Experts back mandatory electronic payments

DAR ES SALAAM: TAX experts and economists have welcomed mandatory electronic payments for specified transactions, saying the measure will curb tax evasion, widen the tax base and accelerate Tanzania’s transition towards a more transparent digital economy.

They, however, stressed that successful implementation would require extensive public education, reliable payment systems, affordable transaction charges and strong protection of customers’ financial data.

The views follow the implementation of the Mandatory Electronic Payments for Specified Transactions Order, which came into effect on July 1, 2026, as part of government efforts to reduce cash transactions and improve tax compliance.

The Order requires payments for goods and services at shopping malls, gymnasiums, cinemas, filling stations, conference and event venues, sports arenas and international trade exhibitions, including Saba Saba and Nane Nane, to be made electronically.

It also covers fees, charges, levies, tolls and fares for services such as bus rapid transit, ferries, bridges, long-distance passenger buses, online taxis, air and railway transport and parking.

Accommodation, food and beverages in hotels, restaurants and cafes are also included, alongside transactions involving the renting, sale or purchase of buildings, plots and farms and motor vehicle sales or purchases.

Businesses covered by the Order have six months to establish compliant electronic payment systems. Speaking to the Daily News recently, Tanzania Association of Tax Consultants (TATC) Chairperson Victoria Soka said the initiative could simplify tax administration, particularly for formal businesses already using banking and mobile-money platforms.

“Electronic systems are good because they make tax collection easier. They also help ensure that every transaction is visible, allowing the government to collect the taxes that are due,” Ms Soka said.

She said electronic payments would create clearer transaction records and strengthen compliance with the issuance of official receipts, making it more difficult for businesses to conceal sales or understate their income.

Ms Soka, however, said the transition could be more challenging for informal businesses and small-scale traders that still depend heavily on cash.

She called for sustained public awareness campaigns to educate taxpayers on how electronic payment systems work and the benefits of using them.

According to her, some customers remain reluctant to use mobile banking and other electronic platforms because of concerns over fraud, hacking and possible loss of funds.

She urged banks, mobile-money operators and other payment service providers to improve the reliability and security of their systems while making government payments accessible through agents.

Ms Soka also called for a review of transaction charges, arguing that high fees could discourage people from using electronic payment platforms.

“If the charges are reduced, people will find it more convenient to use electronic systems rather than travelling long distances or paying high fees to withdraw their money,” she said.

She further stressed the need for stronger data protection as more financial transactions move online, warning that weak security could expose customers to fraud and compromise the confidentiality of their financial information.

Ms Soka said reliable systems were also important because technical failures could affect taxpayers who were ready to meet their obligations within prescribed deadlines.

She noted that immediate electronic payments could help taxpayers avoid interest charges arising from delayed payments, provided the systems were functioning properly.

Economist and investment banker Dr Hildebrand Shayo described the initiative as one of the major reforms to Tanzania’s payment system since the introduction of mobile money.

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“It aligns Tanzania with the worldwide move towards cashless economies, which improve efficiency, transparency and tax compliance via digital transactions,” Dr Shayo said.

He said the reform could significantly broaden the tax base without necessarily increasing tax rates, particularly because a substantial proportion of economic activity and employment occurs in the informal sector.

Dr Shayo said replacing cash with electronic payments would make transactions easier to trace, reducing opportunities for tax evasion, money laundering, corruption and other informal activities.

He added that digital transaction records could also benefit businesses by providing verifiable financial histories that could help them access loans, insurance and other financial services.

At a recent private-sector consultation meeting with President Dr Samia Suluhu Hassan at State House in Dar es Salaam, Tanzania Association of Tour Operators (TATO) Chairman Wilbroad Chimbulo also backed wider adoption of electronic payments, particularly in the tourism sector.

Mr Chimbulo said digital transactions could help curb tax evasion, reduce theft and limit opportunities for corruption.

He said TATO’s approximately 900 members had adopted a policy of avoiding business transactions with individuals and companies that do not issue official receipts, calling for the complete phaseout of cash payments.

“Cash transactions are nothing but a source of theft. Let us completely abandon cash. We will still be able to see and track our money,” he said.