Tanzania Needs to Digitise VAT Payments

September 21, 2016 Taxation in Tanzania

Sales RecieptsDODOMA – Tanzania’s tax revenues could rise by as much as 10 percent of the national GDP, if the government could successfully digitise the VAT system.

The UN group the Better Than Cash Alliance has claimed that Tanzania could boost the economy by nearly half a billion dollars by digitising the national Value Added Tax system.
The findings in the new report are based on the previous results of Tanzania’s attempts to digitise parts of the economy.

It was shown that the government of Tanzania has overcome significant obstacles in the past when encouraging the digitisation of payments made to the government by businesses and by individuals, as, as a result has seen a boost in the efficiency of processing imports and exports, boosts to tourism numbers and revenues, and a reduction in unrecorded cash payments.

If the government could digitise the Vat system with equal success, the collection of tax revenues could increase by as much as USD 477 million per year.

The increase in tax revenues would be particularly beneficial to Tanzania, which currently has an annual GDP of approximately USD 47 billion per year, and sees a tax-to-GDP ratio of only 12 percent.

Photo by patrick h. lauke