients	200	27%	Despite availability, MSEs lack skills to use mobile banking or digital loan tools
Regulatory barriers	82	11%	Strict licensing and KYC requirements slow digital onboarding
Total	740+	100%

🔒

Security & Trust Solution

Strengthen cybersecurity frameworks, enforce data protection laws, and launch client education programs on digital safety and fraud prevention.

💡

Infrastructure Cost Reduction

Partner with fintech firms to share technology costs; leverage cloud-based solutions and seek government subsidies or donor grants for digital platform adoption.

📱

Digital Literacy Programs

Launch targeted digital finance training for MSEs; develop simplified, user-friendly mobile banking apps with local language support and intuitive interfaces.

📜

Regulatory Sandbox

Advocate for streamlined compliance for digital MFIs; work with policymakers to create regulatory sandboxes that allow controlled testing of new digital financial services.

Sections 3.16 – 3.18

Training, Support & Loan Management Challenges

Financial literacy and business training are not luxuries — they are structural components of a sustainable MFI ecosystem. Yet gaps in delivery, reach and content quality remain significant obstacles.

Training Availability

MFIs with Training Programs

Training Types

Types of Training Offered by MFIs

Loan Management Challenges

MSE Difficulties in Managing Loans

Table 3.16: Training Program Availability

Training Status	Frequency	Percentage	Implications
Training programs already in place	290	73%	Majority of MFIs have active programs for financial literacy and business skills
Planning to introduce programs	90	23%	These MFIs recognise the need but lack implementation frameworks
No training programs offered	20	5%	Focus solely on financial services without capacity-building support
Total	400	96% offer or plan to offer training

Table 3.17: Types of Training Offered

Training Type	Frequency	Percentage	Impact on MSEs
Financial literacy & budgeting	280	35%	Teaches cash flow management, expense tracking, and sustainable fund allocation
Loan management & repayment	200	25%	Reduces defaults by improving understanding of repayment obligations and terms
Business planning & management	200	25%	Helps entrepreneurs develop strategic plans and make better investment decisions
Digital literacy	120	15%	Enables transition to mobile banking, digital payments and online loan management
Total	800	100%

Table 3.18: Challenges MSEs Face in Loan Management

Challenge	Frequency	Percentage	Impact on Repayment
Limited financial literacy	330	35%	Affects budgeting, planning and ability to track loan obligations
Poor cash flow management	330	35%	Results in irregular repayments and difficulty covering business expenses
Difficulty understanding loan terms	190	20%	Confusion over schedules, rates and penalties leads to unintentional defaults
Low digital skills	90	10%	Limits access to digital loan management tools and mobile repayment options
Total	940	100%

Section 3.19

Opportunities for Strengthening MFI Support

MFIs themselves identify four key pathways to enhance their impact on MSE development — government-backed funding, digital transformation, strategic partnerships, and expanded financial literacy programs.

Opportunity Landscape

Opportunities to Improve MFI Support for MSEs in Tanzania (n=1,140)

Opportunity	Frequency	Percentage	Expected Impact
Access to government-backed funding programs	320	28%	Provides MFIs with low-cost capital to expand lending to underserved MSEs
Expanding digital financial services	290	25%	Lowers transaction costs; improves accessibility for rural and informal MSEs
Forming partnerships with fintech providers	310	27%	Enables AI credit scoring, blockchain lending, and advanced risk management
Expanding financial literacy programs	220	19%	Reduces default rates; improves loan utilisation and business outcomes for MSEs
Total	1,140	100%

Section 4

Conclusion & Policy Recommendations

This study establishes that MFIs are critical but structurally constrained drivers of MSE development in Tanzania. Sustainable growth requires a coordinated response across three levels: institutional reform within MFIs, enabling regulatory changes, and broader stakeholder collaboration.

4.1 Summary of Key Findings

📋

Risk Management

A combination of credit scoring, group lending, portfolio diversification, and credit guarantee schemes are most effective in mitigating default risks.

💰

Loan Portfolio

Trade & retail (30%) and agriculture (22%) dominate allocations. Manufacturing and digital lending are growing in share.

🏦

Capital Access

44% cite high borrowing costs; 29% face stringent collateral requirements — both major barriers to expanding affordable lending services.

📜

Regulatory Constraints

Capital adequacy requirements, compliance costs, and interest rate caps limit operational flexibility and restrict financial innovation.

📚

Financial Literacy Gaps

MSE borrowers struggle with loan terms, cash flow management and digital tools — directly increasing default risks and loan misuse.

4.2 Recommendations for MFIs

For MFIs

Strengthen Credit Assessment

Integrate mobile money transaction histories as alternative credit data
Use AI-powered scoring to assess informal MSEs
Conduct rigorous pre-loan screening to improve repayment outcomes

For MFIs

Expand Financial Literacy

Offer mandatory budgeting and repayment workshops prior to loan disbursement
Develop simplified, jargon-free loan agreements
Provide post-disbursement advisory services to at-risk borrowers

For MFIs

Embrace Digital Transformation

Partner with telecoms to enable mobile-based loans and repayments
Invest in user-friendly digital platforms for underserved MSEs
Implement cloud-based systems to reduce operational overhead

4.2 Recommendations for Regulators

For Regulators

Flexible Interest Rate Policies

Implement risk-based pricing to allow MFIs to adjust rates by borrower profile
Encourage blended finance models with public-private subsidies
Review interest rate caps to reflect operational realities of MSE lending

For Regulators

Tiered Compliance Framework

Introduce differentiated requirements based on MFI size and risk exposure
Reduce licensing fees and fast-track approvals for new institutions
Implement digital submission systems to reduce reporting burden

For Regulators

Digital Regulatory Sandbox

Create controlled testing environments for new digital financial products
Streamline KYC processes to ease digital onboarding for MSEs
Establish transparent consultation processes before policy changes

4.2 Recommendations for Other Stakeholders

For Partners & Development Institutions

Public-Private Partnerships

Strengthen collaboration between MFIs, banks, and development finance institutions
Promote government-backed credit guarantee schemes to reduce MFI lending risks
Support blended finance models that combine grants with commercial capital

For Partners & Development Institutions

Support Digital Infrastructure

Invest in mobile banking infrastructure for underserved rural regions
Encourage fintech innovation through funding incentives and sandboxes
Develop shared platforms to reduce per-MFI digital investment costs

For Partners & Development Institutions

Strengthen MSE Capacity

Fund national financial literacy campaigns targeting MSE owners
Support women-led and youth-owned enterprises through targeted credit lines
Develop business incubator programs linked to microfinance access

✅ Way forward: By implementing these recommendations, Tanzania has the opportunity to build a more inclusive, efficient, and sustainable microfinance ecosystem — one where MFIs can serve as genuine growth engines for the country's 5 million+ MSE employees and the broader TZS economy.

Amran Bhuzohera

Senior Economist & Research Lead, TICGL

Research areas include public-private partnerships, SME development, inclusive banking, and microfinance policy in Tanzania. Managing Director of Tanzania Investment and Consultant Group Ltd. Contact: amran@ticgl.com | +255 768 699 002

References

Bibliography

Bank of Tanzania. (2024). Microfinance Sector Performance Report. Bank of Tanzania.
National Bureau of Statistics Tanzania. (2022). Micro, Small, and Medium Enterprises Survey Report.
Kessy, S., & Urassa, G. (2020). The role of microfinance institutions in supporting small businesses in Tanzania. Journal of African Finance, 18(2), 45–62.
Nyamsogoro, G. (2017). Financial sustainability of rural microfinance institutions in Tanzania. African Journal of Economic Policy, 25(3), 78–91.
Tanzania Association of Microfinance Institutions (TAMFI). (2023). Annual Report on Microfinance Institutions in Tanzania.
Ministry of Finance and Planning. (2023). Microfinance Policy and Financial Inclusion Strategy in Tanzania.
GSMA. (2022). Mobile Money Adoption in Tanzania: Trends and Future Growth.
World Bank. (2023). Financial Inclusion and Digital Transformation in Sub-Saharan Africa.

Executive Summary

Abstract: The Tax Burden on Tanzania's SMEs

Small and Medium Enterprises (SMEs) are Tanzania's economic backbone — yet the country's tax architecture is systematically undermining their survival. This TICGL research study, drawing on survey data from 250 SMEs across five regions, quantifies the damage and maps a path toward reform.

Without urgent tax reforms, Tanzania risks entrenching a two-tier economy: a shrinking formal sector crushed by compliance costs, and a vast informal sector that generates employment but fails to contribute to the tax base needed for national development.

SME Survey: Primary Tax Challenges

% of 250 surveyed SMEs citing each challenge

SME Formality vs Informality Rate

Breakdown of Tanzania's ~1.8M+ SME businesses

248+

hours spent annually on tax filing by a typical SME

18%

VAT rate on businesses exceeding TZS 200M turnover

30%

corporate income tax rate — highest in the sub-region

65%

struggled with compliance due to unclear tax policies

TABLE 1.1 — Key Taxes Affecting SMEs in Tanzania (2025)
Tax Type	Rate	Threshold / Trigger	Impact Level	Notes
Corporate Income Tax	30%	All registered companies	Very High	Highest in the sub-region; presumptive system below TZS 200M
Value Added Tax (VAT)	18%	Turnover > TZS 200 million/yr	Very High	≈ USD 40,000; triggers VAT registration obligation
Skills & Development Levy (SDL)	4%	Companies with ≥ 10 employees	Moderate	Charged on gross salary; discourages formal employment
Withholding Tax	2%–15%	Depends on transaction type	Moderate	Covers rent, professional fees, consultancy, dividends
Local Government Levies	Variable	All registered businesses	High	Business licenses, signage fees, service levies — vary by district
Excise Duty	Variable	Specific goods/sectors	Moderate	Affects manufacturing and importers disproportionately
Capital Gains Tax	Variable	On disposal of assets	Lower	Less frequently encountered by micro/small enterprises

TABLE 2.1 — Comparative SME Tax Regimes: Tanzania vs. Best-Practice Countries
Country	SME Tax Model	Corporate Tax Rate	Key Incentives	Outcome
🇹🇿 Tanzania	Complex multi-tax system	30%	Very limited; no SME-specific holidays	72% informality; 78% report excessive burden
🇷🇼 Rwanda	Flat turnover-based tax	3% flat	Tiered: 0% below RWF 2M; 1–3% above	60%+ reduction in tax evasion; high formalization
🇲🇺 Mauritius	Progressive with SME holidays	0% (5 yrs)	Tax-free first 5 years; reinvestment credits	SMEs contribute 50%+ of GDP
🇬🇭 Ghana	Presumptive tax system	Fixed %	Fixed % of turnover instead of complex CIT	Higher formalization rates; broader tax base
🇰🇪 Kenya	Simplified regime for small biz	1–3%	1–3% for revenue < KES 5M (USD 45,000)	30%+ of SMEs formally registered vs <20% in Tanzania
🇿🇦 South Africa	Progressive SBC rates	28%	Tax rebates; tax-free threshold < ZAR 1M	Effective incentives; lower informality

TABLE 3.1 — Sample Distribution by Sector (Total: 250 SMEs)
Sector	SMEs Sampled	% of Sample	Regions Covered
Retail & Trade	80	32%	Dar es Salaam, Arusha, Mwanza
Services (hotels, salons, etc.)	60	24%	All 5 regions
Manufacturing	50	20%	Mbeya, Dar es Salaam, Mwanza
Agribusiness	30	12%	Mwanza, Mbeya, Dodoma
ICT & Innovation	30	12%	Dar es Salaam, Arusha
TOTAL	250	100%	Dar es Salaam, Arusha, Mwanza, Mbeya, Dodoma

TABLE 4.1 — Illustrative Tax Burden: Retail SME in Dar es Salaam, TZS 150M Annual Revenue
Tax / Levy Type	Estimated Annual Amount (TZS)	USD Equivalent	% of Revenue
Corporate Income Tax (30%)	20,000,000	~8,000	13.3%
VAT Obligations (net)	5,000,000	~2,000	3.3%
Business Permits & Levies	3,000,000	~1,200	2.0%
SDL (4% of payroll — est.)	2,400,000	~960	1.6%
Tax Consultant Fees	1,500,000	~600	1.0%
TOTAL TAX BURDEN	31,900,000	~12,760	21.3%

TRA Challenge Area	Description	Impact on SMEs
Aggressive Tax Collection	Surprise audits; heavy penalties for minor non-compliance	Severe
Inconsistent Tax Policies	Frequent amendments without adequate advance communication	High
Limited SME Support	Minimal tax education; inaccessible taxpayer assistance services	Moderate
Digital Gap	Online system exists but many SMEs lack digital access	Moderate

Section 05

Case Studies & Findings

Real-world evidence from three SMEs across Tanzania — retail, agribusiness, and manufacturing — illustrates how the tax burden translates into concrete business damage. Survey findings from 250 SMEs and a comparison with Kenya and South Africa complete the picture.

5.1 Real-life Examples of SMEs Affected by Tax Laws

Case Study · Retail & Trade

Electronics Retail SME — Dar es Salaam

Annual Turnover

TZS 120M (≈ USD 48,000)

Years in Operation

5 Years

Primary Product

Imported Electronics

This retail SME in Dar es Salaam deals primarily in imported consumer electronics. Operating above the TZS 200 million VAT threshold, the business faces both 18% VAT and 30% corporate income tax simultaneously. Tax filing is done manually, and cash flow irregularities — common in import-dependent retail — have caused repeated missed deadlines and compounding penalties.

🏷 VAT Registered 🏷 Corporate Tax Liable 🏷 Manual Filing 🏷 Import Duties

Tax Issues Encountered:

⚠Subject to both VAT (18%) and corporate income tax (30%) simultaneously, with no tax offset or relief mechanism
⚠Frequent surprise tax audits disrupt product shipments and day-to-day operations
⚠Cash flow mismatches between inventory purchase cycles and VAT payment deadlines trigger penalties
⚠Manual filing process prone to errors; no digital accounting integration

Business Impact

Combined compliance costs and taxes consume approximately 15% of annual revenue, leaving minimal margin for reinvestment
Owner actively considering closing the formal business or shifting operations to the informal sector to reduce tax liability
Workforce size deliberately kept below 10 employees to avoid the Skills & Development Levy trigger

TZS 11M

in penalties incurred over two years due to late tax payments and VAT reporting discrepancies — equivalent to USD 5,200 in additional, avoidable cost

Case Study · Agribusiness

Maize & Sunflower Oil Producer — Mwanza

Annual Turnover

TZS 80M (≈ USD 32,000)

Employees

~20 Workers

Products

Maize & Sunflower Oil

This rural agribusiness in Mwanza employs 20 workers and operates below the VAT threshold, but is still subject to 30% corporate income tax and the 4% Skills & Development Levy on its payroll. The agricultural sector has historically benefited from certain tax exemptions — but frequent, poorly communicated policy changes mean that owners often cannot tell which exemptions currently apply, generating confusion, accidental non-compliance, and costly professional advice.

🌾 Agriculture Sector 🏷 SDL Liable (20 employees) 🏷 Rural Operations

Tax Issues Encountered:

⚠Corporate income tax (30%) applied despite thin seasonal margins and weather-dependent revenue uncertainty
⚠Inconsistent application of agriculture-specific tax exemptions — rules change without clear communication to rural businesses
⚠No local infrastructure for tax education or accessible TRA support services in Mwanza's peri-urban zone
⚠SDL levy discourages adding more seasonal workers, limiting production capacity during harvest periods

Business Impact

Delayed tax payments triggering TRA interest charges and late fees that compound over multiple seasons
Owner reluctant to formalize business fully — considering reverting to entirely informal operations to eliminate compliance overhead
Inability to access bank loans (banks require tax compliance certificates) limiting capital for equipment upgrades

TZS 4.5M

spent annually on external tax compliance services — USD 1,800 — which represents a significant share of net profit for a TZS 80M revenue agribusiness

Case Study · Manufacturing

Textile Goods Manufacturer — Mbeya

Annual Revenue

TZS 150M (≈ USD 60,000)

Employees

35 Workers

Products

Textile Goods

A small textile manufacturing firm in Mbeya, employing 35 people and generating TZS 150 million annually, faces a dual burden from VAT (18%) and local government levies — on top of corporate income tax. Poor bookkeeping systems (a common constraint in manufacturing SMEs lacking accounting staff) make VAT input/output reconciliation complex and error-prone. TRA assessments based on estimated (rather than actual) profits create recurring disputes.

🏭 Manufacturing 🏷 VAT Registered 🏷 Local Government Levies 🏷 35 Employees

Tax Issues Encountered:

⚠VAT management is extremely difficult without proper bookkeeping infrastructure — delays in input VAT reclaim affect cash flow
⚠TRA assessments regularly overestimate profit due to weak documentation — leading to tax bills higher than actual liability
⚠Tax disputes consume management time and legal resources that would otherwise go into production and hiring
⚠Owner cutting employee benefits and reducing production scope to lower overall tax liability

Business Impact

Tax audit overestimates compress profit margins, making reinvestment in modern equipment financially impossible
Owner exploring ways to reduce taxable income through expense inflation — a compliance risk that could trigger further penalties
Production stagnating despite strong local demand, due to cash being locked in tax dispute resolution processes

TZS 10M

in tax dispute-related costs in a single year — USD 4,000 — directly hindering growth investment, equipment upgrades, and potential job creation

5.2 Key Findings from SME Interviews & Surveys

From 250 SMEs surveyed and 30 in-depth interviews conducted across Tanzania's five major regions, the following quantified findings emerged. These results paint a picture of a tax system that — despite its legitimate revenue objectives — is systematically undermining the very businesses that drive Tanzania's economic growth.

76%

Tax Filing Too Complex

Especially for service-sector businesses. Many cannot comply without expensive external assistance, adding cost pressure on top of the tax itself.

68%

High Corporate Tax Rate Limits Growth

Cannot reinvest after paying taxes. The 30% rate is cited as the single biggest structural barrier to business expansion.

56%

Reduced Workforce Due to Tax Strain

More than half of surveyed SMEs report deliberately keeping headcount low to minimise SDL liability and avoid triggering higher tax thresholds.

63%

Face Multiple Overlapping Tax Layers

Urban SMEs particularly burdened by layered local government levies on top of national tax obligations, with inconsistent classification and enforcement.

72%

Operate Informally to Avoid Tax

Informality is a rational business response to an inaccessible tax system — not simply a compliance failure. Three-quarters say they'd register if taxes were simpler.

5–10%

Revenue Lost to Compliance Costs

Average annual compliance cost as a percentage of revenue — covering consultant fees, filing costs, audit preparation, and penalty management.

Survey Results: SME Tax Challenges — Ranked by Severity

From 250 SMEs across 5 sectors and 5 regions — TICGL 2025

72%

operate informally to avoid tax burden

56%

cut workforce due to tax-related financial strain

45%

delay tax payments, incurring further TRA penalties

80%

believe TRA enforcement approach is too harsh

5.3 Comparison with Other Emerging Markets

Tanzania's tax challenge is not inevitable. Peer economies in East and Southern Africa have adopted targeted SME-friendly tax regimes that demonstrate measurable improvements in formalization, compliance, and economic growth. The following comparisons highlight exactly what Tanzania stands to gain from reform.

🇹🇿 Tanzania

Corporate Tax30%

VAT Rate18%

VAT ThresholdTZS 200M

SME-Specific IncentivesVery Limited

Formalization Rate<20%

Tax Evasion Rate69%

Hours/Year on Compliance248 hrs

🇰🇪 Kenya

Corporate Tax30% (standard)

SME Simplified Rate1–3% turnover

SME ThresholdKES 5M (≈ USD 45K)

SME-Specific IncentivesYes — tiered system

Formalization Rate30%+

Tax Evasion Rate56%

ComplianceSimplified

🇿🇦 South Africa

SME Corp Tax28% (SBC rate)

Tax-Free ThresholdZAR 1M (≈ USD 53K)

Tax RebatesAvailable

SME-Specific IncentivesProgressive SBC

Tax Evasion Rate47% (Uganda: 47%)

Digital FilingMature system

Compliance SupportStrong

SME Formalization Rate vs Tax Evasion Rate by Country

IMF 2022 & World Bank data — shows inverse relationship between tax friendliness and evasion

"Countries with SME-friendly tax structures — such as Rwanda, where SMEs benefit from a 3% flat tax rate on turnover — experience significantly higher business formalization rates and broader economic participation." — TICGL Economic Case Studies (TECS), June 2025

TABLE 5.1 — Rwanda's Tiered SME Tax Model: A Benchmark for Tanzania
Revenue Band	Tax Treatment	Rate	Result for Tanzania to Consider
Below RWF 2M (≈ TZS 4M)	Fixed small business tax	Minimal flat fee	Micro-enterprises enter formal system painlessly
RWF 2M – 50M (≈ TZS 4M–100M)	Progressive turnover tax	1–3%	Low rate encourages registration; broadens tax base
Above RWF 50M	Standard corporate system	Standard rate	Graduated entry into full compliance obligations
Overall Outcome	Tax evasion reduction	60%+ reduction	Tanzania equivalent could capture 1.8M+ informal businesses

Section 06

Policy Implications & Recommendations

The evidence is unambiguous: Tanzania's current tax architecture is suppressing SME growth, deepening informality, and paradoxically reducing the government's own revenue base. The following recommendations — drawn from survey data, case studies, and global best practice — provide a concrete roadmap for reform.

Expected Impact of Key Reforms

Projected improvement if reforms implemented — TICGL analysis

SME Formalization Potential

If Tanzania adopted Rwanda-style tiered tax model

6.1 Need for Tax Reforms for SMEs

Tanzania's existing tax system, while generating essential government revenue, does not adequately support the growth of SMEs — the backbone of the national economy. Three structural deficiencies drive the need for urgent reform: rates that exceed the financial capacity of small businesses, compliance procedures that require resources most SMEs simply do not have, and enforcement mechanisms that punish growth rather than reward compliance.

Simplification of Tax Compliance Processes

The manual, multi-return tax filing system is the single most actionable barrier to SME compliance. Simplification — through unified filing portals, pre-filled returns, and single-window compliance — would immediately reduce the 248+ annual hours SMEs spend on tax administration. This reform costs government relatively little but yields disproportionately large compliance gains.

Expand and upgrade TRA's Online Tax System (OTS) for full SME accessibility, including offline and mobile-first modes
Introduce a single-window annual return for SMEs below TZS 500 million that consolidates VAT, corporate tax, and SDL reporting
Publish clear, version-controlled tax guidelines with step-by-step compliance instructions in Swahili and English
Establish a dedicated SME Taxpayer Support Desk within TRA — staffed and accessible in all five regions covered by this study

Reducing Tax Burden & Introducing SME Incentives

Tanzania's 30% corporate tax rate is structurally incompatible with SME economics. A tiered, revenue-banded approach — modeled on Rwanda and Kenya — would keep rates proportional to business capacity, encourage formalization, and ultimately broaden the tax base enough to compensate for reduced per-SME revenue. This is not a revenue sacrifice; it is revenue optimization.

Reduce corporate tax to 15–20% for SMEs with annual turnover below TZS 500 million (≈ USD 200,000)
Raise or exempt VAT for businesses below TZS 200 million turnover to ease the "compliance cliff" at the TZS 200M threshold
Introduce 2-year corporate tax holidays for newly registered SMEs in priority sectors: agriculture, manufacturing, and technology
Offer targeted tax breaks for SMEs that create jobs exceeding a defined employment threshold
Provide one-time registration fee waivers for informal businesses transitioning to the formal sector within a defined amnesty window

Digital Solutions for SME Tax Compliance

Tanzania's mobile penetration significantly exceeds its internet infrastructure coverage — particularly in rural areas. A mobile-first tax compliance strategy would reach the 1.8 million+ informal businesses that are unreachable through traditional TRA office-based interaction, turning mobile phones into compliance tools rather than requiring physical tax office visits.

Develop SMS-based tax notification and payment reminder systems operable on basic mobile phones
Create a dedicated SME Tax App for Android/iOS with offline capability, Swahili-language support, and real-time liability calculation
Integrate TRA tax tools with commonly used Tanzanian accounting platforms (e.g., QuickBooks, M-Pesa Business, Tally) for automatic reporting
Fund digital literacy training workshops for SMEs in partnership with chambers of commerce and local government units
Build a public API for TRA data that allows third-party accountants and SME associations to assist businesses in compliance

Enhanced Tax Education & Awareness Programs

With 80% of small businesses lacking proper tax knowledge, the compliance gap is largely driven by ignorance rather than deliberate evasion. A structured, ongoing tax education program — delivered through TRA, chambers of commerce, and local governments — would meaningfully reduce unintentional non-compliance, the penalties it triggers, and the deterrent effect those penalties have on formalization.

TRA to collaborate with industry associations, chambers of commerce, and local government units for quarterly compliance workshops
Develop free online tax courses for SME owners, covering VAT, corporate tax, payroll obligations, and available exemptions
Establish a free TRA helpline specifically for SME queries, with guaranteed response within 48 hours
Publish annual "State of SME Taxation" reports to track compliance trends and communicate upcoming policy changes well in advance

TRA Reform: From Enforcement to Partnership

With 80% of SMEs finding TRA enforcement "too harsh," the relationship between Tanzania's tax authority and its small business community is fundamentally adversarial. Rebuilding this relationship — through supportive auditing, consultative penalty processes, and genuine taxpayer education — would generate more long-term revenue than aggressive enforcement ever could, while also reducing the compliance cost burden that drives businesses into the informal sector.

Introduce SME-Friendly Audit Protocols: first audit is consultative, with penalties waived for first-time, self-corrected non-compliance
Replace surprise audits with scheduled review meetings that give SMEs 30 days' notice and preparation support
Establish a transparent Tax Dispute Resolution Mechanism with defined timelines and no-cost representation for SMEs below TZS 200M revenue
Publish TRA's enforcement actions and penalty data quarterly to improve transparency and build taxpayer trust

6.5 Summary: Policy Recommendations & Expected Outcomes

TABLE 6.1 — Policy Recommendations: Priority, Difficulty, and Expected Impact
Recommendation	Priority	Implementation Difficulty
Simplify tax compliance (digital, single-window)	Immediate	Low
Reduce corporate tax rate (15–20% for SMEs)	High	Moderate
2-year tax holidays for new formal SMEs	Medium	Moderate
Mobile-first digital tax platform	Immediate	Low–Medium
Nationwide tax education program	High	Low
TRA SME-Friendly Audit Protocols	Medium	Moderate
VAT exemption below TZS 200M threshold	Medium	High

Projected SME Formalization Growth: Reform vs No-Reform Scenarios

Modelled on OECD data: 10% tax rate reduction → 15% formalization increase; TICGL 2025 projections

Section 07

Conclusion

Taxation Should Nurture Growth, Not Suppress It

Tanzania stands at a critical juncture. The tax reforms described in this research are not radical — they are calibrated, evidence-based adjustments that peer economies have already proven to work. The question is not whether Tanzania can afford to reform, but whether it can afford not to: 72% informality, 1.8 million unregistered businesses, and an estimated TZS 31.9 million average tax burden on a single mid-sized SME tell a story that urgently demands action.

7.1 Summary of Key Findings

📋
Complex Tax Compliance Procedures
SMEs face cumbersome, multi-return filing requirements, frequent policy changes, and limited digital support. 76% cite complexity as a major barrier. The average SME spends 248+ hours annually navigating a system designed for large enterprises.
💸
High Tax Burden Suppresses Growth
At 30% corporate tax plus 18% VAT, Tanzania's combined tax obligation consumes over 21% of a mid-size SME's annual revenue. 68% of surveyed businesses report they cannot reinvest after paying their tax obligations, directly limiting employment creation and innovation.
🔢
Multiple Taxation Creates Structural Unfairness
National taxes, local government levies, and sector-specific duties pile up disproportionately on SMEs, which lack the tax planning infrastructure to manage them. 63% of SMEs experience multiple overlapping taxation, particularly in urban centers.
🌫️
Informality is a Rational Economic Response
72% informality is not a culture problem — it is a pricing problem. When the cost of compliance (in money, time, and risk) exceeds the perceived benefit of formalization, businesses choose the informal sector. Critically, 75% of informal businesses say they would register if taxes were simplified.
🏛️
TRA's Approach Needs Structural Reform
80% of SMEs find TRA enforcement too harsh; 75% struggle to understand tax regulations. An authority that is feared rather than trusted generates tax avoidance rather than compliance. The relationship must shift from enforcement-first to education-and-support-first.
🌍
Global Best Practice Provides a Clear Template
Rwanda's flat-rate SME system reduced tax evasion by 60%+. Mauritius' 5-year tax holiday drove SME GDP contribution above 50%. Kenya's simplified regime achieved 30%+ SME formalization versus Tanzania's <20%. The evidence base for reform is overwhelming.

7.2 Final Thoughts on SME Tax Challenges

The challenges Tanzania's SMEs face are substantial — but they are not insurmountable. Taxation plays a crucial role in national development, but it must be designed to balance revenue generation with meaningful support for small businesses. A progressive approach — where SMEs are taxed in proportion to their actual earnings and administrative capacity — would produce higher compliance rates, a broader tax base, and ultimately more government revenue, not less.

Simplifying tax procedures and deploying digital solutions would meaningfully close the gap between the formal and informal sectors. Many SMEs, particularly in rural areas, face structural barriers to compliance — lack of internet access, no accountants, poor understanding of changing regulations — that have nothing to do with willingness to comply. Addressing these barriers is a precondition for any sustainable expansion of Tanzania's tax base.

7.3 Call to Action for Policymakers

⚡

Implement Simplified Taxation Now

Introduce simplified tax structures with reduced rates and fewer compliance requirements for SMEs. This single action could bring hundreds of thousands of businesses into the formal economy.

🎯

Introduce Startup Tax Incentives

Tax holidays and reduced rates for the first three years of operation for formal SMEs. Ease entry into the formal economy and allow new businesses to establish themselves before full obligations apply.

📱

Invest in Digital Tax Solutions

Mobile and digital tax filing platforms are low-cost, high-impact interventions. Particularly critical for rural SMEs currently unreachable through traditional TRA channels.

🤝

Reform TRA's SME Relationship

Shift from punitive enforcement to consultative partnership. Regular tax education, transparent communication of policy changes, and supportive audit protocols would dramatically improve voluntary compliance.

📚

Invest in Tax Education

80% of SMEs lack basic tax knowledge. National tax literacy programs — delivered through chambers of commerce, local government, and digital channels — are essential infrastructure for a healthy tax system.

🗺️

Align Policy with Tanzania Vision 2025

Tanzania Development Vision 2025 recognizes SMEs as a key growth driver. Tax policy must operationalize this vision — not contradict it. Policymakers must prioritize reforms that make the tax system inclusive and equitable.

Comprehensive SME Tax Burden Dashboard — Tanzania 2025

All key metrics from TICGL research — visualising the full scale of the challenge

Bibliography

References

Tanzania Revenue Authority (TRA). (2020). Taxpayer's Guide: An Overview of Tax Compliance and Procedures. Dar es Salaam: Tanzania Revenue Authority.
International Monetary Fund (IMF). (2020). Tax Policy and SME Growth in Emerging Economies: A Case Study on Tanzania. Washington, D.C.: International Monetary Fund.
World Bank. (2019). The Role of Taxation in SMEs: Global Best Practices and Lessons for Developing Economies. Washington, D.C.: World Bank.
United Nations Conference on Trade and Development (UNCTAD). (2018). Financing Small and Medium-Sized Enterprises in Africa: Taxation and Compliance Issues. Geneva: UNCTAD.
Tanzania National Bureau of Statistics (NBS). (2020). Annual Survey of Business Establishments 2020: Economic Trends and Insights. Dar es Salaam.
OECD. (2019). OECD Tax Policy Reviews: Tanzania 2019. Paris: Organisation for Economic Co-operation and Development.
Mafuru, P. (2021). Challenges and Opportunities for Small and Medium Enterprises in Tanzania: A Taxation Perspective. Journal of Tanzanian Economics, 5(2), 45–67.
African Development Bank (AfDB). (2018). Promoting SME Growth in Africa: Policies and Practices. Abidjan: AfDB.
Bennet, R., & Robson, P. (2020). Taxation and SMEs: Lessons from Global Practices. Journal of Small Business Management, 58(3), 128–145.
International Finance Corporation (IFC). (2017). Unlocking Financing for SMEs in Tanzania: Role of Taxation in Accessing Credit. Washington, D.C.: IFC.
Suleiman, M. S., & Mwakalindile, A. (2020). Tax Law Compliance and SMEs: A Case Study of Dar es Salaam. Tanzania Business Review, 11(4), 202–215.
Tanzania Investment Centre (TIC). (2021). Overview of Investment Policies and Tax Incentives for SMEs in Tanzania. Dar es Salaam: TIC.
Chachage, C. (2021). SME Taxation in Tanzania: An Assessment of Existing Laws and Their Impact on Business Growth. Tanzania Economic Forum, 4(1), 66–80.

Informal operation rate	40% operate informally due to high tax burden
Annual admin cost	TZS 2 million average per SME in tax-related admin
Primary reason for evasion	Rate complexity and high penalties

SMEs citing tax as constraint	50% — highest-ranked business barrier
Profit margin differential	Formal SMEs earn less than informal equivalents
Primary reason for informality	Multiple taxation + complex filing procedures

Avg. annual compliance cost	TZS 1.5 million per SME
Lacking tax knowledge	80% of small businesses
Proposed solution	Progressive tax model tied to revenue bands

Debt Category	Amount (TZS Trillion)	Amount (USD Billion)	Share (%)
External Debt	90.0	36.1	69.7%
Domestic Debt	38.4	15.8	30.3%
Total National Debt	128.4	51.9	100%

Currency	Amount (USD Million)	Percentage Share
US Dollar (USD)	24,127.7	66.8%
Euro (EUR)	6,333.6	17.5%
Japanese Yen (JPY)	3,219.0	8.9%
Chinese Yuan (CNY)	1,334.5	3.7%
Other Currencies	1,112.9	3.1%

Indicator	October 2025	November 2025	Change
Average Exchange Rate (TZS/USD)	2,460.54	2,444.81	-15.73 TZS
IFEM Turnover (USD Million)	133.7	158.7	+18.7%
BoT Net FX Intervention (USD Million)	—	52.5	Net Sale
Year-on-Year Change	+8.1% Appreciation		From -6.3% in Nov 2024

Inflation Measure	November 2024	October 2025	November 2025
Headline Inflation (%)	3.0	3.5	3.4
Core Inflation (%)	3.3	2.1	2.3
Energy, Fuel & Utilities (%)	5.7	4.0	3.8
Central Bank Rate (%)	5.75		5.75

Service Category	Receipts (USD M)	Payments (USD M)	Share of Receipts
Travel (Tourism)	3,791.4	777.2	55.8%
Transportation	2,079.3	2,458.9	30.6%
Other Business Services	451.5	1,333.7	6.6%
Government Services	257.3	464.5	3.8%
Telecom, Computer & Information	222.6	438.6	3.2%
Total	6,802.1	5,472.9	100%

Indicator	October 2025	November 2025	Status
Headline Inflation (%)	4.8	4.6	Declining
Food Inflation (%)	7.2	6.8	Moderating
Non-Food Inflation (%)	3.3	3.1	Stable
GDP Growth (2024)	7.1%		Above National Average

Indicator	Value
Total Tender Size	TZS 352.0 billion
Total Bids Received	TZS 798.4 billion
Amount Accepted	TZS 369.2 billion
Oversubscription Ratio	2.3 times
Weighted Average Yield	6.25%
Previous Month Yield	6.27%

Creditor Category	Amount (TZS Billion)	Percentage Share
Commercial Banks	10,979.9	28.6%
Pension Funds	10,503.3	27.4%
Bank of Tanzania (BoT)	5,671.5	14.8%
Other Financial Institutions	5,596.8	14.6%
Retail Investors	5,609.8	14.6%
Total	38,361.3	100%

Revenue Category	Amount (TZS Billions)	Performance vs Target	Status
Total Revenue	3,718.2	+6.1%	Above Target
Central Government Revenue	3,570.4	+6.5%	Above Target
Local Government Own Sources	147.8	On track	Stable

Revenue Source	Amount (TZS Billions)	Performance	Main Contributors
Tax Revenue (Total)	3,124.1	+11.4% above target	Primary driver of overperformance
• Taxes on Imports	Major contributor	Strong	Import duties, VAT on imports
• Income Tax	Major contributor	Strong	Corporate and personal income tax
• Taxes on Local Goods & Services	Significant	Strong	VAT, excise duties
• Other Taxes	Moderate	Stable	Various minor taxes
Non-Tax Revenue	~446.1	-TZS 101.9B below target	Fees, charges, dividends

Expenditure Category	Amount (TZS Billions)	Share (%)	Fiscal Priority
Total Expenditure	4,284.2	100.0%	-
Recurrent Expenditure	2,508.6	58.6%	Operational
Development Expenditure	1,775.6	41.4%	Growth-Focused

Financing Source	Share (%)	Amount (TZS Billions)	Strategic Significance
Domestic Financing	82.3%	~1,461.2	Lower FX Risk
Foreign Financing	17.7%	~314.4	Supplementary

Fiscal Indicator	Value (TZS Billions)	Interpretation
Total Revenue	3,718.2	Strong collection, above target
Total Expenditure	4,284.2	Development-focused allocation
Fiscal Deficit	566.0	Expansionary but manageable
Deficit as % of Expenditure	13.2%	Within sustainable range
Primary Financing Source	Domestic borrowing (government securities)

Policy Area	Assessment	Performance Rating	Policy Implication
Revenue Performance	Strong overperformance (+6.1%)	Excellent	Improved fiscal space for priorities
Tax Collection	Very strong (+11.4%)	Excellent	Reforms yielding sustained results
Non-Tax Revenue	Weak (-TZS 101.9B shortfall)	Needs Attention	Requires administrative strengthening
Expenditure Structure	Balanced (41.4% development)	Strong	Supports growth and stability
Financing Strategy	Domestically oriented (82.3%)	Robust	Lower foreign exchange risk
Overall Fiscal Health	Robust and growth-supportive	Very Strong	Sustainable development path

Macroeconomic Indicator	Status (2025)	Fiscal Linkage
Inflation Rate	3.4% (within 3-5% target)	Fiscal discipline supports price stability
Private Sector Credit Growth	18.1% (robust expansion)	Domestic financing doesn't crowd out private sector
Exchange Rate	Appreciating shilling	Reduced external borrowing needs support currency
Interest Rate Spread	5.51% (narrowing)	Government securities demand doesn't distort markets
Government Securities Yields	Declining trend	Strong fiscal position reduces risk premiums

Indicator	Oct 2024	Oct 2025	Annual Change (%)	Notes
Headline Inflation	3.0	3.5	+0.5	Stable, low inflation
Food Inflation	7.0	7.4	+0.4	Driven by cereals and vegetables
Core Inflation	2.2	2.1	–0.1	Stable non-food prices
Energy/Fuel Inflation	3.7	–1.4 (monthly)	—	Lower global oil prices

Indicator	Sep 2025	Change	Economic Implication
Exchange rate (TZS/USD)	2,471.69	+9.4% YoY	Strengthens import affordability
Current Account Balance	–1.5% of GDP	Narrowed	Boosted by tourism +15.8%
Foreign Reserves	USD 6.66B	5.8 months import cover	Ample external buffer
Services Receipts	USD 6.97B	+4.6%	Tourism recovery

Category	Amount	Share (%)	Key Notes
Total Debt	TZS 127,474.5B	100	Up 1.4% MoM
External Debt	USD 35.44B	69.8	77.5% held by central government
Domestic Debt	TZS 37,459B	30.2	73% bonds, 27% T-bills
USD Share (of External)	66%	—	FX exposure risk
Debt/GDP Ratio	40.1%	—	Below EAC 50% ceiling

Fiscal Indicator	Value	Performance
Revenue (collected)	TZS 2,728.1B	87.2% of target
Expenditure	TZS 3,346.6B	71.9% executed
Deficit	TZS 618.5B	3.5% of GDP (approx.)
Policy Rate	6.0%	Accommodative stance
Credit Growth	12%	Driven by SMEs and trade

Sector	Contribution to GDP	2025 Performance	Outlook
Agriculture	25–30%	Food inflation pressure but export resilience	Needs irrigation, value addition
Tourism	10–12%	Arrivals +15.8%	Post-election rebound
Manufacturing	8–10%	Stable input costs	Expansion via local supply chains
Mining	7–9%	Gold exports +12.8%	Sustained global demand

Economic Effects of Tax Laws on Investment in Tanzania

Executive Summary

🎯 Critical Research Findings 2025

FDI Growth 2024

TIC Registered Projects 2024

Economic Growth Q3 2025

Job Creation

Introduction

Research Objectives

💡 Research Methodology

Background of Investments in Tanzania

Foreign Direct Investment (FDI) Trends: 2020-2025

Tanzania FDI Inflows Trend (2020-2024) with 2025 Target

2024 FDI Performance

2026 FDI Target

Sector Distribution

FDI Stock & Ranking

Key FDI Drivers & Developments 2024-2025

Domestic Investment & SME Contribution

Employment Impact

SME Challenges

💡 Economic Performance 2025

Importance of Investments in Economic Growth

Investment Contribution to Tanzania's Economy

Job Creation

GDP Growth Driver

Export & Industrialization

Overview of Tanzania's Tax System & Finance Act 2025 Reforms

1. Corporate Income Tax (CIT) - Current Framework

⚠️ Regional Competitiveness Alert

Corporate Tax Rate Comparison - East Africa 2025

2. Finance Act 2025: Critical New Tax Measures

⚡ Finance Act 2025: Key Investor Concerns

3. Value-Added Tax (VAT) - Current Framework & 2025 Changes

Standard VAT Rate

Digital Payments VAT New

VAT Refund Delays

VAT Withholding System New

💰 VAT Refund Crisis: A Major Investment Barrier

4. Withholding Tax Framework

5. Pay As You Earn (PAYE) & Employment Taxes

6. Multiple Taxation Burden

🏢 Layered Tax System Creates Complexity

📚 Related Research & Resources

TICGL Economic

Join TICGL as a Researcher

Dashboard

Tanzania Business Intelligence Dashboard

Is Tanzania's Economy Growing?

Opportunities and Risks 2026

Inclusive Growth Challenges

Invest in Tanzania

Key Issues: How Tax Laws Affect Investments and Investors

⚠️ Critical Investment Challenges

Major Tax-Related Barriers to Investment

1. High Corporate Tax Rates Reducing Investor Profits

Regional Disadvantage

Investor Impact

Competitiveness Loss

📊 Real Impact Example

2. Frequent and Unpredictable Tax Policy Changes

📋 Survey Finding

3. Complex and Burdensome Tax Compliance Procedures

Annual Tax Compliance Hours: Regional Comparison

Compliance Burden Statistics

4. Multiple Taxation at National and Local Levels

💰 Multiple Taxation Impact

5. VAT Burden and Persistent Refund Delays

Refund Processing Time

Pending Refunds 2025

Cash Flow Impact

6. Ineffective Tax Incentives

7. Aggressive Tax Enforcement by TRA

📊 Investor Perception

Survey Findings: Investor Perspectives on Tax Challenges

Key Survey Results

Top Tax-Related Investment Barriers (% of Respondents)

1. Corporate Tax Rate as Investment Barrier

Major Barrier

Regional Preference

Category	June 2025 (%)	July 2025 (%)	Change
Lending Rates
Overall Lending Rate	15.23	15.16	-0.07
Short-Term Lending Rate (≤ 1 yr)	15.69	15.51	-0.18
Negotiated Lending Rate	12.68	12.56	-0.12
Deposit Rates
Overall Deposit Rate	8.74	8.83	+0.09
12-Month Deposit Rate	9.79	9.88	+0.09
Negotiated Deposit Rate	11.21	10.72	-0.49
Savings Deposit Rate	2.90	2.90	0.00
Interest Rate Spread	—	5.63 (vs. 6.66 in 2024)	Narrowed

Type of Lending Rate	May 2025	June 2025	Change
Overall Lending Rate	15.18%	15.23%	↑ +0.05%
Short-Term Lending Rate	15.96%	15.69%	↓ -0.27%
Negotiated Lending Rate	12.99%	12.68%	↓ -0.31%

Type of Deposit Rate	May 2025	June 2025	Change
Overall Time Deposit Rate	8.58%	8.74%	↑ +0.16%
12-Month Deposit Rate	9.72%	9.79%	↑ +0.07%
Negotiated Deposit Rate	10.64%	11.21%	↑ +0.57%
Savings Deposit Rate	2.52%	2.90%	↑ +0.38%

Indicator	June 2024	May 2025	June 2025
Overall Lending Rate	15.30%	15.18%	15.23%
Short-Term Lending Rate	15.57%	15.96%	15.69%
Negotiated Lending Rate	12.82%	12.99%	12.68%
Overall Time Deposit Rate	7.66%	8.58%	8.74%
12-Month Deposit Rate	9.09%	9.72%	9.79%
Negotiated Deposit Rate	9.86%	10.64%	11.21%
Savings Deposit Rate	2.86%	2.52%	2.90%
Short-Term Interest Rate Spread	6.49%	6.24%	5.90%

Institution	2023	2024	Change (Number)	Change (%)
Immigration (Residence Permits)	5,540	4,908	-632	-11.4%
Labour Office (Work Permits)	5,272	7,425	+2,153	+40.8%
TRA (Tax Exemptions Approved)	268	236	-32	-11.9%
NIDA (ID Cards/NIN)	387	457	+70	+18.1%
TIC (Certificates of Incentives)	526	901	+375	+71.3%
Ministry of Lands (Derivative Rights)	54	66	+12	+22.2%