VAT on International Transport in Tanzania: What TRA's August 2026 Notice Means for Transporters

This guide reads TRA's August 2026 notice against the VAT Act. It covers which services qualify, the subcontractor question, transit storage, the documents TRA expects, input tax and refunds, the Zanzibar position and a worked example in shillings.

What changed on 6 August 2026?

On 6 August 2026 the Tanzania Revenue Authority (TRA) published a Notice to the Public on Chargeability of Value Added Tax in the Course of Supplying International Transport Services. It sits on TRA's public notices page under that date.

The notice did not change the law. It told the market how TRA reads the existing zero rate for cross-border transport. The dispute it settles is old. Lead transporters often hand part of a cross-border haul to a smaller trucking firm. TRA officers had treated some of those subcontracted legs as domestic supplies at 18%.

The TRA file is a scanned image, and this desk could not machine-read it on 19 October 2026. The detail below is therefore taken from two independent reports that quote it. The BizLens (6 August 2026) and Lookuptax (snapshot of 18 August 2026) agree on its content:

• it is issued as a tax ruling under section 11 of the Tax Administration Act, Cap. 438;
• it applies the zero rate in section 61(3) of the VAT Act;
• transport by a lead transporter and by a subcontractor carrying goods across Tanzania's borders is treated as international transport;
• such supplies can support refund claims, subject to the normal refund rules;
• the ruling binds TRA only while the taxpayer stays fully compliant;
• it takes effect on the date of issue and applies prospectively.

Read the signed PDF before you rely on any single line. The quoted wording comes from secondary reports, and the scan is the authority.

What the law says

The charging rule is in the Value Added Tax Act, Cap. 148 R.E. 2023, as published by TRA. Section 5(1) sets the standard rate at 18% (register F0239). Section 5(2) sets the rate for zero-rated supplies at 0% (F0241).

Section 2(1) defines "international transport services" as carrying passengers or goods by road, rail, water or air on three routes:

• from a place outside the United Republic to another place outside it;
• from a place outside the United Republic to a place in Mainland Tanzania;
• from a place in Mainland Tanzania to a place outside the United Republic.

The definition excludes "ancillary transport services". Those are defined separately as stevedoring, lashing and securing, cargo inspection, preparation of customs documentation, container handling and storage of goods transported or to be transported.

Section 61 then zero-rates three groups of supplies. Subsection (1) covers goods used to repair, maintain, clean or modify an aircraft or ship engaged in international transport. Subsection (2) covers ship's and aircraft's stores consumed or sold on board during an international voyage or flight. Subsection (3) covers services, listed in the next section.

Older notes and some TRA forms cite the 2014 numbering. The Revised Edition 2023 renumbered the Act from section 56 onwards, so the old section 59 is now section 61. Our VAT return guide explains the renumbering.

Who is affected

• Road hauliers and lead transporters running trucks between the Dar es Salaam, Tanga or Mtwara ports and Zambia, Malawi, the DRC, Rwanda, Burundi or Uganda.
• Subcontracted truck owners who carry loads for a lead transporter or a clearing agent.
• Clearing and forwarding agents handling transit cargo and customs documentation.
• Shipping lines and their local agents, including container depots and stevedores.
• Airlines and ground handlers serving international flights.
• Cargo insurers covering goods in international transit.
• Buyers of these services who check whether a supplier's invoice should carry VAT.
• Zanzibar operators, who answer to a different Act and a different authority.

Each of these businesses must be registered for VAT before it can zero-rate anything. Registration is compulsory at TZS 200 million of taxable turnover in twelve months (F0242), and zero-rated sales count toward that figure. Our TIN and VAT registration team handles the file.

Which transport services are zero-rated?

Section 61(3) lists six kinds of service. TRA's Taxes and Duties at a Glance 2025/26, item 10.3, repeats the same list in summary form.

Passenger carriage qualifies too. An international flight from Dar es Salaam to Nairobi is zero-rated under paragraph (a). A domestic flight from Dar es Salaam to Mwanza is not, because neither end is outside the United Republic.

Zero-rated is not the same as exempt. A zero-rated supplier stays inside the VAT system, files returns and recovers the VAT on its costs. An exempt supplier charges no VAT but loses that recovery.

Is a subcontracted leg inside Tanzania zero-rated?

This is the question the notice was written to answer. A Zambian importer usually contracts one lead transporter for the whole Dar es Salaam to Lusaka haul. The lead transporter then hires a smaller fleet for part of the volume. The subcontractor's customer is the lead transporter, a Tanzanian company, and not the importer.

Both reports state that the notice treats the subcontractor's carriage as international transport where it moves goods across the border. The supply is therefore zero-rated in the subcontractor's hands, and the lead transporter is invoiced without VAT.

Two limits follow from the wording reported. First, the truck must cross the border with the goods. A firm that only moves containers from the port to an inland depot, or hands over at Morogoro, is not described in the reports. Treat that leg as a domestic supply at 18% unless TRA confirms otherwise in writing. Second, the subcontractor must hold its own evidence. The lead transporter's file does not cover it.

The notice is prospective. Lookuptax reads it as not reopening periods before 6 August 2026. A subcontractor already assessed for earlier periods cannot rely on it as a defence and should take advice on objection.

Are clearing, storage and port services zero-rated?

Only for transit goods and only within limits. Section 61(3)(e) zero-rates ancillary transport services for goods in transit through Mainland Tanzania where two tests are met:

• the service is an integral part of an international transport supply; and
• for stored goods, storage at a port, airport or declared customs area lasts not more than thirty days, or any longer period the Commissioner for Customs authorises under the East African Community Customs Management Act.

The BizLens report states that the notice allows the Commissioner of Customs to extend the period by up to 21 days. That figure does not appear in the Act, so confirm it against the scanned notice before you rely on it.

Ancillary services on imports for home use are outside paragraph (e). Clearing a container of furniture for a Dar es Salaam shop is a domestic service at 18%. The same agent clearing a transit container for Lubumbashi may zero-rate its fee. One agent can therefore issue both kinds of invoice in the same week.

Demurrage is a separate point. In Civil Appeal No. 212 of 2025, decided on 22 May 2026, the Court of Appeal held that container demurrage is compensation for breach, not consideration for a supply. Both EY (28 May 2026) and Bowmans (26 May 2026) report the decision. Demurrage is therefore outside VAT altogether, not merely zero-rated.

Clearing and forwarding is also a licensed and reserved trade. It is closed to non-citizens under GN 487A of 2025 (NEW-08-14). Our note on the clearing and forwarding restriction and the customs agent licence guide cover the licensing side.

What documents does TRA expect?

The zero rate stands or falls on evidence. The notice, as reported, lists two document sets. They match what officers ask for on audit.

A transporter that carries goods under customs control also posts a security bond with TRA. The register shows TZS 10,000,000 for a C.28 or C.40 licence, or TZS 50,000,000 for both (F0352).

The fiscal receipt matters even at 0%. Section 44 of the Tax Administration Act, Cap. 438 requires a receipt for every supply. Failing to issue one is an offence carrying a fine of the greater of 20% of the value or TZS 2,000,000, capped at TZS 4,000,000 (NEW-02-13). Our EFD receipt guide sets out the device rules.

Can you still claim input tax and a refund?

Yes. This is the main commercial value of the zero rate. Section 72 allows a registered person to credit input tax on purchases used to make taxable supplies, and zero-rated supplies are taxable supplies. Tyres, spare parts, workshop services, rent and software bought at 18% all generate credits.

Input tax must be claimed within six months of the invoice or EFD receipt (F0245). The monthly return and payment are due by the 20th of the following month.

A transporter whose sales are mostly zero-rated will often run a negative net amount. Section 86 allows an immediate refund where 50% or more of turnover is zero-rated. Otherwise the credit is carried forward. TRA must decide a correct application within 90 days and pay within 14 days of deciding; the claim window is three years (NEW-02-23). Our VAT refund guide covers the application in full.

The notice adds a compliance condition to the refund. TRA will hold the ruling binding only where the claimant files on time, pays on time and has no fictitious transactions or inflated input claims. A late return in an unrelated month can therefore put the zero rate itself in question.

How does Zanzibar treat international transport?

Zanzibar runs its own VAT. The Mainland Act applies to Mainland Tanzania only, and TRA's notice does not reach the islands. Zanzibar VAT is charged under the Value Added Tax Act No. 4 of 1998, consolidated to 2025, and collected by the Zanzibar Revenue Authority (ZRA). The standard rate is 15% and the registration threshold TZS 100 million a year (F0246), as shown on ZRA's VAT page.

The exemption for passengers has a cost. An exempt Zanzibar ferry or air operator cannot recover input tax on its purchases. A Mainland airline flying internationally zero-rates the ticket and keeps its credits.

Carriage between Dar es Salaam and Zanzibar is not international transport under Cap. 148. Both ends are inside the United Republic, so the Mainland definition is not met. Goods crossing the channel meet the separate rate-difference rules in our Zanzibar and Mainland VAT comparison.

Worked example: a Dar es Salaam to Lusaka contract

The figures below are illustrative. A Mainland haulier, VAT registered, signs a contract with a Zambian importer for 40 loads of fertiliser from the Dar es Salaam port to Lusaka. The price is TZS 9,000,000 a load. It carries 30 loads on its own trucks and subcontracts 10 loads to a smaller fleet at TZS 7,500,000 a load.

All of the haulier's turnover is zero-rated, so it qualifies for an immediate refund of TZS 21,600,000. If TRA accepts the application as correct, the statutory clock is 90 days to decide and 14 days to pay.

Now change one fact. The subcontractor cannot show movement sheets for its 10 loads and charges 18%. Its invoice rises to TZS 88,500,000, with VAT of TZS 13,500,000. The haulier can claim that VAT as input tax, so the refund grows to TZS 35,100,000. No tax is lost, but TZS 13,500,000 of cash waits in TRA's refund queue.

Change a second fact. Four of the haulier's own loads lack a release order and exit evidence. TRA can deny the zero rate on TZS 36,000,000 of sales. If the price is treated as VAT-inclusive, the tax fraction of 18/118 gives VAT of TZS 5,491,525. Interest runs at the statutory rate (NEW-02-08). If the zero-rating claim is found false or misleading, a 50% penalty on the shortfall, TZS 2,745,763, can follow (NEW-02-11).

For example, a missing border stamp on one truck can cost more than the haulier's margin on that load. The paperwork is part of the price.

What goes wrong on audit?

TRA audits of transporters return to the same gaps. Each one turns a 0% sale into an 18% assessment.

• No exit evidence. The transit declaration was never acquitted at the border, or the truck's movement sheet stops at the port.
• Wrong customer. The invoice names a local trader, but the goods were for home use, not transit.
• Storage over the limit. Transit cargo sat in a depot beyond thirty days without a Commissioner's extension, yet the depot zero-rated its charges.
• Domestic legs labelled international. A port-to-depot shuttle was invoiced at 0%.
• Missing fiscal receipts. A subcontractor invoiced on letterhead with no EFD receipt.
• Late returns. A missed filing deadline breaks the compliance condition on which the ruling depends.

A late return also costs money directly. The penalty is the greater of 2.5% of the unpaid tax or 15 currency points, TZS 300,000, a month for a company (NEW-02-06). A currency point is TZS 20,000 (NEW-02-05). Our guide to TRA penalties and interest sets out the full schedule.

If TRA does assess, the objection must be filed within 30 days. It is admitted only once the greater of the undisputed tax or one third of the assessed tax is paid (NEW-02-19). Our guide to appealing a TRA assessment walks through the route to the Board and Tribunal.

Did the Finance Act 2026 change the zero rate?

No change to section 61 has been reported. The EY analysis of the Finance Act, 2026, published on 17 July 2026, lists the VAT amendments in force from 1 July 2026. They cover withholding VAT, capital goods deferral, electronic services, mining framework agreements and several exemptions. Aircraft tyres and turbine engines were added to the aircraft exemption. Nothing touches the international transport zero rate.

One change does affect transporters' cash flow. Appointed withholding agents now remit within 10 days after the tax period (F0233). Where a transporter sells standard-rated domestic haulage to such an agent, part of its VAT is withheld at source. Check the Finance Act, 2026 text itself before relying on a summary. PwC Worldwide Tax Summaries, reviewed 9 September 2026, confirms the 18% Mainland and 15% Zanzibar rates.

What to do now

1. Map every revenue line. Sort each service into international carriage, transit ancillary, domestic haulage or out of scope, and record the section relied on.
2. Read the signed notice. Download the TRA PDF and keep a copy with the date read in your VAT file.
3. Build a per-trip evidence pack. Link the fiscal receipt, bill of lading or airway bill, transit declaration, release order and movement sheet to each invoice.
4. Check subcontractors. Ask each one for its C28 or C40 licence, VAT certificate and border evidence before you accept a 0% invoice.
5. Track storage days. Flag transit cargo approaching thirty days and request any extension from Customs in writing.
6. File on time every month. The ruling depends on full compliance, so treat the 20th as a fixed date.
7. Claim input tax within six months. Reconcile purchase receipts monthly and lodge a section 86 refund where you qualify.
8. Separate Zanzibar. Keep island operations on their own ZRA ledger and apply the Zanzibar Act, not the Mainland notice.

Key dates

How Zatra helps

Zatra works with hauliers, clearing agents, airlines' local partners and shipping agents on the VAT side of cross-border trade. We classify each revenue line against section 61, build the per-trip evidence pack and test subcontractor files before invoices are accepted. We also prepare monthly returns and section 86 refund applications.

Our tax and regulatory compliance desk runs the monthly cycle. Our import and export compliance team aligns customs and VAT documents. Our TRA audit and dispute support team handles audits, assessments and objections. For transit procedure itself, see our guide to transit goods through Tanzania.

Costs come in two separate buckets. Government charges are paid to TRA or ZRA at the official rate, on a GePG control number where one is issued. Zatra's professional fee is quoted on its own line and never mixed with tax. Zatra prepares and files, but does not decide or guarantee any authority's outcome. Prosecutions, seizures of goods or trucks, disputes and formal legal opinions go to an advocate.

Sources and status

Accurate as at 19 October 2026.

• Notice to the Public on Chargeability of VAT in the Course of Supplying International Transport Services: TRA, 6 Aug 2026; scanned image, not machine-readable. Accessed 19 Oct 2026.
• TRA public notices: TRA listing, notice dated 06 Aug 2026. Accessed 19 Oct 2026.
• Value Added Tax Act, Cap. 148 R.E. 2023: TRA copy; ss.2, 5 and 61 read. Accessed 19 Oct 2026.
• Taxes and Duties at a Glance 2025/26: TRA, Jul 2025; items 10 and 34. Accessed 19 Oct 2026.
• Zanzibar VAT Act No. 4 of 1998, consolidated: ZRA, 2025; s.9 and Schedules read. Accessed 19 Oct 2026.
• TRA clarifies zero-rated VAT treatment: The BizLens, 6 Aug 2026. Accessed 19 Oct 2026.
• Cross-border transport subcontractor ruling: Lookuptax, snapshot 18 Aug 2026. Accessed 19 Oct 2026.
• Court of Appeal ruling on demurrage: EY, 28 May 2026. Accessed 19 Oct 2026.
• Tanzanian Finance Act, 2026 analysis: EY, 17 Jul 2026. Accessed 19 Oct 2026.
• Zatra fee register lines F0233, F0239, F0241, F0242, F0245, F0246, F0352, NEW-02-05, NEW-02-06, NEW-02-08, NEW-02-11, NEW-02-13, NEW-02-19, NEW-02-23, NEW-08-14: fees at 26 Sep 2026. Accessed 19 Oct 2026.

Figures to confirm before you act

• Notice wording: the conditions and document lists are taken from two secondary reports; confirm them against the signed scan
• Storage extension: the 21-day extension is reported from the notice; the Act refers only to a longer period the Commissioner for Customs authorises
• Domestic legs: whether TRA zero-rates a subcontracted leg that ends before the border
• Assessment method: whether TRA applies 18% on top of the price or the 18/118 tax fraction when it denies the zero rate
• Zanzibar freight: whether ZRA treats cross-border freight from Zanzibar as an exported service under First Schedule item 2(i)
• Prior periods: how TRA treats open audits for periods before 6 August 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.