Tanzania Tax Reform 2026: New VAT, DST, and Deemed Supplier Rules for Foreign Digital Platforms

The Tanzania Government, on June 17, 2026, presented the Finance Bill 2026-2027 with a particular focus on the tax reforms. A significant part of the proposed tax reforms is strengthening the regulatory framework around the accountability for revenue gained from the supply of digital services. 

Tanzania Digital Services Tax 

Under the Income Tax Act, Tanzania introduced the Digital Services Tax that requires non-resident digital service providers to collect and remit the Digital Services Tax at a 2% rate on payments received from local consumers. 

The proposal from the Budget for 2026-2027 is to increase the DST on the supplies of digital services by non-resident providers from the current 2% to 3%, with the effective date announced later. 

VAT on Electronic Services 

In line with the Finance Bill 2026/2027, there is a proposal to expand the scope of VAT applicability on electronic services provided by digital service providers. The Government proposes the expansion of the provision to be able to expand the scope of taxable services. (and connected providers)

This expansion of the definition of electronic services could be seen in the following proposal to amend the current taxability framework, which is going to include also “any other service of a similar nature delivered through the internet or a telecommunications network”. 

Deemed Supplier Model 

The Finance Bill introduces a deemed supplier provision to strengthen the digital VAT framework. The shift of VAT compliance obligations from the single third-party service provider to digital intermediaries lessens compliance obligations for SMEs while simplifying the tax collection process and connecting the monitoring of compliance by tax authorities. 

The concept of the deemed supplier provision for VAT collection on digital services is very wide in nature; the adoption of the following definition was proposed: “an electronic interface, including website, internet portal, application, online store or digital marketplace that allows recipients and persons offering services through the electronic interface to enter into contact which results in a sale through that electronic interface”

Excise Duty for Digital Service Providers

The Finance Bill 2026/2027 looks to expand the scope of service providers under the Excise Act. Under the proposed amendment to the Excise Duty Act, the non-resident service providers that make their supplies through online platforms directly to end-customers will be required to register, file returns, and pay excise duty in accordance with requirements that are going to be governed by the Excise Act.