Tanzania introduces VAT withholding: agents keep 3 points on goods and 6 points on services from 1 July 2025

What changed in detail

The Finance Act, 2025 (Act No. 11 of 2025), assented to on 30 June 2025 and in force from 1 July 2025, introduced VAT withholding into Tanzania’s Value Added Tax Act (Cap. 148).

• Who withholds (s.2): a “withholding agent” is the Ministry responsible for finance, a Government entity that retains all or part of its collected revenue, and any registered person the Commissioner General appoints by notice.
• How much (new s.5(5)): on a standard-rated supply made in Mainland Tanzania to a withholding agent, the rate stays 18%, but the agent withholds three percentage points on a supply of goods and six on a supply of services. The Act states that the rate payable to the supplier of a service is therefore 12%; on goods the supplier’s share is the remaining 15 points.
• Certificate (new s.90B): the agent must issue a system-generated VAT withholding certificate by the time VAT becomes payable. A supplier may subtract withheld output tax in its return only if it holds a valid certificate when it files (new s.70(2)).
• Remittance (new s.71(5)): the agent accounts for and remits the withheld tax when its VAT return is due, or as the Commissioner General directs.

What it means

The mechanism is still in force but was tightened by the Finance Act 2026 (Act No. 2 of 2026). Section 91 of that Act wrote the supplier’s 15% share on goods into s.5(5) and added s.5(7), splitting a mixed supply 3:2 between goods and services. Section 95 replaced s.71(5): agents must now pay the withheld VAT within ten days after the end of each tax period and file a monthly withholding statement. See the 2026 withholding-agent filing change and the correction on the 15% and 12% figures.

The 15% and 12% figures are what the supplier collects, not what is withheld. Suppliers to government should reconcile certificates monthly: an output-tax credit claimed without a valid certificate is disallowed.