Is TRA Doing Enough to Register Informal Businesses?

The Tanzania Revenue Authority (TRA) recently announced initiatives aimed at empowering informal business operators to register, signalling a significant step toward broadening the tax base. On August 22, 2025, TRA Commissioner General, Mr. Yusuph Juma Mwenda, shared plans to open Trade Facilitation Desks in all regions and districts. The goal is clear: simplify registration processes, encourage voluntary compliance, and ultimately strengthen Tanzania’s tax revenue contribution to the national GDP.

The Current State: Informal Sector and Tax Compliance

Despite TRA’s efforts, challenges persist:

Tax revenue contribution remains below 15% of GDP, a figure low even by Sub-Saharan Africa standards.

Tax evasion continues to be widespread, particularly among informal operators.

While TRA targets compliance, particularly for foreign businesses and online services (such as Airbnb), a significant portion of the informal economy still operates outside the tax net.

Informal businesses in Tanzania ranging from small-scale retail shops, motorbike taxi operators, to online sellers form a critical component of the economy, providing employment and stimulating local markets. Yet, low registration and tax compliance mean that the government misses vital revenue needed to fund infrastructure, social programs, and industrial growth envisioned in Tanzania’s 2050 National Vision.

TRA’s Initiatives: Positive Steps

The TRA’s Trade Facilitation Desks are designed to:

• Make registration simple and accessible across all districts.
• Engage directly with business operators to understand challenges.
• Promote voluntary compliance by reducing procedural barriers.

TRA’s efforts to remind operators of online accommodations and digital businesses of upcoming registration deadlines show a proactive approach in keeping pace with modern business trends.

Gaps and Areas for Improvement

While TRA’s initiatives are commendable, several gaps remain:

1. Awareness and Education: Many informal operators are unaware of registration processes or the benefits of formalization.
2. Incentives for Registration: Voluntary compliance may increase if TRA offers tax breaks, micro-loans, or technical support for newly registered businesses.
3. Ease of Registration: Despite Trade Facilitation Desks, some operators still find bureaucracy and paperwork daunting.
4. Digital Integration: Limited use of mobile platforms and digital registration tools can discourage small operators in remote areas.

Recommendations Toward the 2050 Vision

To align TRA efforts with Tanzania’s long-term goals, the following strategies could help:

Expand Awareness Campaigns:

Launch nationwide campaigns using radio, social media, and local community leaders to explain registration benefits.

Provide Incentives for Informal Operators:

Offer reduced tax rates for the first 1–3 years for newly registered businesses.

Introduce training, access to markets, and micro-financing opportunities.

Leverage Technology for Simplified Registration:

Develop mobile and online platforms for easy registration and tax filing.

Implement user-friendly guides in local languages.

Engage Local Governments:

Work with municipalities and wards to track unregistered businesses and provide local support.

Strengthen Collaboration with the Private Sector:

Partner with organizations like TPSF to co-host workshops, seminars, and mentorship programs.

Continuous Monitoring and Feedback:

Collect feedback from informal operators regularly to identify barriers and improve TRA services.

Conclusion

TRA’s Trade Facilitation Desks and proactive engagement with business operators are steps in the right direction. However, for Tanzania to achieve its 2050 National Vision which emphasizes economic growth, industrialization, and a broadened tax base more proactive, incentive-driven, and technology-enabled strategies are essential.

Empowering informal businesses to formalize not only increases tax revenue but also strengthens entrepreneurship, encourages investment, and drives sustainable economic development.

If TRA successfully implements these recommendations, Tanzania could see a more compliant, resilient, and vibrant informal sector contributing significantly to national prosperity.