Hotels face November deadline for new tax

ZANZIBAR: ACCOMMODATION and hospitality businesses in Zanzibar must use revenue authority-approved property management software and integrate it with the tax authority’s electronic system today under new tax administration requirements.

The changes, introduced through Legal Notice No. 106 of 2026 amending the Tax Administration and Procedures (Virtual Fiscal Management System) Regulations, 2021, also require software vendors serving the sector to obtain approval and integrate their applications with the Zanzibar Revenue Authority’s (ZRA) Virtual Fiscal Management System (VFMS).

A tax alert issued by PwC Tanzania says the requirements apply to accommodation and hospitality service providers, as well as companies developing, deploying, operating, maintaining or managing property management systems (PMS).

Such systems are used to process transactions including guest bookings, accommodation charges and other hospitality services.

The ZRA issued a public notice on the amendments on August 25, 2026, giving affected businesses and technology providers until November 2 to meet the requirements.

Failure to comply constitutes an offence punishable under the applicable law, according to the tax alert.

Hospitality operators are expected to establish whether their existing software has received ZRA approval and can interface with the VFMS platform.

Businesses whose systems do not meet the requirements may need to upgrade or replace them before the deadline.

Software providers must also secure the necessary approval and ensure their systems can exchange information with the tax authority’s platform.

The changes form part of wider efforts to strengthen tax administration in Zanzibar, including tighter controls over the reporting of purchases used to support value-added tax (VAT) claims.

Under a separate ZRA public notice issued on June 4, 2026, VAT-registered businesses claiming input tax on local purchases must report the transactions through the VFMS.

According to PwC, the requirements took effect in June 2026 and apply to purchases made within Zanzibar for which businesses intend to claim input VAT.

Supporting electronic fiscal receipts must include the purchaser’s ZTN Location Number in the prescribed format, ZXXXXXXXXX-XXX.

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Businesses must also ensure that the information recorded on receipts is accurate and that the relevant transactions are properly captured in VFMS reports.

The requirements make accurate transaction records and coordination between buyers and suppliers important for businesses seeking to claim input VAT.

PwC advises affected businesses to review their software, purchasing procedures and tax records to identify compliance gaps and address them promptly.

The consultancy also recommends that software vendors coordinate with hospitality clients to facilitate system integration, staff training and technical support.

Businesses that fail to maintain the required documentation or report transactions correctly could face difficulties substantiating their input VAT claims.

The developments place additional compliance responsibilities on Zanzibar’s hospitality sector and VAT-registered businesses, requiring them to review their systems and reporting procedures to meet the tax authority’s requirements.