Dar es Salaam. The government has proposed additional tax incentives in the 2026/27 financial year to accelerate the adoption of compressed natural gas (CNG), electric vehicles and other clean energy technologies as part of efforts to reduce dependence on imported petroleum products.
Presenting the budget estimates in Parliament on Thursday, Finance Minister Khamis Mussa Omar said the government has continued implementing tax measures aimed at encouraging the use of electricity and natural gas in transport and households.
“The government has continued to implement various tax measures that promote the use of electricity and natural gas in the transport sector and households,” he told Parliament.
Mr Omar said existing incentives include excise duty exemptions for electric and gas-powered vehicles based on engine capacity, as well as value-added tax (VAT) exemptions on compressed natural gas used in vehicles.
The government has also exempted VAT on equipment used in the distribution of CNG, including compressors, metering equipment, storage cascades, specialised transport vehicles and dispensers.
Other incentives cover VAT exemptions across the CNG production value chain and on equipment used to convert vehicle fuel systems from petrol or diesel to gas or electric power.
VAT exemptions have also been extended to imported raw materials used in the manufacture of gas cylinders, including those used in motor vehicles.
In addition, import duty relief has been granted on lithium-ion batteries used in the assembly and manufacture of vehicles and motorcycles.
Vehicle assemblers and manufacturers, including producers of electric and gas-powered vehicles, also benefit from import duty relief under the East African Community Assembling and Manufacturing of Goods Regulations, 2025.
To further support the transition to cleaner energy, the government has proposed two additional tax measures.
The first is a VAT exemption on imported equipment used in electric vehicle charging stations classified under HS Code 8504.40.00.
The second is a VAT exemption on imported LPG smart meters classified under HS Code 9028.10.00, which will be available exclusively to LPG distributors.
According to Mr Omar, the proposed measures are intended to support investment in clean energy infrastructure, expand access to alternative energy sources and encourage wider adoption of electric and gas-powered technologies across the country.
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