This article, prepared by LILAC, provides an analysis of the tax incentives available to companies licensed as Export Processing Zones (EPZs) under the new Investment and Special Economic Zones (ISEZ) Act, 2025.
This new law, currently only available in the Swahili language, introduces key changes to simplify and speed up investment processes while ensuring greater transparency and coordination in managing Special Economic Zones (SEZs).
LILAC is a leading audit, accounting, and advisory service company in Tanzania, specializing in business facilitation, tax advisory, and investment support services. This article was prepared under the guidance of Ms. Zawadia Nanyaro, the founder of LILAC and an expert with over 10 years of experience in investment promotion and facilitation in Tanzania.
Introduction
The new Investment and Special Economic Zones (ISEZ) Act provides a wide list of incentives for EPZs. However, at the time of writing, not all ISEZ Act incentives appear in the tax laws, thus making them inaccessible. They become accessible when the tax laws are amended to accommodate them.
Note: In Tanzania, a tax incentive can only be accessed if it is explicitly provided for in the relevant tax law, and it will be implemented strictly in accordance with that law—not based on provisions in the investment law.
These incentives are provided by the Tanzania Investment and Special Economic Zones Authority (TISEZA), the Government’s central institution for promoting, coordinating, and facilitating investment, as well as developing and regulating Special Economic Zones (SEZs).
Summary of Incentives
| Exemption | Accessibility | Comments | |
| 1 | Corporate Tax exemption for an initial period of 10 years | Accessible | The exemption is available Provided that exports outside Tanzania are 100% (Income Tax Act), exports outside EAC are 80% or above (ISEZ Act). Our interpretation of this is that 20% can be offloaded within EAC but not in Tanzania. |
| 2 | Exemption on customs duty, VAT and other taxes on capital goods and raw materials | Both Import Duty and VAT are Accessible | Import duty exemptions in the tax laws is broader than in ISEZ. EPZ Companies enjoy 100% exemption, no negative list, there is no limit in the number of years, includes other items beyond capital goods and raw materials. VAT exemption in the VAT Act is on both goods and services as long as they relate to production/are cost of goods sold. Excludes spare parts, motor vehicles and consumables – this you can apply for VAT refund. |
| 3 | Withholding tax exemption on rent, dividends, and interest for the first 10 years | Not accessible | Not in the income tax Act |
| 4 | Withholding tax exemption on foreign interest | Not accessible | Not in the income tax Act |
| 5 | Exemption of taxes and levies charged by local government authorities for 10 years | Accessible | Accessible |
| 6 | Exemption on import duty & VAT on 1 administrative car, ambulances, fire fighting equipment and 2 buses | Accessible except VAT on the car | VAT on motor vehicle is not accessible |
| 7 | VAT exemption on utilities (water, power and gas) | Accessible | There are challenges on the procedure to access it, i.e. on on getting invoices with zero VAT, hence the accessibility is not that smooth |
| 8 | Business visa on entry for employees for 2 months | To be confirmed | To be confirmed |
| 9 | Treatment of goods into the SEZs as transit cargo | Embedded in customs systems. | Embedded in customs systems. |
| 10 | Exemption on port charges | To be confirmed | Previously in the EPZ act the exemption was on VAT for wharfage – we do not see how wharfage can be exempted |
| 11 | Exemption on stamp duty | Accessible | Accessible |
| 12 | VAT exemption on construction materials | Accessible | Accessible |
Regulatory Framework
The ISEZ Act has merged the Tanzania Investment Centre (TIC) and Export Processing Zones Authority (EPZA) to form the Tanzania Investment and Special Economic Zones Authority (TISEZA). The new regulations are expected to streamline investment facilitation services in Tanzania.
At the time of writing, the ISEZ regulations have not yet been issued. Once published, they are expected to provide clarity on EPZ procedures.
Applicable Tax Law
- From 1st July 2025, EPZs are administered under the Investment and Special Economic Zones (ISEZ) Act No. 6 of 2025. This law was enacted in February 2025.
- Prior to 1st July 2025, EPZs were being administered by the Export Processing Zones Act R.E 2012.
- All the previous Acts have been repealed, i.e, the TIC’s Investment Act, the EPZ Act, and the SEZ Act.
- The new ISEZ Act has merged the two entities—the Tanzania Investment Centre (TIC) and the Export Processing Zones Authority (EPZA) to establish a unified entity—the Tanzania Investment and Special Economic Zones Authority (TISEZA).
- The Finance Act for 2025 has made some changes to the Investment and Special Economic Zones Act 2025 hence the two must be read together.
- The Investment and Special Economic Zones Regulations, which are yet to be developed, will provide detailed legal procedures for investments under the ISEZ Act.
Legal Instruments
These remain as before. EPZs are provided with business licenses (and not a certificate of incentive as with TIC). The license types are:
- EPZ Developers License – given for 2 years to Develop infrastructure and set up machinery
- EPZ Operator License – an annual license during project operations.
The License serves as a business license, and no separate business license is required unless the business operates in a regulated sector such as medical, telecommunications, tourism, or mining.
All EPZ/SEZ land is gazetted in the Government Gazette as such. This gazettement grants these areas a special legal status for customs purposes. EPZs are legally considered to be outside the customs territory—that is, outside the East African region. Due to this status:
- Some Goods entering an EPZ area are duty-free.
- Goods produced in EPZs and sold in the customs territory, including in Tanzania, must undergo the customs clearance process and are subject to VAT and import duty.
- Shipment inspection can be done at the EPZ area.
Fees
The former EPZA issued the below fees for varius facilitation services. These may change now with TISEZA in place.
Table 1: License Fees
| S/N | Item | Fees (USD) |
|---|---|---|
| 1 | Operator license | USD 2,000 per annum |
| 2 | Developer license | USD 6,000 payable once |
Table 2: Facilitation Fees
| S/N | Item | Fees (USD) |
|---|---|---|
| 1 | Facilitation fee on all imports | USD 100 for import duty & 5% of approved VAT exempted |
| 2 | Facilitation fee for local purchase | 5% of the approved VAT exempted |
Table 3: Transfers and Sublease Fees
| S/N | Item | Fees (USD) |
|---|---|---|
| 1 | Land transfer fee | 10% of the transfer fee payable to Ministry of Land and Human Settlement |
| 2 | Capital gain tax (fee) on property transfer | 5% of the amount gained |
| 3 | Lease, including under-lease or sublease and agreement to let or sublet | 1% of annual lease rent paid by sub-lessee |
Table 4: Mortgage Consent
| S/N | Amounts Borrowed (USD) | Consent Fee (USD) |
|---|---|---|
| 1 | Below 100,000 | USD 1,000 |
| 2 | 100,000 – 500,000 | USD 1,500 |
| 3 | 500,001 – 1,000,000 | USD 2,500 |
| 4 | Above 1,000,000 | USD 5,000 |
Table 5: Fees for Alteration of Licensed Activities
| S/N | Amendments and Alterations | Fees (USD) |
|---|---|---|
| 1 | Change of Company Name | USD 300 |
| 2 | Change or alteration of operating location | USD 300 |
| 3 | Additional activity on operating license | USD 300 |
Table 6: Customs and Bond Services Fees
| S/N | Details | Fees (USD) |
|---|---|---|
| 1 | Pre-shipment customs inspection | USD 100 per inspection |
| 2 | On-site customs inspection | USD 100 per inspection |
| 3 | Permit to offload within the customs territory | USD 500 |
| 4 | Permit to localize sample goods | USD 200 |
Table 7: Construction Permit Fees
| S/N | Item | Fees (USD) |
|---|---|---|
| 1 | Planning consent | USD 300 |
| 2 | Building permit | USD 220 for up to 1,000 square meters, and USD 5 for every additional 100 square meters |
| 3 | Occupancy permit fee | USD 100 |
Table 8: Derivative Rights (DR) Fees
| S/N | Item | Fees (USD) |
|---|---|---|
| 1 | On first registration and issue of DR | 10% of the cost payable to the Ministry of Land and Human Settlement for processing of land ownership |
| 2 | Annual fee | Annual land rent as assessed by Commissioner of Land plus 10% thereof to cover EPZA administration costs |
There are also several penalties for non-compliance.
However, with TISEZA now in place, perhaps these fees and penalties will no longer apply or will be revised.
Conclusion
Tanzania’s EPZ schemes offer compelling tax and non-tax incentives, making them vital tools for fostering investment across diverse industries. From tax holidays to import duty exemptions and capital allowances, these programs provide a wealth of opportunities for local and foreign investors.
Navigating the processes to obtain these benefits can be complex without expert guidance. LILAC is uniquely positioned to assist investors at every stage. With a deep understanding of the Tanzanian business environment, LILAC helps businesses from initial entity incorporation in Tanzania through to securing TISEZA approvals, ensuring a seamless process and compliance with all regulations.
Contacts
For further guidance, contact LILAC on WhatsApp: +255 738 726 111 / +255 764 266 009 email: info@lilac.co.tz, website: www.lilac.co.tz.
