The Tanzania Private Sector Federation (TPSF) has raised concerns about the 10% withholding tax (WHT) on retained earnings in the draft Tanzania Budget 2025-2026. TPSF warns that the measure could impact investment and reinvestment, calling for sector exemptions, clearer guidelines, and a longer timeline to support business growth.
The hearing, organized by the Parliamentary Budget Committee, brought together private sector associations, business leaders, and policymakers to review key fiscal measures under consideration in the budget draft. TPSF, represented by CEO Raphael Maganga, cautioned that the proposed 10% withholding tax could hinder business expansion and reinvestment, undermining Tanzania’s ambitions for private sector growth and formalization.
Maganga highlighted that this tax would impact companies of all sizes and could discourage informal businesses from formalizing if formal registration results in new tax burdens. He urged the government to adopt tax policies that foster growth rather than constrain it, warning that imposing the withholding tax indiscriminately risks slowing investment, reinvestment, and capital formation, especially in strategic and early-stage sectors.
Maganga further argued that Tanzanian companies remain small compared to regional and global competitors and should be supported to build capital through reinvestment.
Read more at: https://www.tanzaniainvest.com/economy/budget-2025-2026-tpsf-wht-retained-earnings
