The Tanzanian government is introducing a VAT exemption on capital goods to foster industrialization as part of the Tanzania Development Vision 2025. A team of local PEP researchers sought to understand the short-term impact of the policy on households and the overall economy, and whether a partial VAT reduction would provoke the intended economic benefits without reducing government revenues too much. They found that a 10% VAT reduction on capital commodities can contribute to economic growth.
Find out more about the research methods, findings and policy recommendations in the following PEP publications:
Research team:
Country:
Tanzania
Project code:
MPIA-19971
Project link: