Tax Arrears Tanzania: Paying TRA by Instalments, Waivers and Recovery
Can a business pay TRA tax arrears by instalments? Yes. Under section 66 of the Tax Administration Act, Cap. 438 R.E. 2023, a taxpayer may apply in writing for more time to pay, and the Commissioner General may allow instalments where good cause is shown. Interest still runs at the statutory rate. Missing one instalment makes the whole balance and interest payable at once. Penalties and interest can be remitted separately under section 81.
The tax arrears Tanzania rules give a business three lawful routes before enforcement starts: ask for more time or instalments, ask for interest and penalties to be remitted, or dispute the tax itself.
This guide sets out the Mainland position under the Tax Administration Act, Cap. 438 R.E. 2023, which the Tanzania Revenue Authority (TRA) administers. It then covers Zanzibar, where the Zanzibar Revenue Authority (ZRA) applies a separate Act with different interest and remission rules.
What the law says
All Mainland tax laws share one procedural statute. The Tax Administration Act, Cap. 438 R.E. 2023, as published by TRA, governs payment, extension, recovery, remission, interest and penalties for income tax, VAT, excise and the other domestic taxes. The 2019 revised edition, held by the Ministry of Finance and on TanzLII, numbers the same provisions differently. Older articles that cite section 55 for extensions or section 76 for interest are using the 2019 numbering.
The sections a business in arrears meets are these, in R.E. 2023 numbering:
- Section 65: tax is payable at the time set by the relevant tax law or the notice served on the taxpayer.
- Section 66: a taxpayer may apply in writing for an extension of time to pay. The Commissioner General may extend the date for all or part of the tax, including by instalments, where good cause is shown.
- Section 66(4): if an instalment is missed, "the whole balance of the tax outstanding plus the interest shall become payable immediately."
- Section 70: unpaid tax may be recovered as a debt due to the Government in a competent court.
- Sections 72 to 75: a charge over the taxpayer's assets, sale of charged assets, restraint of a person likely to leave the country and restraint of assets.
- Section 78: a notice to a third party who owes the taxpayer money, usually called an agency notice.
- Section 81: the Commissioner General may remit the whole or part of any interest or penalty where satisfied there is good cause.
- Section 87: interest at the statutory rate, compounded monthly, on tax unpaid after its due date.
- Section 89: a monthly penalty for failing to file a return or pay tax on the due date.
Section 3 defines the statutory rate as the prevailing discount rate determined by the Bank of Tanzania. TRA's Taxes and Duties at a Glance 2025/2026 repeats that interest is charged at the prevailing Bank of Tanzania statutory rate. PwC's Tanzania tax administration summary describes the same compounding basis.
Who should read this
- Companies with VAT, PAYE, withholding tax or corporate tax that fell due and was not paid in full.
- Businesses that received an assessment after a TRA audit and cannot fund it from current cash flow.
- Directors who have received a demand notice, an agency notice on the company bank account or a notice of charge over assets.
- Firms that need a tax clearance certificate for a licence renewal, a tender or a sale and know arrears stand in the way.
- Businesses in Zanzibar dealing with ZRA, where the instalment and remission rules differ.
If the tax itself is wrong, start with our guide to objecting to a TRA tax decision. If the question is only how much the delay has cost, read TRA penalties and interest in Tanzania first.
What changed in 2025 and 2026
For the Mainland, no general amnesty on interest and penalties is in force at the date of this guide. The EY analysis of the Finance Act, 2026 and the Clyde & Co summary list no waiver programme. Both report a change to recovery: the Commissioner General may now sell perishable charged assets by auction or private treaty. Both also report that the amicable settlement window for tax appeals rose from 60 to 90 days.
The 100% waiver widely reported in 2025 was a Zanzibar measure. The Daily News of 26 August 2025 reported ZRA taxpayers welcoming a full waiver of penalties and interest before 31 December. The legal instrument is the Tax Administration and Procedures (Remission of Interest and Penalty) Order, 2025, Legal Notice No. 84 of 2025. That window closed on 31 December 2025. Mainland taxpayers could never use it.
On the Mainland, the general remission regulations were revoked in 2021. The Tax Administration (Remission of Interests and Penalties) (Revocation) Regulations, 2021, GN No. 713 of 2021, revoked the 2020 regulations. Remission now rests on the Commissioner General's case-by-case discretion under section 81.
How do you ask TRA to pay tax arrears by instalments?
Section 66 sets the framework but not a form. The application must be in writing and must show good cause. The Commissioner General must serve written notice of the decision. Beyond that, the Act sets no maximum term, no minimum first payment and no security requirement, so these are negotiated with the tax office.
In practice a strong application contains five things:
- The exact debt: tax type, period, principal, interest and penalty, reconciled to the TRA ledger.
- The cause: why the tax was not paid on time, for example a delayed government receivable or a seasonal collapse in sales.
- Evidence: bank statements, aged debtors, management accounts and a 12-month cash-flow forecast.
- A schedule: dated monthly amounts that clear the principal, with an upfront payment where cash allows.
- Current compliance: proof that returns are filed and new tax is being paid on time.
File before enforcement starts if possible. Once an agency notice reaches the bank, cash is diverted first. Address the letter to the Commissioner General through the tax office that manages the account, and keep the acknowledgement.
The last point in that list matters most. A plan for old arrears will not hold if new arrears build up beside it. Expect the tax office to look at the current account before it looks at the plan.
Does interest stop while you pay by instalments?
No. Interest keeps running on the unpaid balance. The R.E. 2019 text, at section 76(2), states that an extension of time to pay is not applied when interest is calculated. It also states that interest is not waived because of delay caused by court or other dispute proceedings. We read section 87 of R.E. 2023 as carrying the same rules, but the part of the TRA copy read for this guide did not reach that section, so it is listed in the figures to confirm.
The rate is the Bank of Tanzania statutory rate, compounded monthly. The Zatra fee register records 8.75% for the third quarter of 2026 (register NEW-02-09). The Bank of Tanzania's Monetary Policy Committee statement of 3 July 2026 set the Central Bank Rate at 6.25% for the quarter to September 2026. The Central Bank Rate is a different figure from the statutory rate. Confirm the rate TRA applies for the fourth quarter before you sign a schedule.
The section 89 penalty is a separate question. It applies for each month or part of a month that a person fails to pay tax on the due date. Whether an approved extension moves the due date for penalty purposes is not stated in the text we read. Ask TRA to confirm in its decision letter whether the monthly penalty stops once the plan is approved.
What happens if you miss an instalment?
Section 66(4) answers this directly. The whole balance of the tax outstanding plus the interest becomes payable immediately. TRA can then move straight to recovery without a new assessment.
If cash flow changes, write to the tax office before the instalment date and ask for a revised schedule. A request made in advance is a new section 66 application; a missed payment is a default.
Can TRA waive interest and penalties on arrears?
Yes, but only interest and penalties, not the principal tax. Section 81 lets the Commissioner General remit the whole or part of any interest or penalty payable under a tax law where satisfied that there is good cause. The R.E. 2023 section has a single subsection and sets no percentage cap.
Good cause is not defined in the Act. A request is stronger when it shows three things. The default came from something outside the taxpayer's control. The principal has been paid or is being paid on a schedule. The taxpayer has a clean filing record outside the period in question. A remission request is strongest when it is filed with, or after, payment of the principal.
The penalties a remission request usually targets are these:
| Charge | Basis (R.E. 2023) | Amount | Register ID |
|---|---|---|---|
| Interest on late payment | Section 87 | Statutory rate, compounded monthly | NEW-02-08 |
| Statutory rate, Q3 2026 | Section 3 definition | 8.75% a year | NEW-02-09 |
| Late filing or late payment penalty | Section 89 | Higher of 2.5% of the unpaid tax a month, or TZS 100,000 (individual) or TZS 300,000 (body corporate) a month | NEW-02-06 |
| Currency point | Section 4 and Second Schedule | TZS 20,000 | NEW-02-05 |
| False or misleading statement penalty | Section 90 | 50% or 75% of the tax shortfall | NEW-02-11 |
Our guide to TRA penalties and interest explains how each line is calculated.
What recovery action can TRA take on unpaid tax?
The Act gives TRA a set of tools once tax is not paid on time. Most are administrative and start with a written notice, not a court order. The table summarises them.
| Tool | Section (R.E. 2023) | What it does | What ends it |
|---|---|---|---|
| Agency notice | 78 | Requires a bank, customer or tenant who owes the taxpayer money to pay it to TRA | Payment of the tax, or withdrawal by TRA |
| Charge over assets | 72 | Creates a charge in favour of the Government over the taxpayer's assets, including land once registered | Full payment of the tax and interest |
| Sale of charged assets | 73 | Sale after written notice, normally by public auction | Payment before the sale date |
| Restraint of a person | 74 | Immigration prevents departure for 14 days where the person is likely to flee; the High Court may extend | Payment, or arrangements for payment that satisfy the Commissioner General |
| Restraint of assets | 75 | Restraint of goods, vehicles, vessels or premises in the listed cases | Payment, or release after assessment |
| Suit for unpaid tax | 70 | Recovery as a civil debt due to the Government | Judgment satisfied |
| Managers' liability | 76 | Managers jointly liable with the entity; the R.E. 2023 text ties this to default caused by fraud proved in court | Payment by the entity |
Under the R.E. 2019 text, a sale could not take place earlier than 30 days after possession of land or buildings, 14 days for other tangible assets and one day for perishable goods. Our guide to TRA tax debt recovery and agency notices covers these tools in more depth.
The departure restraint is the one that surprises foreign managers. Section 74(3) requires the Commissioner General to withdraw the notice once the tax is paid or payment is arranged to the Commissioner General's satisfaction. An approved instalment plan is the usual way to meet that test.
Seizure, a charge over land, a departure restraint or a threatened sale should go to an advocate the same day. Zatra prepares the payment file and the instalment proposal; the advocate handles any challenge or court step.
Does objecting to an assessment stop collection?
Only partly, and only after the deposit is paid. Under section 62(7), an objection is admitted only if the taxpayer pays, within 30 days of service, the tax not in dispute or one third of the assessed tax, whichever is greater (register NEW-02-19). The remaining two thirds is then held while the objection is decided.
The deposit itself is tax due. If a business cannot fund it, it cannot object, and the full assessment stands. That is why an instalment request for the deposit and an objection on the merits often run together. Whether the Commissioner General can reduce the Mainland deposit was not confirmed in the text read for this guide. Zanzibar's Act expressly allows it.
Interest also keeps running on tax that is later confirmed. Our guides to tax objections and to appealing to TRAB and TRAT cover the deposit question in detail. Any appeal to the Tax Revenue Appeals Board or Tribunal is advocate work.
How do arrears affect a tax clearance certificate?
TRA's Glance guide says only that the certificate is issued on application. The Business Licensing Act, Cap. 101 R.E. 2023 requires a tax clearance certificate with every business licence renewal (register NEW-08-02).
In Zatra's experience, a tax office will not issue a clean certificate while unpaid arrears sit on the ledger. Some offices will issue where the arrears are on an approved, current instalment plan. That is practice, not a published rule, so confirm with the tax office before you plan a renewal around it. Our tax clearance certificate guide sets out the application steps.
How do tax arrears work in Zanzibar?
Zanzibar taxes such as Zanzibar VAT, hotel levy and stamp duty are administered by ZRA under the Tax Administration and Procedures Act, No. 7 of 2009, consolidated 2025. Income tax in Zanzibar remains a Union matter collected by TRA, so a Zanzibar business can owe both authorities at once.
The Zanzibar rules differ from the Mainland on four points:
- Instalments: section 40(1) lets the Commissioner allow payment by instalments on good cause and sufficient reasons. The term may not exceed one year.
- Interest: section 33(2) sets interest at the Bank of Tanzania lending rate at the start of each calendar year plus ten percent. Section 40(2) applies monthly interest to amounts outstanding under a plan.
- Remission: section 57(2) lets the Commissioner remit penalties and interest, but interest remission may not exceed 50% of the total interest.
- Deposit: section 21A(8) requires the tax not in dispute or one third of the assessed tax before an objection is admitted. Section 21A(10) lets the Commissioner reduce or waive it on reasonable grounds.
Section 57(3) lets the Minister order wider remission. L.N. 84 of 2025 used that power. It gave 100% remission from 1 July to 31 December 2025 to taxpayers who agreed in writing to pay the principal tax by 31 December 2025. Section 5 of the Order dealt with existing instalment plans by prorating payments across principal, interest and penalty. ZRA's implementation notice was posted on 1 August 2025. Whether ZRA has issued a new order for 2026/27 could not be confirmed, because the Finance Act and orders file ZRA posted in August 2026 was not machine-readable.
ZRA's recovery tools include an agency notice under section 41, closure of business premises under section 43, distress proceedings against property under section 44 and a certificate that takes effect as a court decree under section 45.
| Point | Mainland (TRA) | Zanzibar (ZRA) |
|---|---|---|
| Governing Act | Tax Administration Act, Cap. 438 R.E. 2023 | Tax Administration and Procedures Act, No. 7 of 2009 |
| Instalments | Section 66, no maximum term in the Act | Section 40, not more than one year |
| Interest rate | Bank of Tanzania discount rate, compounded monthly | Bank of Tanzania lending rate plus 10% |
| Remission | Section 81, whole or part, no cap | Section 57(2), interest capped at 50%; wider orders under section 57(3) |
| Amnesty in force | None found for 2026/27 | 2025 Order ended 31 December 2025; 2026/27 unconfirmed |
| Objection deposit | Section 62(7), one third or undisputed tax | Section 21A(8), one third or undisputed tax; may be reduced |
Worked example: a VAT debt cleared over six months
Example: a Dar es Salaam distributor did not pay TZS 60,000,000 of VAT due on 20 June 2026. A large customer, a public body, has not paid its invoices. By late November 2026 the debt is five months old. We assume a constant statutory rate of 8.75% a year, the third-quarter 2026 figure in register NEW-02-09.
| Item | Working | TZS |
|---|---|---|
| Principal VAT | Unpaid return | 60,000,000 |
| Interest, five months | 60,000,000 x ((1 + 0.0875/12)^5 - 1) | 2,219,635 |
| Section 89 penalty | 2.5% x 60,000,000 x 5 months (higher than TZS 300,000) | 7,500,000 |
| Total on the ledger | Sum | 69,719,635 |
The distributor applies under section 66 to pay the principal in six monthly instalments of TZS 10,000,000. Interest is paid each month on the falling balance. The first month's interest is TZS 437,500 on TZS 60,000,000. The sixth month's interest is TZS 72,917 on TZS 10,000,000. Interest over the six months comes to about TZS 1,531,250.
At the same time the distributor asks for the TZS 7,500,000 penalty to be remitted under section 81. The good cause is the delayed public receivable, backed by invoices and the customer's correspondence. Whether TRA grants it is TRA's decision.
The penalty grew at TZS 1,500,000 a month while interest grew at about TZS 440,000. Applying in month one rather than month five could have saved about TZS 6,000,000 in penalty, before any remission. The figures are illustrative; the rate may differ by quarter.
What to do now
- Reconcile the ledger: download the TRA statement, match it to your returns and payments, and split principal, interest and penalty by tax and period.
- Decide whether the tax is right: if it is wrong, diary the 30-day objection deadline and budget for the one-third deposit.
- Build the cash-flow case: prepare a 12-month forecast, aged debtors and bank statements that show what can be paid and when.
- Apply in writing under section 66: set out the cause, the debt and a dated schedule, with an upfront payment where possible.
- Request remission under section 81: ask for the penalty and interest to be remitted, with evidence of good cause.
- Stay current: file and pay every new return on time while the plan runs.
- Get the decision in writing: confirm the schedule, the interest basis and whether the monthly penalty stops.
- Escalate early: if an agency notice, charge, seizure or departure restraint arrives, involve an advocate the same day.
Key dates and deadlines
| Event | Time limit | Source |
|---|---|---|
| Objection to a TRA tax decision | 30 days from service, with deposit paid in the same 30 days | Section 62; register NEW-02-19 |
| Missed instalment | Whole balance plus interest payable immediately | Section 66(4) |
| Departure restraint | 14 days from service, extendable only by the High Court | Section 74 |
| Sale of charged land or buildings | Not earlier than 30 days after possession (R.E. 2019 text) | Section 73 (formerly 62) |
| Late payment penalty | Accrues each month or part of a month | Section 89; register NEW-02-06 |
| Zanzibar instalment plan | Not more than one year | ZRA Act No. 7 of 2009, section 40 |
| Zanzibar 2025 amnesty | Ended 31 December 2025 | L.N. 84 of 2025 |
| Appeal amicable settlement window | 90 days, extendable by 30 | Finance Act, 2026; register NEW-02-22 |
How Zatra helps
Zatra reconciles TRA and ZRA ledgers, prepares section 66 instalment applications and section 81 remission requests, and attends the tax office with the client. Our tax compliance team keeps current returns clean while a plan runs. Our TRA audit and dispute team builds the objection file where the tax itself is wrong, and tax advisory models cash flow and the cost of each option. See also our guide to TRA audits and tax disputes and the note on provisional tax instalments.
Agency notices on bank accounts, seizures, charges over land, departure restraints, prosecutions, appeals and legal opinions go to an advocate, with Zatra preparing the file. Zatra prepares and files documents and negotiates schedules; Zatra does not decide or guarantee any authority's outcome.
Costs come in two buckets. Tax, interest, penalties and any appeal fees are government charges, paid to TRA, ZRA or the appeal body at the official rate against a control number. The register lists the appeal fees as NEW-02-20 and NEW-02-21 in our government fees guide. They are separate from Zatra's professional fee, which we quote in writing before work starts. To begin, contact Zatra with your latest TRA statement.
Sources and status
Accurate as at 13 November 2026.
- The Tax Administration Act, Cap. 438 R.E. 2023. Tanzania Revenue Authority, 2023 revised edition. Accessed 13 Nov 2026.
- The Tax Administration Act, Cap. 438 R.E. 2019. Ministry of Finance, revised to 30 November 2019. Accessed 13 Nov 2026.
- Tax Administration Act, 2015 (as at 30 November 2019). TanzLII, 2019. Accessed 13 Nov 2026.
- Tax Administration (Remission of Interests and Penalties) (Revocation) Regulations, 2021, GN No. 713 of 2021. Ministry of Finance, 8 October 2021. Accessed 13 Nov 2026.
- Taxes and Duties at a Glance 2025/2026. Tanzania Revenue Authority, 2025. Accessed 13 Nov 2026.
- Monetary Policy Committee statement No. 244. Bank of Tanzania, 3 July 2026. Accessed 13 Nov 2026.
- The Tax Administration and Procedures Act, No. 7 of 2009, consolidated. Zanzibar Revenue Authority, 19 September 2025. Accessed 13 Nov 2026.
- Tax Administration and Procedures (Remission of Interest and Penalty) Order, 2025, L.N. 84 of 2025. Zanzibar Revenue Authority, 18 July 2025. Accessed 13 Nov 2026.
- Implementation of the Remission of Interest and Penalty Order, 2025. Zanzibar Revenue Authority, 1 August 2025. Accessed 13 Nov 2026.
- Taxpayers welcome 100pc waiver on penalties, interest. Daily News, 26 August 2025. Accessed 13 Nov 2026.
- Tanzanian Finance Act, 2026 analysis. EY Global Tax News, 17 July 2026. Accessed 13 Nov 2026.
- Tanzania Tax Update: Finance Act 2026 Highlights. Clyde & Co, 3 July 2026. Accessed 13 Nov 2026.
- Tanzania: Corporate tax administration. PwC Worldwide Tax Summaries, reviewed 9 September 2026. Accessed 13 Nov 2026.
Figures to confirm before you act
- The statutory interest rate TRA applies for the fourth quarter of 2026; the register's 8.75% is the third-quarter figure.
- Whether section 87 of R.E. 2023 keeps the 2019 rule that an extension of time is ignored when interest is calculated.
- Whether the section 89 monthly penalty stops once a section 66 extension or instalment plan is approved.
- Whether the Commissioner General may reduce or waive the Mainland objection deposit, and under which subsection.
- The sale waiting periods in section 73 of R.E. 2023, read here from the 2019 text, and the Finance Act, 2026 change for perishables.
- Whether a tax office will issue a tax clearance certificate while arrears are on a current instalment plan.
- Whether ZRA has issued a remission order for 2026/27, and the Bank of Tanzania lending rate ZRA uses for 2026.
This article is general information based on official sources available at the date of publication. It is not legal, tax or financial advice. Laws and notices change. Verify with the issuing authority or consult Zatra before acting.
Frequently asked questions
Is there a TRA tax amnesty on the Mainland in 2026?
No general amnesty on interest and penalties was found for 2026/27. The Finance Act, 2026 summaries list none. The 100% waiver reported in 2025 was a Zanzibar order that ended on 31 December 2025. Mainland relief now depends on a section 81 remission request.
Can TRA waive the principal tax itself?
Not under section 81, which covers interest and penalties only. The principal is reduced only by showing the assessment is wrong, through an objection and, if needed, an appeal. An exemption must come from the tax law or a Ministerial order, not from a payment negotiation.
How long can a TRA instalment plan run?
The Mainland Act sets no maximum term. The length depends on the debt, the evidence of cash flow and the tax office's view. In Zanzibar, section 40 caps an instalment arrangement at one year. Shorter plans with an upfront payment are easier to justify.
Will an agency notice be lifted once I agree a plan?
That is for TRA to decide. Ask for the notice to be withdrawn or limited in the same letter as the instalment request, and show that the plan is funded from the account under notice. An advocate should handle any challenge to a notice already served.
Can a director be stopped at the airport for company tax?
Section 74 lets TRA ask Immigration to stop a person who fails to pay tax and is likely to flee, for 14 days. Only the High Court can extend it. The notice must be withdrawn once payment is arranged to the Commissioner General's satisfaction.
Does paying by instalments count as tax compliance for a tender?
Each procuring entity sets its own test, and most ask for a tax clearance certificate. Whether the tax office issues one while a plan runs is a matter of practice. Ask the tax office and the procuring entity in writing before the bid deadline.
Can a business with debts to both TRA and ZRA settle them together?
No. TRA and ZRA are separate authorities with separate ledgers, Acts and decisions. A plan agreed with one does not bind the other. Prepare two applications, one under each Act, and make sure the combined schedule is affordable.
Should I pay the arrears first or object first?
If the tax is wrong, object within 30 days and pay the deposit, then apply for instalments on the rest if it is confirmed. If the tax is right, apply for instalments and remission at once. Paying nothing while deciding costs interest and penalty every month.
Sources & regulators
Verify before filing: Rates, forms and thresholds move by Finance Act, Government Notice and portal revision. Confirm the live schedule on the mandate-holder portal before you budget or submit. Law-firm alerts and Big Four notes are discovery only.
- The Tax Administration Act, Cap. 438 R.E. 2023: Tanzania Revenue Authority, 2023 revised edition. Accessed 2026-11-13.
- The Tax Administration Act, Cap. 438 R.E. 2019: Ministry of Finance, revised to 30 November 2019. Accessed 2026-11-13.
- Tax Administration (Remission of Interests and Penalties) (Revocation) Regulations, 2021, GN No. 713 of 2021: Ministry of Finance, 8 October 2021. Accessed 2026-11-13.
- Taxes and Duties at a Glance 2025/2026: Tanzania Revenue Authority, 2025. Accessed 2026-11-13.
- Monetary Policy Committee statement No. 244: Bank of Tanzania, 3 July 2026. Accessed 2026-11-13.
- The Tax Administration and Procedures Act, No. 7 of 2009, consolidated: Zanzibar Revenue Authority, 19 September 2025. Accessed 2026-11-13.
- Tax Administration and Procedures (Remission of Interest and Penalty) Order, 2025, L.N. 84 of 2025: Zanzibar Revenue Authority, 18 July 2025. Accessed 2026-11-13.
- Taxpayers welcome 100pc waiver on penalties, interest: Daily News, 26 August 2025. Accessed 2026-11-13.
- Tanzanian Finance Act, 2026 analysis: EY Global Tax News, 17 July 2026. Accessed 2026-11-13.
- Tanzania: Corporate tax administration: PwC Worldwide Tax Summaries, reviewed 9 September 2026. Accessed 2026-11-13.
Disclaimer
This article is informational orientation. It is not legal, tax or investment advice and not a government decision. Tanzanian instruments move by Act, Government Notice, Finance Act and portal revision. If a sentence here disagrees with the live mandate-holder, the mandate-holder wins. Zatra Consultants Limited does not issue licences, permits, tax clearances or approvals, and gives no assurance of any regulatory or banking outcome. Professional fees are published only on /pricing/.