The government is strengthening the Presumptive Tax Scheme as part of broader reforms aimed at improving voluntary tax compliance among small-scale traders and informal businesses across the country.
Deputy Minister for Finance, Eng. Mshamu Ali Munde, told Parliament in Dodoma that the system is designed to simplify tax payment procedures for small taxpayers, especially those without proper financial records, while encouraging them to register their businesses and participate in the formal economy.
He was responding to a question from Busokelo Member of Parliament, Lutengano Mwalwiba, who wanted to know the government’s strategy for offering targeted tax incentives to young entrepreneurs in order to promote job creation and economic growth.
Eng. Munde said the Presumptive Tax Scheme has been structured to suit small business operators by using simplified and predictable assessment methods, making it easier for traders without accounting books to meet their tax obligations.
He explained that the approach is intended to widen the tax base while reducing the burden on small businesses, allowing them to grow steadily before transitioning into full tax compliance.
“The government has introduced a six-month grace period for new businesses, during which they are allowed to operate without paying taxes. This is meant to give entrepreneurs time to establish and strengthen their businesses before entering the tax system,” he said.
He further noted that the government recognizes the role of youth in driving economic development and is therefore providing targeted tax incentives, including exemptions and reduced tax rates, to encourage business start-ups and job creation.
According to Eng. Munde, the government continues to review these measures to ensure they remain fair, effective, and supportive of sustainable revenue collection without stifling emerging enterprises.
He also pointed out that through the Finance Act 2023 and subsequent amendments in 2024, the government introduced a six-month Corporate Income Tax deferment for start-up businesses.
The measure, he said, is aimed at giving newly established companies enough space to stabilize, grow, and eventually become strong contributors to the national economy through a broadened and sustainable tax base.
