Tanzania splits VAT withholding at 15% on goods and 12% on services, with a new monthly statement

What changed in detail

The Finance Act, 2026 (Act No. 2 of 2026) makes two linked changes to the VAT withholding regime in the Value Added Tax Act (CAP. 148), both in operation from 1 July 2026.

Section 91 amends section 5(5), replacing a single “twelve percent” figure with a split: withholding on a taxable person supplying goods is fifteen percent, and on a taxable person supplying services is twelve percent. A new subsection (7) handles the boundary case — where a supply has both goods and services elements, the taxable value subject to withholding is apportioned in the ratio 3:2 for goods and services respectively.

Section 95 substitutes section 71(5) and adds a new subsection (6). Under the substituted (5), a withholding agent must pay the Commissioner any VAT withheld under section 5(5) within ten days after the end of each tax period. Under the new (6), an agent required to withhold must file a withholding value added tax statement with the Commissioner for the tax period, in the prescribed manner and form, within ten days of the month following the tax period to which the VAT relates.

What it means

The rate split is the item most likely to be configured wrongly, because the trigger is the character of the supply rather than the identity of the supplier — the same vendor can be withheld at 15% and 12% in the same month. Systems that carry a single withholding rate per counterparty will need the rate moved onto the line, and the 3:2 apportionment rule means mixed invoices cannot simply be classified to whichever side dominates.

The new statement is a genuinely new filing, separate from the withholding payment that was already due. Two ten-day clocks now run: one for remittance after the tax period ends, one for the statement in the following month. Missing the second is easy precisely because the money has already moved.