Tax Incentives and Revenue Losses in Tanzania
Report for Tax Justice Network-Africa and ActionAid-International (June 2012)
The government of Tanzania is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment (FDI) into the country. This study shows that such tax incentives are leading to very large revenue losses and may not be needed to attract and retain FDI. The report shows that, taking different estimates into account, revenue losses from all tax exemptions and incentives may be as high as TShs 1.8 trillion (US$ 1.23 billion) in 2008 and that the minimum revenue loss from tax incentives granted to companies alone is around TShs 381 billion ($174 million) a year (for the years 2008/09 – 2009/10). Thus Tanzania is being deprived of badly-needed financial resources for financing public expenditure of goods and services. If the public revenue lost through tax incentives were spent on education and health, the education budget would increase by more than a fifth and the health budget by more than two-fifths.