Tax disputes with the Tanzania Revenue Authority (TRA) can create substantial financial and operational pressure for businesses. Disputed assessments may involve corporate income tax, value added tax (VAT), withholding tax, transfer pricing adjustments, customs duties and other tax liabilities.
For companies facing significant assessments, the consequences can extend beyond the disputed tax itself. Interest, penalties, tax deposits, management costs and uncertainty over the final outcome can affect cash flow, investment decisions and business operations.
Tanzania’s tax legislation provides several mechanisms for resolving disputes, including administrative objections, proposals for settlement and amicable settlement proceedings before the Tax Revenue Appeals Board (TRAB) and Tax Revenue Appeals Tribunal (TRAT).
The Finance Act, 2025 introduced important clarifications to the objection process, while the Finance Act, 2026 extended the statutory period for amicable settlement of appeals.
This guide explains the available procedures, the applicable legal framework and practical considerations for businesses seeking to resolve tax disputes in Tanzania.
Understanding the Legal Framework for TRA Tax Dispute Resolution
Tax disputes involving the TRA are principally governed by the following legislation:
- Tax Administration Act, Cap. 438, R.E. 2023: Provides the administrative framework for tax objections, objection decisions, interest, penalties and tax recovery.
- Tax Revenue Appeals Act, Cap. 408, R.E. 2023: Establishes TRAB and TRAT and governs the appeal process and amicable settlement of tax disputes.
- Finance Act, 2025: Introduced amendments clarifying the admission and determination of tax objections, including the legal consequences of a taxpayer failing to respond to a proposal for settlement.
- Finance Act, 2026: Amended the amicable settlement procedure under section 23 of the Tax Revenue Appeals Act, extending the settlement period to 90 days, with a possible extension of up to 30 days.
These laws should be read together when assessing a taxpayer’s options.
The statutory references in this article use the Revised Edition 2023 numbering, as amended by subsequent Finance Acts.
1. Administrative Settlement During the TRA Objection Process
One of the earliest opportunities to resolve a tax dispute arises during the administrative objection process.
Under section 62 of the Tax Administration Act, a taxpayer aggrieved by a tax decision may lodge an objection with the Commissioner General within 30 days from the date the tax decision is served.
An objection must be in writing, identify the grounds of disagreement and include the supporting documents and information relied upon by the taxpayer.
The Tax Deposit Requirement
Where an objection concerns a tax assessment or notice of liability to pay tax, the taxpayer is generally required to pay, within 30 days, the higher of:
- The amount of tax not in dispute; or
- One-third of the assessed tax.
The Commissioner General may waive or reduce the required payment where there are good reasons.
This requirement is particularly important for businesses challenging substantial assessments because failure to satisfy the applicable payment requirement may result in the assessment being confirmed as final.
The taxpayer should therefore assess the disputed amount, supporting evidence and eligibility for a waiver or reduction before the objection deadline expires.
The TRA Proposal for Settlement
Under section 63 of the Tax Administration Act, the Commissioner General may issue a notice setting out an intention to amend an assessment or refuse to amend it, together with the reasons for that position.
The taxpayer is generally required to submit written representations within 30 days of receiving the notice.
This stage provides an opportunity to challenge the proposed treatment, clarify disputed facts, provide additional evidence and explain the legal basis of the taxpayer’s position.
The Finance Act, 2025 introduced important consequences where the taxpayer fails to respond within the prescribed period.
Where the taxpayer fails to make the required submission within the 30-day period, the notice may be treated as an objection decision, giving the taxpayer a right of appeal to TRAB.
Similarly, where the Commissioner General issues the relevant notice but fails to issue a final determination within the statutory six-month period, the notice may be treated as the objection decision.
Practical implication: A TRA proposal should never be treated as an informal communication that can safely be ignored. It may have direct consequences for the taxpayer’s appeal rights and deadlines.
2. Appealing a TRA Objection Decision to TRAB
Where the taxpayer is dissatisfied with an objection decision, the next stage is an appeal to the Tax Revenue Appeals Board.
TRAB has original jurisdiction over civil disputes arising from revenue laws administered by the TRA.
Under section 17 of the Tax Revenue Appeals Act, the taxpayer must generally:
- Serve a notice of appeal on the Commissioner General within 30 days after service of the relevant objection decision; and
- Lodge the appeal with TRAB within 45 days after service of the objection decision.
The appeal should clearly identify the disputed issues and be supported by the relevant assessment, objection, objection decision and supporting documentation.
Depending on the dispute, the evidence may include:
- Financial statements and accounting records;
- Tax returns and tax computations;
- Invoices and payment records;
- Contracts and commercial agreements;
- Customs and import documentation;
- Transfer pricing documentation;
- Correspondence with the TRA;
- Technical and expert reports.
The taxpayer carries the burden of proving that the assessment or decision being challenged is excessive or erroneous.
This makes the quality of the documentary evidence and the legal and technical arguments particularly important.
3. Amicable Settlement of Tax Appeals at TRAB and TRAT
Tanzania’s tax appeal framework allows parties to resolve disputes amicably while an appeal is pending before TRAB or TRAT.
The statutory framework was introduced through amendments to the Tax Revenue Appeals Act under the Finance Act, 2021.
Importantly, the legislation uses the expression amicable settlement, rather than treating the procedure as a conventional independent mediation process.
Under section 23(7), a party may apply for an appeal to be settled amicably at any stage before judgment is delivered by the Board or Tribunal.
The process requires the participation and agreement of the parties. It is not a unilateral right to compel the TRA to accept a proposed reduction.
The 2026 Amendment: Settlement Period Extended to 90 Days
The Finance Act, 2026 amended section 23 of the Tax Revenue Appeals Act.
The amendment replaced the previous 60-day settlement period with a 90-day period.
It also introduced an important procedural requirement: the Board or Tribunal is to issue the relevant order after the parties have confirmed their acceptance for the appeal to be subjected to the amicable settlement process.
Where the parties have not finalised the settlement within 90 days, the Board or Tribunal may, upon application by a party and for good reasons, grant an extension not exceeding 30 days.
The updated framework therefore provides:
- Initial amicable settlement period: 90 days;
- Possible extension: Up to 30 additional days;
- Extension: Subject to an application and sufficient reasons;
- Acceptance: Both parties must confirm their acceptance of the amicable settlement process.
These amendments took effect on 1 July 2026.
Recording a Successful Settlement
Where the parties reach an agreement, they must submit a written settlement agreement signed by both parties.
Under section 23(8), the Board or Tribunal issues a final order in respect of the amicable settlement.
The order is legally significant because section 25(3) of the Tax Revenue Appeals Act provides that an order of the Board or Tribunal is enforceable and executed as if it were an order issued by a court of law.
The Act also prevents the Board or Tribunal from entertaining an issue that has already been settled amicably under the relevant provision.
This makes it essential to ensure that the settlement agreement accurately identifies the disputed issues and the obligations accepted by each party.
4. Direct Negotiations Between the Taxpayer and TRA
Apart from the formal objection and appellate settlement procedures, taxpayers may engage the TRA in discussions aimed at resolving disagreements.
Such discussions may be useful in clarifying technical issues, reconciling tax computations, identifying missing documents and exploring whether the parties can narrow the scope of a dispute.
However, informal negotiations should not be confused with a legally completed settlement.
A meeting, email exchange or verbal assurance does not automatically cancel an assessment or extinguish an outstanding tax liability.
Where negotiations produce an agreement, the parties should ensure that it is implemented through the appropriate statutory procedure, including a final objection decision, adjusted assessment or formal settlement order where applicable.
Taxpayers should also ensure that any agreed payment arrangements and tax adjustments are properly documented.
5. What Should a Proper Tax Settlement Agreement Contain?
A settlement should provide certainty about the matters resolved and the obligations remaining.
For high-value commercial tax disputes, the following matters should be addressed.
Identification of the Parties
The agreement should identify the taxpayer, the TRA and the officers or representatives authorised to execute the agreement.
Scope of the Dispute
The agreement should specify:
- The relevant years of income or tax periods;
- The applicable tax heads;
- The assessment and objection reference numbers;
- The disputed items;
- The amounts agreed and any amounts remaining disputed.
Agreed Tax Liability
The agreement should clearly state the final amount of principal tax payable, the payment dates and any instalment arrangements formally approved.
Interest and Penalties
The agreement should identify how interest and penalties are treated and whether a separate remission application is required.
Taxpayers should not assume that agreeing on the principal tax automatically cancels all interest and penalties.
Implementation and Closure
The agreement should explain the steps required to implement the settlement, including any revised assessment, payment reconciliation, withdrawal of the relevant appeal and final order by TRAB or TRAT.
It should also identify any matters that remain outside the settlement.
Finality
The agreement should state the matters resolved and the legal effect of the final order.
A taxpayer should not rely solely on a general statement that the dispute is fully settled without checking the wording and legal effect of the relevant documents.
6. Tax Interest and Penalty Remission in Tanzania
Interest and penalties can significantly increase the financial exposure arising from a tax dispute.
Under section 87 of the Tax Administration Act, interest is payable on tax remaining unpaid after the prescribed due date.
The interest is calculated at the statutory rate and compounded monthly.
The statutory rate is defined by reference to the prevailing discount rate determined by the Bank of Tanzania. It is therefore incorrect to assume that the applicable tax interest rate is automatically the Bank of Tanzania discount rate plus five percentage points.
The applicable rate should be verified for the relevant calculation period.
Can TRA Remit Interest and Penalties?
Section 81 of the Tax Administration Act gives the Commissioner General power to remit the whole or part of interest or penalties where satisfied that there is good cause.
A taxpayer seeking remission should prepare a properly supported application explaining the circumstances and grounds for the request.
Supporting documents may include:
- Evidence of the circumstances causing the delay;
- Relevant payment records;
- Correspondence with the TRA;
- Evidence of compliance efforts;
- Financial and operational information relevant to the application.
However, an important limitation appears under section 87(4): interest payable under the section is not affected or waived merely because of delay arising from court proceedings or another dispute resolution process.
Consequently, taxpayers should not assume that interest will stop accumulating simply because an objection or appeal is pending.
The principal tax, interest and penalty components should be separately analysed when preparing a settlement strategy.
7. When Should a Business Consider Settlement Rather Than Litigation?
Settlement can be commercially attractive, but it is not automatically the best option in every tax dispute.
The decision should be based on the legal merits, financial exposure, evidence and wider business consequences.
Circumstances Where Settlement May Be Appropriate
A settlement may be worth considering where:
- The legal position is uncertain or involves competing interpretations;
- The taxpayer has incomplete or inconsistent supporting records;
- The cost of continuing the dispute is disproportionate to the potential benefit;
- The dispute creates significant cash-flow or operational pressure;
- A reasonable settlement would provide meaningful financial certainty;
- The parties can agree on a practical payment arrangement.
Circumstances Where Litigation May Be Preferable
Litigation may be more appropriate where:
- The assessment is clearly inconsistent with the applicable law;
- The taxpayer has strong documentary and technical evidence;
- The disputed issue is likely to recur in future tax periods;
- The case raises an important legal interpretation requiring judicial determination;
- The proposed settlement offers little or no commercial benefit;
- The taxpayer has a strong basis for challenging the assessment before the appellate authorities.
A decision to settle should therefore follow a proper comparison between the expected financial outcome of settlement and the likely outcome of continued proceedings.
8. A Practical Strategy for High-Value TRA Tax Disputes
Businesses facing significant tax assessments should approach the dispute through a structured process.
Step 1: Review the assessment
Identify the tax periods, tax heads, principal tax, interest, penalties and legal grounds relied upon by the TRA.
Step 2: Assess the objection requirements
Confirm the objection deadline, applicable tax deposit, possible waiver or reduction and supporting documentation.
Step 3: Prepare the technical case
Review the accounting records, contracts, invoices, tax returns, legal provisions and relevant supporting evidence.
Step 4: Evaluate settlement opportunities
Determine whether the dispute can be resolved during the administrative objection process or whether an appeal and subsequent amicable settlement application should be considered.
Step 5: Quantify the commercial exposure
Prepare a comparison of the original assessment, the taxpayer’s position, the potential settlement amount, interest, penalties and litigation costs.
Step 6: Document the agreement
Ensure that any settlement is recorded in the appropriate written instrument and approved through the applicable statutory process.
Step 7: Monitor implementation
Confirm that payments, revised assessments, final orders and tax account reconciliations are completed.
9. The Role of Professional Support in TRA Tax Disputes
High-value tax disputes require careful coordination between tax, accounting, financial and legal professionals.
A company should not base its settlement decision solely on the amount proposed by the TRA. The underlying tax law, supporting evidence, financial exposure and potential consequences for future tax periods should all be considered.
GERPAT Solutions Limited is a Tanzania and Zanzibar business advisory and regulatory compliance firm supporting businesses with corporate compliance, tax registration, licensing, investment procedures and regulatory coordination.
For businesses facing TRA-related compliance or administrative challenges, GERPAT Solutions can assist with:
- Tax compliance documentation and administrative coordination;
- Review and organisation of supporting corporate and financial records;
- Coordination of tax registration and compliance procedures;
- Preparation and organisation of documentation for engagement with the relevant authorities;
- Coordination with appropriately qualified tax consultants, accountants and advocates where specialist tax representation or legal advice is required.
Formal tax opinions, reserved legal services and representation requiring an appropriately qualified professional should be undertaken by the relevant authorised practitioner.
Frequently Asked Questions About TRA Tax Dispute Resolution
How long does a taxpayer have to object to a TRA assessment?
Generally, a taxpayer has 30 days from the date of service of the relevant tax decision to lodge an objection under section 62 of the Tax Administration Act, subject to the applicable extension provisions.
Is a one-third tax deposit required before an objection is admitted?
For objections relating to an assessment or notice of liability to pay tax, the taxpayer is generally required to pay the higher of the undisputed tax or one-third of the assessed tax within 30 days. The Commissioner General may waive or reduce the amount where good reasons exist.
What happens if a taxpayer does not respond to a TRA proposal for settlement?
Under the amendments introduced by the Finance Act, 2025, failure to make the required submission within the prescribed 30-day period may result in the proposal notice being treated as an objection decision. The taxpayer retains the applicable right of appeal.
Can a taxpayer settle a tax dispute after filing an appeal?
Yes. Section 23(7) of the Tax Revenue Appeals Act allows a party to apply for an appeal to be settled amicably at any stage before judgment is delivered.
How long does amicable settlement take in 2026?
Under the Finance Act, 2026, the initial statutory period is 90 days. The Board or Tribunal may grant an extension not exceeding 30 additional days upon application by a party and for good reasons.
Does a settlement agreement have the force of a court order?
A written settlement agreement signed by both parties is submitted to the Board or Tribunal, which issues a final order. Under section 25(3) of the Tax Revenue Appeals Act, such an order is enforceable as if it were an order issued by a court of law.
Does interest stop accumulating while a tax dispute is pending?
Not automatically. Section 87 of the Tax Administration Act provides for interest on unpaid tax, compounded monthly. Section 87(4) also provides that interest is not affected or waived merely because of delay caused by court proceedings or another dispute resolution process.
Can the TRA remit penalties and interest?
The Commissioner General may remit the whole or part of interest or penalties where good cause is established under section 81 of the Tax Administration Act. Each application should be supported by appropriate evidence and assessed against the applicable statutory restrictions.
Conclusion: Make an Informed Decision Before Settling a TRA Tax Dispute
Tax disputes can have significant financial consequences for businesses operating in Tanzania. The administrative objection process, appellate proceedings and statutory amicable settlement mechanism provide different opportunities to resolve disagreements with the TRA.
The Finance Act, 2025 strengthened the consequences associated with proposal notices during the objection process, while the Finance Act, 2026 extended the amicable settlement period to 90 days, with a possible further extension of up to 30 days.
Businesses should therefore manage tax dispute deadlines carefully, maintain strong supporting documentation and evaluate settlement proposals against their legal and commercial position.
A properly documented and legally effective settlement can provide certainty, but an unfavourable agreement may create unnecessary financial exposure.
GERPAT Solutions supports businesses with regulatory compliance, tax administration coordination and corporate advisory services in Tanzania and Zanzibar.
Reach to out Team at www.gerpatsolutions.co.tz , info@gerpatsolutions.co.tz, +255 742 816 955
Disclaimer: This article is intended for general business and regulatory information and does not constitute tax advice, a legal opinion or a guarantee of any settlement outcome. Tax disputes must be assessed individually under the applicable legislation and current procedures. Taxpayers should consult appropriately qualified tax professionals, accountants or advocates before taking action.