Presumptive Tax System and its Influence on the Ways Informal Entrepreneurs Behave in Tanzania


  • Samboja Haji Hatibu Haji University of Dar es Salaam



SMEs, presumptive tax system in Tanzania, JEL Codes: H25, H26 and L26


The paper provides an analysis of how the presumptive tax system in Tanzania influenced the ways in which informal entrepreneurs behave. The established presumptive income tax system is based on solid sector and fiscal policies, and effective legal and institutional systems. Whereas the absolute increases in presumptive tax revenues and SME behaviour changes have partly been contributed by improvement of the presumptive scheme system, the study suggests that overall government reforms, tax surveys and patrols, tax severance and tax audits: all have their contributions to these achievements. However, the relative contribution of presumptive tax to total tax has been low and insignificant despite the presumptive tax reforms. Many SME firms are still outside the TRA tax net, suggesting the existence of weaknesses in the existing presumptive tax system. There is a need to intensify effective presumptive taxation reforms for SME entrepreneurs through rationalizing turnover tax regime, monitoring and controlling factors influencing behavioural patterns of SMEs, promoting segments focused on education and service to drive voluntary compliance, and improving operational efficiency.


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Author Biography

Samboja Haji Hatibu Haji, University of Dar es Salaam

Department of Economics, University of Dar es Salaam, Dar es Salaam




How to Cite

Haji, S. (2015). Presumptive Tax System and its Influence on the Ways Informal Entrepreneurs Behave in Tanzania. Tanzanian Economic Review, 5(1-2), 72–90.