INTRODUCTION
On 11th March 2025, the Minister for Finance issued the Foreign Exchange Use Regulations, 2025 (Government Notice No. 198 of 2025) which set the Government Directives on the Use of Foreign Exchange in Tanzania. Effective from 11th March 2025. The Regulations come amidst the amendment of the previous amendment of the Bank of Tanzania Act, Cap. 197 by the Finance Act, 2024 of which Section 26 of the Act was amended by creating an office for any person who transacts using any other currency other than the legal tender issued by the Central Bank (Tanzania Shillings). Hence, from 01st July 2024 onwards transacting in Tanzania using any currency other than the Tanzania Shillings is an offence. However, the said amendment required the Minister for Finance to issue regulations to clarify this matter. Hence, on 11th March 2025, the Minister for Finance thus issued the Foreign Exchange Use Regulations, 2025 for that purpose.
COMPULSORY USE OF TANZANIA SHILLINGS
The Regulations make it compulsory and mandatory for all prices of goods and services must be quoted in Tanzania Shillings (TZS) and all transactions within the country MUST be conducted using Tanzanian Shillings (TZS) only.
DEFINITION OF TRANSACTIONS
The Regulations have defined the word “transaction” to include quoting, announcing, specifying, publishing, arranging a price, or making or receiving payments for goods or services within the country.
OFFENCE TO USE OTHER CURRENCIES OTHER THAN TANZANIA SHILLINGS
The Regulations create an office for the use of any other currency other than Tanzania Shillings in Tanzania. The Regulations prohibit any person from quoting, advertising, specifying, or publishing prices for any goods or services in the country using foreign currency. Equally, the regulations prohibit any person from forcing or facilitating payments for goods or services in the country using foreign currency. Moreso, it is also an offense for any person to refuse payment in Tanzania shillings (TZS) or receive goods or services in foreign exchange.
PROHIBITION OF ENTERING CONTRACTS IN FOREIGN CURRENCY
The Regulations prohibit entering into contracts for goods or services denominated in foreign currency within Tanzania. Therefore, all contracts MUST now be concluded in Tanzanian Shillings (TZS). The regulations require all contracts with payments in foreign currency that were entered before 11th March 2025 to be revised within 1 year from the coming into force of these Regulations.
The Regulations specify that Contracts that shall not be revised to provide payment in Tanzania Shillings (TZS) within one year from 11th March 2025 shall be illegal contracts except where the Minister for Finance issues an extension of such time.
ALLOWED TRANSACTION IN FOREIGN EXCHANGE
The regulations specify the following as allowed transactions that can be conducted in Foreign Currency in Tanzania.
- Membership fees paid by the Government to regional institutions located in the country;
- Transactions involving embassies and international organizations located in the country;
- Foreign currency loans provided by Banks and financial institutions within the country, and
- Payments for goods in duty-free shops in the country.
The list above is not exhaustive. The regulations empower the Minister for Finance to add or reduce the transactions that can be done in Foreign Exchange upon prior consultation with the Governor of the Central Bank.
