Analysts link revenue growth to new collection measures

DAR ES SALAAM: THE Tanzania Revenue Authority (TRA) and Zanzibar Revenue Authority (ZRA) exceeded their revenue collection targets for the first quarter of the 2026/27 financial year, recording performances of 107.49 per cent and 100.63 per cent, respectively.

According to the reports, TRA collected 10.65tri/- against a target of 9.91tri/-, while ZRA mobilised 353.31bn/- against a planned collection of 351.10bn/-. Compared with the same period last year, TRA’s collections increased by 18.81 per cent from 8.96tri/-, while ZRA’s collections rose by 28.81 per cent from 274.29bn/-.

The strong performance has been attributed to improvements in tax administration, expansion of the taxpayer base, increased economic activity and greater use of technology.

Economic analyst Dr Hildebrand Shayo said the figures reflected changes in tax administration, expansion of the taxpayer base and increased economic activity rather than simply an increase in revenue. He said TRA registered 447,611 new taxpayers during the quarter, bringing the total number of registered taxpayers to 9,011,783.

“The deployment of mobile vehicle offices and handheld devices, combined with new office openings in different areas, allowed the TRA to access taxpayers who had not previously been within the formal system,” Dr Shayo said.

He added that increased trade had also contributed to revenue growth, with imports valued at 89.77tri/-, representing a 33.66 per cent increase, while container traffic rose by 16.9 per cent. Technology has also become an important part of revenue administration, with the Integrated Domestic Revenue Administration System (IDRAS) supporting domestic tax administration and the Tanzania Customs Integrated System (TANCIS) improving customs processes.

TRA reports that 83 institutions are connected to IDRAS and 28 to TANCIS, allowing greater access to taxpayer and trade information. Dr Shayo said enforcement against tax evasion had also contributed to the performance. More than 130 investigations were completed, identifying 331.15bn/- in tax liabilities, while more than 44.74bn/- was collected.

TRA also conducted 1,185 border patrols, leading to the seizure of smuggled goods valued at 12.72bn/-. Another analyst, Mr Kelvin Msangi, said the report showed gains in operational efficiency, pointing to a decline in the cost of revenue collection from 2.28 per cent to 1.58 per cent. He, however, identified a gap between tax liabilities established through investigations and the amounts actually recovered.

“While investigations identified 331.15bn/- in tax liabilities across 130 cases, TRA recovered only 44.74bn/-,” Mr Msangi said. He said the difference pointed to the need for stronger mechanisms to convert identified tax liabilities into actual revenue. Mr Msangi also said the 33.66 per cent increase in import values demonstrated the importance of trade to current revenue performance, while exposing collections to changes in international trade conditions.

However, Senior Lecturer in Innovation and Entrepreneurship at Saint Augustine University of Tanzania, Dr Sylvester Jotta, said the collection figures should also be assessed against the country’s potential tax base.

“Exceeding a collection target does not, on its own, necessarily mean that we have collected all the tax revenue that our economy has the capacity to generate,” he said.

Dr Jotta said sustained performance above targets raised questions about whether the targets fully reflected the actual potential of the economy. He called for regular assessment of Tanzania’s tax gap, defined as the difference between revenue collected and the amount that could potentially be collected based on the size and structure of economic activities.

He said the informal sector remained an important area for expanding the tax base, but formalisation should be accompanied by benefits such as access to finance, markets, government tenders and business information. Dr Jotta also called for greater use of data from different institutions to identify economic activities that remain outside the tax system.

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TRA’s first-quarter performance comes as the authority works towards the government’s 41.83tri/- revenue target for the 2026/27 financial year. In Zanzibar, ZRA Head of Information, Public Relations and Customer Service, Makame Khamis Mohamed, said the authority attributed the increase to several factors, including growth in economic activities between Zanzibar and Mainland Tanzania, increased investment in infrastructure and social services, taxpayer education and improvements in revenue collection systems.

ZRA said the improved performance was also supported by strengthened taxpayer education programmes aimed at increasing awareness of changes in tax laws, regulations and procedures.

The authority has further strengthened digital revenue collection systems, including the Virtual Fiscal Management System (VFMS) and the Zanzibar Integrated Domestic Revenue Administration System (ZIDRAS). “The VFMS can now issue receipts showing the location of a business, while ZIDRAS provides information on businesses that do not fully comply with the system,” the statement said.