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Tanzania: VAT liability upheld on performance grants (court decision)

Performance grants qualify as revenue subject to VAT

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December 15, 2025

The Court of Appeal of Tanzania upheld a ruling that performance grants qualify as revenue subject to value added tax (VAT).

The case is: Mwenga Hydro Limited V. Commissioner General of TRA

The court found that a grant from the Rural Energy Agency was a revenue subsidy tied to electricity connection services, not a capital injection. Consequently, the VAT assessment on the grant was deemed valid, and the appeal was dismissed.


For more information, contact a KPMG tax professional in Tanzania:

Samwel Esupu | sesupu@kpmg.co.tz

Fabiola Ssebuyoya | fssebuyoya@kpmg.co.tz

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