March 30th 2025
From our Desk
Background
In August 2007 and December 2017, the government of Tanzania issued notices prohibiting domestic payments for goods and services using foreign currencies among residents of the United Republic of Tanzania. Despite of such notices, the public continued to use foreign currency in some of their transactions. As result, the Bank of Tanzania, in June 2023, issued a notice to remind the public on the restriction from using foreign currency for domestic payments of goods and service in Tanzania.
On 20th June 2023 the Governor of the Bank of Tanzania issued a public notice on directives provided by the Minister of Finance in his 2024/2025 budget speech that lead to the amendment of the Bank of Tanzania Act. The Bank of Tanzania Act was amended by the Finance Act, of 2024 that added by section 26(2) to the Act which makes it an offence for any person to transact in any other currency other than Tanzanian Shilling in Tanzania.
Enactment of Foreign Currency Usage Regulations, 2025 (GN No.198 of 2025)
On 28th March 2025, the Ministry of Finance issued Foreign Currency Usage Regulations through a Government Notice (GN) No. 198 of 2025. This is a result of amendment of The Bank of Tanzania Act. The Regulations has imposed several restrictions and conditions in using foreign currency in Tanzania in making payments for goods and services. The following are the key takeaways from the regulations:
- Pricing goods and services in Tanzania Shillings
Before the enactment of the regulations, people were pricing goods and services in foreign currency especially in US Dollars. The enactment of these regulations makes it a requirement of the law that all goods and services within Tanzania to be priced in Tanzania shillings. It is a mandatory requirement imposed by Regulation 2 of the Regulations.
- All transactions within Tanzania to be paid in Tanzania shillings
It has been a tradition for people to make choice while transacting either to pay using Tanzanian shillings or foreign currency. These Regulations make it a mandatory requirement to make payments in Tanzanian shillings for all transactions. Under the regulations, it is an offence for any person to force, assist, arrange, enable, receive, demand or advertise the use of the foreign currency in any transactions done within Tanzania.
- The transactions allowed to be done in foreign Currency
The regulations have provided for certain exceptional transactions that may be done in foreign currency. Furthermore, the Minister of Finance in consultation with the Governor of the Bank of Tanzania may make changes to the list of the exempted transactions. The exempted transactions are:
- Government contributions to reginal organizations.
- Transactions involving embassies and international organizations.
- Foreign currency loans from local financial institutions.
- Purchases from duty-free shops.
- Prohibition to enter into contracts in Foreign Currency
Except for the above exceptions, the regulations impose a mandatory requirement to parties entering into contractual relations for goods or services or both, to provide for using in Tanzanian shillings as currency of payments in discharging their contractual obligations. Furthermore, the Regulations require all existing contracts of goods and services to be executed within Tanzania whose consideration, prices or amounts are made in foreign currency have to be amended within one (1) year from the effective date of the Regulations. Thus, parties to existing contracts are required to amend their contracts and provide their consideration or prices in Tanzanian not later than 27th March, 2026. Failure to amend the contracts within the said period will lead to nullification of the contracts unless an extension is granted by the Minister of Finance.
Implications of the Regulation to individual Businesses and Business entities
The regulations brought following implications to individual businesses and business entities in Tanzania:
- Amendment of existing contracts
All existing contracts which do not provide pricing using Tanzanian shillings are to be amended unless they stand to become nullity. Therefore, entities and/individuals are required to amend their contracts by changing the consideration, prices, and amounts appearing in foreign currency to Tanzania shillings. The individuals and all business entities have to revise and convert the prices which appears in foreign currency to Tanzania shillings the parties are advised to consult their advocates while doing this.
- Using Tanzania Shillings in pricing structure
The individuals and business entities are required to be mindful that in all their transactions after the publication of these Regulations, pricing and payments should be Tanzanian shillings.
- Amendment of Existing Foreign Exchange Policies
In order to comply with the requirement of using Tanzania shillings to all transactions done within Tanzania in exception to the allowed transaction, business entities are advised to amend their existing Foreign Currency Exchange Policy in order to facilitate the use of Tanzania shillings.
- Accounting and Billing Systems has to be updated
Businesses and business entities are also advised to update the existing accounting and billing systems to facilitate the processing of all transactions, billings and payments in Tanzanian shillings.
- Change of Advertising and marketing or sales materials
The existing materials for marketing, sale and advertising that explain or insist of use of foreign currency in Tanzania or having foreign currency quotations are to be changed or removed.
- Management of potential Exchange Risks
Business entities or individuals are advised to put in place mechanisms for management of potential exchange risks through monitoring exchange rates and make sure they access their financial implications.
- Undertake financial audits to identify non-compliant contracts and transactions
Individuals and business entities are advised to undertake financial audits in order to spot or identify the contracts and transactions that do not comply with the requirement of using Tanzania shillings.
Conclusion
The new regulations mandate the use of Tanzanian Shillings for all domestic transactions except for the allowed transactions under the Regulations. The regulations are enacted in a bid by the government to strengthen Tanzanian currency and stabilize the economy.
Disclaimer: This brief is issued for general information purposes and does not in any way constitute a legal opinion by LAWHILL. LAWHILL shall not be liable for any injury and/or loss arising from relying on this brief. Should you have issues relating to the brief or any other issue, kindly contact our office for an opinion that suits your particular needs.
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