Excise Duties (Alcohol, Tobacco, Petroleum Products)

Excise duties in Tanzania are taxes on specific goods, typically those considered harmful or luxury. The main excisable products are alcoholic beverages, tobacco products, petroleum fuels, and some categories of motor vehicles, as well as a few miscellaneous items (sugar sweetened beverages, etc.). These duties raise significant revenue and also serve health and environmental policy objectives by disincentivizing certain consumption.

Alcoholic Beverages

Excise tax on alcohol is levied per unit of volume, often with different rates by type and alcoholic strength:

• Beer: Tanzania charges excise on beer by volume and depending on local content. For FY2024/25:
  • Beer made from local unmalted cereals: *TZS 540 per litre​ (a lower rate to promote use of local ingredients like sorghum).
  • Other beers (made from malt): rates vary by brand/strength but examples from schedule: TZS 918 to 964 per litre for malt beer. This translates to roughly TZS 330 to 350 per standard 330ml bottle.
  • Non-alcoholic beer: *TZS 673 to 707 per litre​ (yes, even 0.0% “beers” are excised, though slightly lower than alcoholic beer).
• Wine:
  • Wine with more than 25% imported grapes or cider: *TZS 5,600 per litre​.
  • Wine made with at least 75% local fruits (grapes, banana, etc.): *TZS 200 per litre​ (very low to encourage local fruit wine industry).
  • This huge disparity incentivizes using Tanzanian grapes or fruits. E.g., a South African imported wine effectively faces a tax of TZS 4200 per 750ml bottle.
• Spirits:
  • Spirits (distilled beverages like vodka, gin, whiskey) – excise is TZS 4,386 per litre of spirit (this is for higher-strength spirits, >50% etc; schedule shows 3,978 to 4,386 per litre depending on type). So, a 750ml bottle of whiskey would carry about TZS 3,290 excise.
  • Some local traditional spirits or lower-strength liqueurs might have slightly lower rates but generally spirits are taxed heavily.
• Other fermented beverages (like traditional brews, mead) have rates but these are less common industrially.

These excises are adjusted usually in each government budget (often upward in line with inflation or health policy). Manufacturers are responsible for affixing Electronic Tax Stamps on bottles as proof excise is accounted (ETS system introduced a few years ago for track-and-trace and curbing illicit alcohol).

Tobacco Products

Tobacco is also taxed per unit:

• Cigarettes:
  • Without filter, with ≥75% local tobacco: TZS 14,936 per 1000 sticks (so TZS 298.7 per pack of 20​).
  • With filter, ≥75% local tobacco: TZS 35,310 per 1000 (TZS 706 per pack)​.
  • Other cigarettes: TZS 67,076 per 1000 (TZS 1,341.5 per pack​).
  • These steep differences reward use of Tanzanian tobacco and cheaper production (likely targeting local brands vs premium imports).
• Cut rag (tobacco filler): imported cut rag for cigarette production is at TZS 33,879 per kg, local cut rag with local tobacco is TZS 9,600 per kg. This encourages using domestic leaf.
• There’s also excise on cigars at some rate (not listed in snippet but generally high).

The strategy is similar to alcohol: high taxes but slight favour to local content.

Petroleum Products

As noted in section 11, petroleum fuels are major excise items:

• Motor spirit (gasoline): excise TZS 339 per litre (premium petrol) or TZS 379/litre (regular petrol​). [The snippet suggests two lines possibly for different grades].
• Gas Oil (diesel): *TZS 255 per litre​.
• Kerosene (Illuminating): *TZS 465 per litre.
• Jet fuel: Kerosene-type jet fuel is 0% (no excise​), as a concession to aviation.
• Furnace oil: 0% excise as well (industrial fuel).
• LPG (Liquefied Petroleum Gas): Exempt from excise (and VAT was made 0% in recent budgets to encourage clean cooking​.】.
• Lubricants: Lubricating oils: TZS 736 per cubic meter, greases TZS 0.87/kg (these are modest rates). These excises are passed to the consumer via pump prices. Combined with fuel levy, they constitute a large portion of fuel cost, as discussed.

Other Excisable Products

• Telecom services: There is an excise duty of **17% on mobile telephone services (airtime/data). This means on top of 18% VAT, phone usage is taxed an extra 17%. Essentially nearly 35% tax on telco services. This is to raise revenue from a broad base (and perhaps discourage excessive usage? though it’s more revenue-driven).
• Financial services fees: 10% excise on charges by banks and mobile money service​. This was introduced to tap into the booming mobile payments (e.g., M-Pesa fees). It increases cost of sending money.
• Sugar-sweetened beverages: The schedule shows e.g. “Waters containing added sugar or flavored” at TZS 67.1 per litre excise. This functions as a sugar tax to curb soft drink consumption (and raise revenue). Non-sugary water has a smaller excise (TZS 56 or 70.4 depending on carbonation​.
• Powder drinks and beers: interestingly, “imported powdered juice” and “imported powdered beer” have high specific rates (TZS 255.2 per litre reconstituted for juice, TZS 1,012.8 for beer​, to prevent circumventing excise by importing concentrates.
• Cement: Historically, Tanzania put excise on locally produced cement (TZS 20 per kg) – partly as a revenue measure when cement prices were low, and to fund infrastructure.
• Music and film products: There’s an excise of TZS 55 per unit on entertainment content storage (like DVDs​) less relevant in streaming era, but was meant to curb piracy and generate revenue.
• Plastic bags: As noted, 50% excise on disposable plastic bags remains in la​, though production/import of them is banned, so it’s moot.
• Cars: On top of import duty and VAT, excise on motor vehicles is applied by engine size: 0% for small cars (<=1000cc), 5% for 1001-2000cc, 10% for >2000c). And by age: additional 10-30% for older one​. So, excise duty on a 8-year old 2500cc car would be 10% (for >2000cc) + 15% (age 8-10) = 25% on CIF value, plus 25% import duty, plus 18% VAT – making imports of such cars very expensive. This tiered excise is partly for environment (discourage big engines, old cars) and partly progressive luxury tax.

Compliance and Administration of Excise

Excise duties on domestic goods are paid by producers (e.g., breweries, cigarette manufacturers) and are due monthly by the 25th following the month of production. These producers must be licensed and often operate under excise supervision (TRA officers can be posted to factories to monitor production or ensure tax stamps usage).

Imported excisable goods have excise collected at import by Customs simultaneously with import duty and VAT.

Electronic Tax Stamps (ETS): Since 2019, Tanzania rolled out ETS for cigarettes, alcohol, soda, bottled water, etc. Manufacturers must affix digital stamps which allow TRA to track production volumes and assure excise is paid. The system has increased excise collections and reduced counterfeiting.

Penalties for excise evasion are severe – including forfeiture of goods, heavy fines or imprisonment under the Excise (Management) Act.

Impact on Businesses and Consumers

Excise taxes increase the retail prices of targeted goods substantially:

• For alcohol/tobacco companies, excise is a major cost that they pass on to consumers. These industries also require compliance (tax stamps, bonded manufacturing) which raise operating costs. However, investors often still find large volumes make it profitable. It’s a stable revenue for government, so rates often rise annually roughly by inflation (5-10%).
• Fuel taxes raise transport and energy costs for all businesses. There’s no rebate mechanism (except if fuel used to generate electricity for national grid, sometimes exemption is given). So, logistics-heavy businesses need to account for this.
• Consumers face high costs for sin goods – e.g., a pack of imported premium cigarettes might cost TZS 3,000, of which ~1,350 is excise+ VAT. Similarly, a beer at a bar includes excise in its price. That’s intended to deter excessive consumption and fund health budgets.
• The structure of excise can influence business decisions: e.g., beverage companies source local raw materials to enjoy lower rates; auto importers might focus on newer, smaller-engine models which are taxed less.

Regional and Illicit Trade Considerations

High excises can lead to smuggling if neighbouring countries have significantly lower taxes. Tanzania coordinates with EAC partners to keep rates somewhat aligned, but differences exist (e.g., Tanzania’s tobacco and beer excises vs Kenya’s). TRA actively combats illicit trade in cigarettes and spirits (via joint operations and ETS technology).

Also, EAC countries are moving toward some harmonization of excise regimes, but sensitive to each’s fiscal needs.

Revisions and Trends

Each year, the finance minister announces excise rate changes. Recently:

• Tanzania has introduced excise on new categories like electronic cigarettes and nicotine liquids (in 2022 Finance Act, an excise per ml was set).
• There is talk of introducing excise on fast foods or sugary foods as a public health measure (not yet implemented, but sugary drinks are taxed which is a start).
• With inflation, the government often raises specific excises by a certain amount (so real value of tax remains or increases). However, sometimes they freeze alcohol/tobacco excises for a year to support the industry (like during COVID, to protect jobs).
• Digital services excise: Already telecom and banking services have excise. Possibly in future, some digital economy revenues (like streaming subscriptions) could face an excise or special levy beyond VAT.

Overall, excise duties form a critical component of Tanzania’s tax system. They are highly specific and targeted:

• If you invest in manufacturing or importing excisable goods, factor these taxes in pricing and ensure compliance (with stamping, licensing).
• If you’re in hospitality (selling alcohol/tobacco), note that a big chunk of your product cost is tax.
• If you’re an investor in renewable energy, note that fossil fuels your competitors use are taxed (giving you a relative advantage).
• For public finance, excises will continue to be a stable source, likely to grow each year. Tanzania balances health objectives and revenue needs, so far maintaining moderate usage growth of these goods despite taxes.

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