Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania

Martha Joseph Kanama

doi:doi:10.11648/j.ijls.20250804.15

Research Article |

| Peer-Reviewed

Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania

Martha Joseph Kanama^*

Published in International Journal of Law and Society (Volume 8, Issue 4)

Received: 11 August 2025 Accepted: 26 August 2025 Published: 9 December 2025

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The rapid expansion of online business has created increasingly complex challenges for tax systems worldwide, with developing countries such as Tanzania facing particular difficulties. As e-commerce and digital platforms reshape traditional business models, governments must urgently adapt outdated tax frameworks to capture revenue from digital transactions. Tanzania, like many other common law jurisdictions, struggles to regulate and tax its growing digital economy due to limited statutory definitions of online business, weak enforcement capacity and the predominance of informal trading through social media and mobile money platforms. The objective of this article is to critically assess the effectiveness of Tanzania’s current legal and administrative frameworks governing online business taxation, while situating these within broader global developments. The paper identifies key structural and operational gaps, including the absence of resident-focused provisions, lack of integration between mobile money operators and the tax authority and inadequate compliance mechanisms for small-scale digital entrepreneurs. To provide a comparative perspective, the study draws on experiences from Kenya, India and the United Kingdom jurisdictions that have made notable progress in implementing digital taxation measures. Particular attention is given to the adoption of digital services taxes, regulation of non-resident providers, the use of technological tools for real-time tax monitoring and the role of taxpayer education in enhancing compliance. These comparative insights highlight both the opportunities and challenges of aligning Tanzania’s framework with emerging international practices. The article concludes by recommending a set of legal, administrative, and technological reforms aimed at modernizing Tanzania’s digital tax regime. These include the development of digital economy tax strategy, introduction of significant economic presence provisions, implementation of a tiered digital taxation regime, building technological capacity, strengthening public awareness campaigns, extending VAT regulations to include residents and defining “online business” in law. Such reforms are essential to ensure equity, enhance compliance and secure long-term fiscal sustainability in the context of an evolving global digital economy.

Published in	International Journal of Law and Society (Volume 8, Issue 4)
DOI	10.11648/j.ijls.20250804.15
Page(s)	320-327
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2025. Published by Science Publishing Group

Keywords

Digital Taxation, E-commerce, Informal Economy, Tax Reform, Tanzania Revenue Authority, Digital Services Tax, Comparative Tax Policy

References

[1]	Tanzania Communications Regulatory Authority, Communications Statistics Report 2024, available at TCRA+1.
[2]	DataReportal, The “state of digital” in Tanzania in 2025, available at DataReportal – Global Digital InsightsWe Are Social UK.
[3]	DataReportal, The “state of digital” in Tanzania in 2025, available at DataReportal – Global Digital Insights.
[4]	Global System for Mobile Communications (GSMA), The State of the Industry Report on Mobile Money 2023, available at TCRAGSMA+1.
[5]	Tanzania Revenue Authority (TRA), Introduction of Income Tax and VAT on Electronic Services, available at Dentonsvatcalc.comtra.go.tz
[6]	World Bank Group, The Digital Economy for Africa Initiative, Country Diagnostics Status 2024, available at World BankWorld Bank+1.
[7]	Mpofu, B. (2022). Direct Digital Services Taxation in Africa: Policy Trends and Challenges. African Journal of Taxation, 8(1), 44–67.
[8]	Dentons. (2024). Digital Services Tax in Tanzania: Legal Insights. Dentons Tanzania Legal Brief.
[9]	Hashimy, F., & Magoge, P. (2024). Permanent Establishment and E-Commerce Taxation in Tanzania. Tanzania Law Journal, 9(1), 89–112.
[10]	Mponwana, T. (2024). Comparative Perspectives on Digital Services Taxes: Kenya and the UK. International Tax Policy Review, 5(3), 120–142.
[11]	Abdiqani, M. (2020). Kenya’s Digital Service Tax: Opportunities and Challenges. Nairobi Law Review, 4(2), 34–56.
[12]	Khamis, S. (2024). Digital Economy Taxation in Zanzibar: A Comparative Review. East African Fiscal Studies, 3(2), 56–78.
[13]	Banga, K. (2025). Digital Services Taxes and International Trade in Africa. African Economic Policy Journal, 12(1), 15–37.
[14]	Mbise, J., & Baseka, G. (2022). Digital Tax Administration and Compliance in Tanzania. Journal of African Taxation, 6(4), 101–124.
[15]	Yindi, M., Zhang, L., & Tenga, A. (2021). E-Commerce Readiness and Taxation Challenges in Tanzania. Tanzania Economic Review, 11(2), 78–94.
[16]	Income Tax Department, Ministry of Finance, Government of India, available at Income Tax India+1.
[17]	UK HM Treasury, Digital Services Tax Policy Paper, 2020.
[18]	Tanzania Revenue Authority (TRA), Income Tax for Individuals, available at https://www.tra.go.tz/page/income-tax-for-individuals
[19]	Tanzania Revenue Authority, Annual Report 2022/2023.

Cite This Article

Plain Text BibTeX RIS

APA Style

Kanama, M. J. (2025). Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania. International Journal of Law and Society, 8(4), 320-327. https://doi.org/10.11648/j.ijls.20250804.15

Copy | Download

ACS Style

Kanama, M. J. Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania. Int. J. Law Soc. 2025, 8(4), 320-327. doi: 10.11648/j.ijls.20250804.15

Copy | Download

AMA Style

Kanama MJ. Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania. Int J Law Soc. 2025;8(4):320-327. doi: 10.11648/j.ijls.20250804.15

Copy | Download

@article{10.11648/j.ijls.20250804.15,
  author = {Martha Joseph Kanama},
  title = {Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania},
  journal = {International Journal of Law and Society},
  volume = {8},
  number = {4},
  pages = {320-327},
  doi = {10.11648/j.ijls.20250804.15},
  url = {https://doi.org/10.11648/j.ijls.20250804.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijls.20250804.15},
  abstract = {The rapid expansion of online business has created increasingly complex challenges for tax systems worldwide, with developing countries such as Tanzania facing particular difficulties. As e-commerce and digital platforms reshape traditional business models, governments must urgently adapt outdated tax frameworks to capture revenue from digital transactions. Tanzania, like many other common law jurisdictions, struggles to regulate and tax its growing digital economy due to limited statutory definitions of online business, weak enforcement capacity and the predominance of informal trading through social media and mobile money platforms. The objective of this article is to critically assess the effectiveness of Tanzania’s current legal and administrative frameworks governing online business taxation, while situating these within broader global developments. The paper identifies key structural and operational gaps, including the absence of resident-focused provisions, lack of integration between mobile money operators and the tax authority and inadequate compliance mechanisms for small-scale digital entrepreneurs. To provide a comparative perspective, the study draws on experiences from Kenya, India and the United Kingdom jurisdictions that have made notable progress in implementing digital taxation measures. Particular attention is given to the adoption of digital services taxes, regulation of non-resident providers, the use of technological tools for real-time tax monitoring and the role of taxpayer education in enhancing compliance. These comparative insights highlight both the opportunities and challenges of aligning Tanzania’s framework with emerging international practices. The article concludes by recommending a set of legal, administrative, and technological reforms aimed at modernizing Tanzania’s digital tax regime. These include the development of digital economy tax strategy, introduction of significant economic presence provisions, implementation of a tiered digital taxation regime, building technological capacity, strengthening public awareness campaigns, extending VAT regulations to include residents and defining “online business” in law. Such reforms are essential to ensure equity, enhance compliance and secure long-term fiscal sustainability in the context of an evolving global digital economy.},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania
AU  - Martha Joseph Kanama
Y1  - 2025/12/09
PY  - 2025
N1  - https://doi.org/10.11648/j.ijls.20250804.15
DO  - 10.11648/j.ijls.20250804.15
T2  - International Journal of Law and Society
JF  - International Journal of Law and Society
JO  - International Journal of Law and Society
SP  - 320
EP  - 327
PB  - Science Publishing Group
SN  - 2640-1908
UR  - https://doi.org/10.11648/j.ijls.20250804.15
AB  - The rapid expansion of online business has created increasingly complex challenges for tax systems worldwide, with developing countries such as Tanzania facing particular difficulties. As e-commerce and digital platforms reshape traditional business models, governments must urgently adapt outdated tax frameworks to capture revenue from digital transactions. Tanzania, like many other common law jurisdictions, struggles to regulate and tax its growing digital economy due to limited statutory definitions of online business, weak enforcement capacity and the predominance of informal trading through social media and mobile money platforms. The objective of this article is to critically assess the effectiveness of Tanzania’s current legal and administrative frameworks governing online business taxation, while situating these within broader global developments. The paper identifies key structural and operational gaps, including the absence of resident-focused provisions, lack of integration between mobile money operators and the tax authority and inadequate compliance mechanisms for small-scale digital entrepreneurs. To provide a comparative perspective, the study draws on experiences from Kenya, India and the United Kingdom jurisdictions that have made notable progress in implementing digital taxation measures. Particular attention is given to the adoption of digital services taxes, regulation of non-resident providers, the use of technological tools for real-time tax monitoring and the role of taxpayer education in enhancing compliance. These comparative insights highlight both the opportunities and challenges of aligning Tanzania’s framework with emerging international practices. The article concludes by recommending a set of legal, administrative, and technological reforms aimed at modernizing Tanzania’s digital tax regime. These include the development of digital economy tax strategy, introduction of significant economic presence provisions, implementation of a tiered digital taxation regime, building technological capacity, strengthening public awareness campaigns, extending VAT regulations to include residents and defining “online business” in law. Such reforms are essential to ensure equity, enhance compliance and secure long-term fiscal sustainability in the context of an evolving global digital economy.
VL  - 8
IS  - 4
ER  -

Copy | Download

Author Information

Martha Joseph Kanama

Department of Private Law, Catholic University of Mbeya (CUoM), Mbeya, Tanzania

Contact Email

http://orcid.org/0009-0007-2144-2712

Download PDF

Submit an Article

Sections

Plain Text BibTeX RIS

APA Style

Kanama, M. J. (2025). Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania. International Journal of Law and Society, 8(4), 320-327. https://doi.org/10.11648/j.ijls.20250804.15

Copy | Download

ACS Style

Kanama, M. J. Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania. Int. J. Law Soc. 2025, 8(4), 320-327. doi: 10.11648/j.ijls.20250804.15

Copy | Download

AMA Style

Kanama MJ. Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania. Int J Law Soc. 2025;8(4):320-327. doi: 10.11648/j.ijls.20250804.15

Copy | Download

@article{10.11648/j.ijls.20250804.15,
  author = {Martha Joseph Kanama},
  title = {Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania},
  journal = {International Journal of Law and Society},
  volume = {8},
  number = {4},
  pages = {320-327},
  doi = {10.11648/j.ijls.20250804.15},
  url = {https://doi.org/10.11648/j.ijls.20250804.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijls.20250804.15},
  abstract = {The rapid expansion of online business has created increasingly complex challenges for tax systems worldwide, with developing countries such as Tanzania facing particular difficulties. As e-commerce and digital platforms reshape traditional business models, governments must urgently adapt outdated tax frameworks to capture revenue from digital transactions. Tanzania, like many other common law jurisdictions, struggles to regulate and tax its growing digital economy due to limited statutory definitions of online business, weak enforcement capacity and the predominance of informal trading through social media and mobile money platforms. The objective of this article is to critically assess the effectiveness of Tanzania’s current legal and administrative frameworks governing online business taxation, while situating these within broader global developments. The paper identifies key structural and operational gaps, including the absence of resident-focused provisions, lack of integration between mobile money operators and the tax authority and inadequate compliance mechanisms for small-scale digital entrepreneurs. To provide a comparative perspective, the study draws on experiences from Kenya, India and the United Kingdom jurisdictions that have made notable progress in implementing digital taxation measures. Particular attention is given to the adoption of digital services taxes, regulation of non-resident providers, the use of technological tools for real-time tax monitoring and the role of taxpayer education in enhancing compliance. These comparative insights highlight both the opportunities and challenges of aligning Tanzania’s framework with emerging international practices. The article concludes by recommending a set of legal, administrative, and technological reforms aimed at modernizing Tanzania’s digital tax regime. These include the development of digital economy tax strategy, introduction of significant economic presence provisions, implementation of a tiered digital taxation regime, building technological capacity, strengthening public awareness campaigns, extending VAT regulations to include residents and defining “online business” in law. Such reforms are essential to ensure equity, enhance compliance and secure long-term fiscal sustainability in the context of an evolving global digital economy.},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Bridging the Digital Tax Gap: A Comparative Analysis of Online Business Taxation in Tanzania
AU  - Martha Joseph Kanama
Y1  - 2025/12/09
PY  - 2025
N1  - https://doi.org/10.11648/j.ijls.20250804.15
DO  - 10.11648/j.ijls.20250804.15
T2  - International Journal of Law and Society
JF  - International Journal of Law and Society
JO  - International Journal of Law and Society
SP  - 320
EP  - 327
PB  - Science Publishing Group
SN  - 2640-1908
UR  - https://doi.org/10.11648/j.ijls.20250804.15
AB  - The rapid expansion of online business has created increasingly complex challenges for tax systems worldwide, with developing countries such as Tanzania facing particular difficulties. As e-commerce and digital platforms reshape traditional business models, governments must urgently adapt outdated tax frameworks to capture revenue from digital transactions. Tanzania, like many other common law jurisdictions, struggles to regulate and tax its growing digital economy due to limited statutory definitions of online business, weak enforcement capacity and the predominance of informal trading through social media and mobile money platforms. The objective of this article is to critically assess the effectiveness of Tanzania’s current legal and administrative frameworks governing online business taxation, while situating these within broader global developments. The paper identifies key structural and operational gaps, including the absence of resident-focused provisions, lack of integration between mobile money operators and the tax authority and inadequate compliance mechanisms for small-scale digital entrepreneurs. To provide a comparative perspective, the study draws on experiences from Kenya, India and the United Kingdom jurisdictions that have made notable progress in implementing digital taxation measures. Particular attention is given to the adoption of digital services taxes, regulation of non-resident providers, the use of technological tools for real-time tax monitoring and the role of taxpayer education in enhancing compliance. These comparative insights highlight both the opportunities and challenges of aligning Tanzania’s framework with emerging international practices. The article concludes by recommending a set of legal, administrative, and technological reforms aimed at modernizing Tanzania’s digital tax regime. These include the development of digital economy tax strategy, introduction of significant economic presence provisions, implementation of a tiered digital taxation regime, building technological capacity, strengthening public awareness campaigns, extending VAT regulations to include residents and defining “online business” in law. Such reforms are essential to ensure equity, enhance compliance and secure long-term fiscal sustainability in the context of an evolving global digital economy.
VL  - 8
IS  - 4
ER  -

Copy | Download