Zanzibar Tax Guide 2026

Overview — Zanzibar Tax System

Zanzibar is a semi-autonomous region within the United Republic of Tanzania. While the central government sets most tax policy, Zanzibar has its own TRA office that administers taxes within the islands. The Zanzibar Revenue Authority (ZRA) — now integrated as TRA Zanzibar — handles tax collection. Most tax rates are identical to the mainland, but Zanzibar has specific provisions for VAT, excise, and investment incentives under the Zanzibar Investment Promotion Authority (ZIPA).

Corporate Tax in Zanzibar

The standard corporate tax rate in Zanzibar is 30%, matching mainland Tanzania. However, Zanzibar offers enhanced incentives for strategic investments:

• ZIPA-certified investments — 5–10 year tax holidays for qualifying investments in priority sectors (tourism, agriculture, manufacturing, fisheries)
• Freeport Zone (Mlale, Fumba, Maruhubi) — 0% CIT for 10 years, followed by 10% for 10 years (similar to EPZ regime)
• Hotels and resorts — reduced CIT rates for certified tourism projects (negotiated per project)
• Agriculture and agro-processing — 25% CIT rate (same as mainland)

VAT in Zanzibar

Zanzibar applies the same VAT framework as mainland Tanzania (18% standard rate, TZS 200M threshold, monthly returns), but with some local features:

• Tourism VAT — some tourism-related services enjoy VAT exemptions or zero-rating (subject to ZIPA approval)
• Hotel accommodation — may qualify for VAT-free status for the first 5 years under ZIPA incentives
• EFD requirements — same EFD system applies in Zanzibar, with TRA Zanzibar managing compliance
• Cross-border supplies — supplies between mainland Tanzania and Zanzibar are treated as domestic supplies (no customs duty, but VAT may apply)

Excise Duties in Zanzibar

Zanzibar imposes excise duties on specific goods at rates that may differ from the mainland:

• Cigarettes and tobacco — similar rates to mainland (40–50% of value)
• Alcoholic beverages — rates may vary; some local spirits and beers may have different excise treatment
• Petroleum products — same rates as mainland for petrol, diesel, and kerosene
• Sugar-sweetened beverages — excise at similar rates to mainland

Zanzibar also levies a local hotel levy and tourism service charge that are not present on the mainland.

Zanzibar Investment Promotion Authority (ZIPA)

ZIPA is the primary agency for investment promotion in Zanzibar. Certified investors may qualify for:

• Tax holidays — 5–10 years exemption from CIT
• Import duty exemptions — duty-free import of capital equipment, machinery, and raw materials
• VAT exemptions — exemption on imported capital goods and certain local supplies
• Training levy exemptions — reduced or zero Skills & Development Levy
• Employment of expatriates — facilitated work permits for foreign specialists

To qualify, investments typically require a minimum of USD 100,000 for foreign-owned projects and USD 10,000 for locally owned projects.

Property and Land in Zanzibar

Property taxes in Zanzibar follow similar rules to the mainland, but with important differences:

• Land tenure — Zanzibar has its own land laws; freehold land is available to Zanzibari citizens only
• Leasehold — non-citizens can obtain leasehold interests (up to 99 years) for tourism and investment projects
• Stamp duty — 1% of property value (same as mainland)
• Registration fee — 1% (same as mainland)
• Hotel levy — additional levy on tourism accommodation (varies by category)

FAQs

Do I need to file separate tax returns for Zanzibar and mainland?

If your business operates in both jurisdictions, TRA Zanzibar manages Zanzibar-related tax matters. You may need separate VAT registrations for Zanzibar if your business is based there.

Are Zanzibar incentives available for existing businesses?

ZIPA incentives are typically available for new investments or significant expansions. Existing businesses should consult ZIPA for expansion project eligibility.

Are imports from mainland Tanzania subject to duty in Zanzibar?

No, goods moving between mainland Tanzania and Zanzibar are not subject to customs duties as they are part of the same customs territory. VAT may apply.

Can non-citizens own property in Zanzibar?

Non-citizens cannot own freehold land but can hold leasehold interests for investment purposes with ZIPA approval. Lease periods can extend up to 99 years.

Disclaimer

This guide provides general information about Zanzibar taxation for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Tanzanian tax advisor, TRA Zanzibar, or ZIPA for advice specific to your situation. InvestmentKit does not provide tax advice.