By Alfred Zacharia
The Tanzania Revenue Authority (TRA) has launched a tax education campaign targeting online businesses ahead of new tax rules that will take effect on September 1, 2025.
The rules, introduced through amendments to Section 51 of the Tax Act, will require digital enterprises, particularly those offering accommodation services via platforms like Booking.com, Airbnb, Expedia, and Agoda, to pay taxes.
TRA Commissioner General Yusuph Mwenda acknowledged that although the official compliance deadline is August 31, some stakeholders have raised concerns about the short timeframe and requested extensions.
However, he emphasized that TRA will enforce the directive as planned but has allowed small-scale online traders more time to register, receive education, and participate in seminars conducted online in collaboration with the Tanzania Communications Regulatory Authority (TCRA).
“We have no intention of shutting down businesses. Our role is to enable businesses. Where you encounter challenges in making profits, it is our duty to assist you in continuing your operations,” Mr Mwenda said.
He further explained that TRA will use technology to identify all online businesses and encourage consumers to report cases where receipts are not issued. Informants who provide accurate information leading to tax recovery will be rewarded with three per cent of the redeemed amount.
According to Mr Mwenda, this approach aims to broaden the tax base, reduce informal activity, and establish stable tax standards, enabling the government to fund public services more effectively.
To address complaints about the complexity of Electronic Fiscal Device (EFD) receipts, TRA is promoting the Virtual Fiscal Device (VFD) system.
This cloud-based, mobile-friendly alternative allows businesses to issue electronic receipts and invoices more easily and integrate directly with TRA’s systems.
Mr Mwenda also responded to concerns from some East African Community (EAC) member states regarding restrictions on certain businesses operated by foreigners.
He said these measures are designed to protect Tanzanian businesses and local industries, ensuring fair competition.
The importance of this initiative lies in the rapid growth of Tanzania’s digital economy. Mobile phone penetration exceeded 90 percent in 2024, and internet access reached about 55 percent of the population, especially among youth and urban residents.
This expansion has created a vibrant sector of online sellers, freelancers, digital advertisers, and accommodation providers, many of whom operate informally.
Formalising these businesses through tax compliance will enable them to access financial services like loans, which were previously difficult without official registration.
Stakeholders outside TRA have welcomed the tax education drive. John Daffa, Director for Licensing and Monitoring at TCRA, noted that the communication sector is a vital tool in the digital economy and pledged continued support in licensing and infrastructure improvements to facilitate online business growth.
Dr Kedmon Mapana, Executive Secretary of the National Arts Council (BASATA), said the council is ready to collaborate with TRA to educate artists, content creators, and social media influencers on formalising their work and paying taxes.
Meanwhile, Kariakoo Business Community Chairman Severin Mushi urged TRA to invest more in taxpayer education beginning at the primary school level and called on TCRA to ensure reliable internet services to prevent business disruptions.
As Tanzania begins taxing its digital economy more systematically, the government faces the challenge of balancing increased revenue collection with supporting small and emerging businesses.
The success of this effort will depend on effective education, accessible registration, and infrastructure investments that empower businesses rather than burden them. If successful, this initiative could significantly increase government revenues while helping Tanzanian entrepreneurs thrive in the digital age.