Dar es Salaam. Tanzania’s robust revenue performance, highlighted by Sh9.31 trillion collected in the third quarter of 2025/26, is drawing praise from economists, investors, and traders. Many see it as evidence of a maturing tax system and a more resilient economy.
Yet stakeholders warn that sustaining this momentum will require deeper reforms, particularly in widening the tax base and improving the business environment.
The Tanzania Revenue Authority (TRA) has posted steady growth in collections in recent years, with annual revenue exceeding Sh32 trillion in 2024/25 and continuing strongly into the current fiscal year.
Commissioner General Yusuf Mwenda attributed the latest milestone to reforms and technology-driven systems.
“Closely monitoring the business environment and implementing modern tax systems have contributed to these achievements,” he said in a statement shared yesterday.
For investors, predictable and strong revenue collection signals fiscal stability.
Analysts suggest Tanzania is increasingly able to finance its own development at a time when external funding is less certain.
With government spending set to surpass Sh60 trillion in the next financial year, domestic revenue will be crucial in reducing reliance on borrowing.
An investment analyst in Dar es Salaam, Dr Juma Abdulrazak, said the numbers send “a positive signal to the market.” “When a country consistently meets and exceeds revenue targets, it builds confidence among investors. It means the government can sustain infrastructure and social spending,” he said.
Diplomats and development partners also see the trend as evidence of improving fiscal discipline.
A senior diplomat based in Johannesburg, familiar with Tanzania’s reforms, Dr Tobiko Nambu, noted: “Stronger domestic revenue reduces vulnerability to external shocks and gives the government more policy space.”
Growth is real, but uneven
Economists say the 23.6 percent growth in quarterly revenue reflects both economic expansion and improved tax enforcement.
Tanzania’s economy has been growing at about six percent, supported by strong activity in services, industry, and construction.
However, much of the tax revenue remains concentrated in a few urban centres, particularly Dar es Salaam, where formal economic activity is highest.
“Large volumes of money are still outside the tax net,” said Dr Abdulrazak, citing the informal sector and regional disparities in collection.
This suggests significant untapped potential, especially among small and informal businesses.
Traders and business owners report feeling the impact of stricter enforcement. While many support paying taxes, some caution against heavy-handed approaches.
A trader in Kariakoo said, “We support paying tax, but the system must be simple and fair. Too much bureaucracy can discourage compliance.”
Another, Mr Kizito Chacha, added: “There must be a balance between enforcement and support. If businesses feel supported, they are more willing to comply.”
Sustaining the momentum
Experts agree on measures needed to maintain growth. First, further simplification of tax procedures is essential. Despite improvements, many small businesses still find the system complex.
Second, deeper digitalisation is required. Systems such as electronic fiscal devices have improved compliance, but greater integration is needed to capture real-time economic activity.
Third, expanding the tax base remains critical. Tanzania’s tax-to-GDP ratio has improved but still falls short of its potential relative to the size of the economy.
Economists also stress the importance of trust.
“Sustained revenue growth depends on trust between taxpayers and the authority,” said Mr Chacha. “People must see value for the taxes they pay.”
The Sh9.31 trillion milestone marks a significant achievement for TRA and the government, reflecting years of reform and signalling a system that is becoming more efficient and reliable.
Register to begin your journey to our premium contentSubscribe for full access to premium content
