Service Levy in Tanzania: the 0.25% Turnover Tax

What the service levy is

The service levy is a local tax, not a national one. It is imposed by the local government authority where a business operates, on that business's net turnover, and it funds local services and infrastructure. Because it is charged on turnover rather than profit, a business pays it whether or not it made money in the quarter.

The 0.25% rate, and what changed

The Finance Act 2025 amended the Local Government Finance Act to fix the rate at 0.25% of net turnover. Before that, authorities could set any rate up to a maximum of 0.3%, which allowed sector arrangements such as the 0.2% some banks applied. Those arrangements are no longer supported by law: the discretion that permitted them is gone, so the 0.25% applies across the board.

What the levy is charged on

Net turnover — and the compliance point is what "net" excludes. The base is turnover excluding excise duty and value added tax, so a business that has collected VAT on its sales does not pay the levy on the VAT element. Reconcile the revenue in your accounts with the revenue you declare in the levy return, and keep a note of any differences: that reconciliation is what an auditor will ask for.

Paying it, quarter by quarter

The levy is paid quarterly to the authority. In practice the first two months of a quarter are calculated on actual turnover and the final month on an estimate, so the return is filed without waiting for the quarter to close. Late payment attracts fines and interest, which is the main reason to diarise the four deadlines rather than remember them.

A worked example

A quarter's net turnover of 100,000,000 TZS attracts 250,000 TZS in service levy at 0.25% — that is 1,000,000 TZS if the same turnover repeats all year. The base is net turnover excluding excise duty and VAT. The calculator below will do it for your own quarterly turnover.

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