1.0. INTRODUCTION

In recent years, Tanzania has witnessed a growing trend in short-term property rentals, with homeowners increasingly leasing their properties through platforms such as Airbnb, homestays, and serviced apartments. These services have made it easier for homeowners to rent out their properties, offering travellers affordable and unique lodging options that go beyond traditional hotel stays. The demand for short-term rentals in Tanzania has surged, driven by the global popularity of platforms like Airbnb, Booking.com, and similar services.

This rise in short-term rentals has significant implications for Tanzania’s tourism industry, which has traditionally relied on more conventional accommodations like hotels and lodges. Short-term rentals now serve as an essential part of the country’s tourism ecosystem, providing diverse lodging options for both tourists and business travellers. As Tanzania becomes an increasingly popular destination for tourists seeking cultural experiences, safaris, and coastal retreats, the availability of these alternative accommodations plays a pivotal role in shaping the travel experience. In particular, the flexibility and affordability of short-term rentals appeal to tourists looking for a more personalized and cost-effective stay.

For the purpose of this article, and before embarking into the further discussion of centre of this article, it is of imperative and of great importance to appreciate the meanings of the key words which are subject to this article for easy understanding as explained hereunder:

In a nutshell, “homestay” typically refers to private homes or apartments rented out temporarily for short periods to guests, often through platforms like Airbnb or similar local services.

“Airbnb” itself is an online marketplace or platform that connects property owners with travellers seeking short-term accommodations. In other words, it is said to be an online platform that connects hosts who wish to rent out their homes or rooms with travelers seeking accommodations.

“Booking.com” is an online platform where property owners, including Airbnb and short-term rental hosts, list their accommodations to attract and manage bookings from travelers around the world.

“Serviced apartments,” also referred to as serviced apartments, are professionally managed rental properties offering hotel-like amenities for short or medium stays, often catering to both business and leisure travellers. These diverse forms of rental accommodations offer an array of lodging options, from residential homes to fully equipped apartments, serving tourists, business travellers, and individuals attending non-tourism-related engagements such as conferences or work-related activities.

Additionally, many homeowners who engage in short-term rentals do so occasionally when they travel or when they have an extra unoccupied property, not as a primary business. Unlike hotels and lodges that operate on a full-time basis, these part-time landlords may not see themselves as businesses requiring formal registration. However, the lack of registration in this space poses challenges to government oversight, regulation, taxation, and fair competition within the hospitality sector, especially as Tanzania’s tourism industry grows and diversifies.

This article examines the current legal framework governing short-term rentals in Tanzania, particularly regarding homeowners who rent their properties on an occasional basis. It identifies the regulatory gaps that create uncertainty for property owners and enforcement agencies, assesses the taxation and licensing requirements for individuals engaging in short-term rentals, and compares Tanzania’s legal framework with international best practices, such as the United States’ structured approach to part-time rentals. Finally, the article will propose legal and policy recommendations to establish a clear, fair, and sustainable regulatory framework for short-term rentals in Tanzania, ensuring they align with the growth and demands of the country’s tourism sector.

2.0. THE LEGAL FRAMEWORK GOVERNING SHORT-TERM RENTALS IN TANZANIA

The Tourism Act of 2008

This is the primary law governing tourism-related businesses in Tanzania. Section 8 of the Act specifically imposes the obligation for registration of all tourism facilities with the Tourism Agency License (TALA) prior to anyone can officially commence the operation as tour operator. This requirement applies to hotels, lodges, tented camps and guesthouses, but it is unclear whether homeowners who rent out their properties for short-term stays should also be classified as tourism facilities.

One of the key questions in determining whether a short-term rental should be classified as a tourism facility and whether every person using these rentals qualify as “tourists” under the Tourism Act of 2008. Section 2 of the Act defines a tourist as someone who travels to a place outside their usual environment for more than twenty-four hours and less than a year, with a purpose other than engaging in an activity that is remunerated from within the place visited.

This definition raises an important legal issue. If someone rents a short-term property while travelling for business, should they still be classified as a tourist? The Act appears to exclude individuals who travel for work and earn income in their new location from being considered tourists. This creates uncertainty regarding whether Airbnb, homestays, and serviced apartments that primarily cater to business travellers should be subject to tourism regulations and registration requirements. If business travellers are not classified as tourists, then the properties they rent may not necessarily fall under the definition of a tourism facility. This distinction is important because it determines whether or not these short-term rentals must comply with the strict regulatory framework of the tourism industry.

Although the Tourism Act does not explicitly regulate short-term rentals, the Tanzania Tourism Licensing Authority (TALA), operating under the Ministry of Natural Resources and Tourism, has established a strict regulatory framework to ensure that all short-term rental providers register their premises. This obligation applies regardless of whether the premises qualify as traditional tourism facilities or not.

Despite the legal grey area regarding the classification of short-term rentals under the current tourism laws, these establishments are not exempt from regulatory oversight. In practice, TALA treats them as part of the broader tourism accommodation sector. As a result, the requirements and procedures for the registration of short-term rentals still fall within the scope of tourism laws and regulations.

Specifically, the Tourism (Accommodation Facility) Regulations, 2015, under Part Two, outline the steps and procedures required for the registration of a tourism accommodation facility. These include submitting an application to TALA, undergoing inspections, and meeting minimum standards regarding safety, hygiene, and service delivery. Once these conditions are fulfilled, a license may be granted, allowing the operator to legally run the accommodation facility, be it a hotel, guesthouse, lodge, or short-term rental.

THE TOURISM (FEES AND CHARGES) (AMENDMENT) REGULATIONS, 2024

The regulations introduced fees applicable to serviced apartments and homestays. However, while the regulations impose fees on these properties, they fall short of providing a clear legal or regulatory framework on how such properties should be classified, licensed, or monitored under the existing tourism regime.

In particular, serviced apartments and homestays often operate in a manner distinct from traditional hotels, lodges, or hostels and may not always provide the full range of services typically associated with recognized tourism establishments. As such, these accommodations often fall into a grey area; they are neither purely residential nor strictly commercial in the traditional tourism sense.

3.0. LEGAL FRAMEWORKS GOVERNING TAXATION OF SHORT-TERM RENTAL INCOME

With the increasing use of online platforms such as Airbnb to facilitate short-term rental operations, the Government of Tanzania has introduced a series of digital taxation laws to regulate and ensure tax compliance within the digital economy. These reforms aim to address the tax challenges posed by non-resident companies offering services to Tanzanian consumers without having a physical presence in the country.

A major milestone in this digital tax regime is the inclusion of Section 90A in the Income Tax Act [Cap. 332 R.E. 2019], introduced through the Finance Act, 2022. This section provides that:

(1) Where a non-resident person receives a payment that has a source in the United Republic from an individual, other than a payment made in the course of conducting business, in respect of services rendered through a digital market place, such person shall pay income tax for payments received in a calendar month by way of single instalment equal to two percent of the gross payment

(2) A person referred to under subsection (1) shall be liable to pay income tax by filing a return to the Commissioner on or before the seventh day of the month following the month to which the payment relates.

This means that foreign platforms like Airbnb, when receiving payments from Tanzanian individuals for services offered through their digital marketplace, are liable to pay Digital Services Tax (DST) at a rate of 2% of the gross revenue. This is regardless of whether the platform has a physical office in the country or not.

To implement these provisions, the Income Tax (Registration of Non-Resident Electronic Service Providers) Regulations, 2022, were enacted. These regulations impose a legal duty on foreign companies providing digital services to Tanzanian individuals to register with the TRA.

Under Regulation 4(1) require a non-resident person who provides electronic services to a resident individual as defined under section 90A (1) to apply for registration with the Commissioner General.

Upon satisfactory review, the Commissioner will issue the applicant with a Taxpayer Identification Number (TIN), which is required for return filings and tax payments (Regulation 4(4)). Furthermore, providers who were already supplying electronic services in Mainland Tanzania before the regulations came into force were given a grace period of six months to comply with the registration requirement (Regulation 4(7).

The regulations also clarify the source of income for digital transactions. Under Regulation 5(1) which provide that

 A payment for electronic services shall be deemed to have a source in the United Republic, where the recipient of the service is in the United Republic.

This provision ensures that any digital service consumed by a resident of Tanzania regardless of the location of the service provider is considered Tanzanian-source income and is therefore subject to Tanzanian tax laws.

Alongside income tax, the Finance Act, 2022 introduced critical amendments to the Value Added Tax Act [Cap. 148 R.E. 2019], expanding the definition of “business” to cover activities carried out through digital platforms.

Section 51 of the VAT Act now defines “electronic services” broadly to include Any services provided or delivered via the internet.

This categorization formally brings platforms like Airbnb within the scope of VAT obligations. As a result, non-resident electronic service providers are required to register for VAT in Tanzania, even if they do not appoint a local tax representative.

The newly introduced Section 37A of the VAT Act, along with the VAT (Registration of Non-Resident Electronic Service Providers) Regulations, GN No. 478Q of 2022, stipulates that:

• Foreign providers of electronic services must apply for VAT registration with the TRA.
• VAT is charged at the standard rate of 18%.
• Input tax deductions are not permitted, simplifying the compliance framework for foreign companies.

Upon registration, the provider is issued with a VAT Registration Number (VRN) and is required to file monthly VAT returns and remit tax payments on the revenue earned from Tanzanian residents.

It is important to note that tax compliance does not end with the platform. Individual property owners who list their properties on Airbnb and earn rental income in Tanzania also have separate tax obligations under Tanzanian law. These include:

• Registering for a TIN with the TRA;
• Declaring rental income in their annual tax returns; and
• If their annual income exceeds the VAT registration threshold, they must register for VAT and charge 18% VAT on their rental charges.

Crucially, compliance by Airbnb as a digital platform does not exempt individual hosts from fulfilling their own tax responsibilities. Failure to comply may result in penalties and interest, as provided under Section 87 of the VAT Act.

However, while the legal framework is in place, challenges remain in terms of enforcement, capacity, and taxpayer awareness. Many property owners and small-scale hosts remain unaware of their obligations under the new laws, pointing to the need for continued sensitization, outreach, and policy refinement.

4.0. COMPARATIVE ANALYSIS OF SHORT-TERM RENTAL REGULATIONS IN OTHER JURISDICTIONS:

The regulation of short-term rentals has become an increasingly critical issue for the tourism industry around the world, particularly in tourist-heavy regions. A key point of differentiation in the regulatory frameworks governing this sector can be found in the San Francisco Short-Term Rental Ordinance and Tanzania’s legal framework. While San Francisco has developed a clear, detailed approach to the regulation of short-term rentals, Tanzania continues to operate with a more fragmented and less defined regulatory system, particularly when it comes to business-related stays.

San Francisco’s Short-Term Rental Ordinance offers a comprehensive legal framework that defines “Tourist or Transient Use” in a way that regulates both tourism-related and business-related short-term rentals. According to the ordinance, Tourist or Transient Use refers to:

“Any use of a Residential Unit for occupancy for less than a 30-day term of tenancy, or occupancy for less than 30 days of a Residential Unit leased or owned by a Business Entity, whether on a short-term or long-term basis, including any occupancy by employees or guests of a Business Entity for less than 30 days where payment for the Residential Unit is contracted for or paid by the Business Entity.”

This definition explicitly includes both individuals visiting for tourism purposes and those visiting for business activities. It clarifies that any residential unit used for short-term stays (i.e., less than 30 days) by both tourists and business travellers must comply with the city’s registration requirements. The inclusion of business entities and their employees or guests under this definition ensures that even business-related stays are treated with the same regulatory standards as tourism-related stays, establishing a unified framework for all short-term rentals, regardless of the purpose of the stay.

By incorporating both types of travellers under the same regulatory structure, San Francisco’s ordinance ensures that all short-term rentals, whether for tourism or business, are held to consistent standards. These standards include registration, tax compliance, and safety regulations, all of which are monitored and enforced by the Office of Short-Term Residential Rental Administration and Enforcement.

In addition to regulating the use of residential units for tourist or transient use, the San Francisco Short-Term Rental Ordinance also defines the role of Hosting Platforms within the short-term rental ecosystem. A Hosting Platform is defined as:

“A person or entity that participates in the short-term rental business by providing, and collecting or receiving a fee for, Booking Services through which an Owner may offer a Residential Unit for Tourist or Transient Use. Hosting Platforms usually, though not necessarily, provide Booking Services through an online platform that allows an Owner to advertise the Residential Unit through a website provided by the Hosting Platform and the Hosting Platform conducts a transaction by which potential tourist or transient users arrange Tourist or Transient Use and payment, whether the tourist or transient pays rent directly to the Owner or to the Hosting Platform.”

This definition expands the regulatory scope to include digital platforms such as Airbnb and other online services that facilitate short-term rentals. These platforms not only provide a medium for property owners to advertise and rent their units but also serve as intermediaries for payment transactions. Importantly, Hosting Platforms are subject to the same regulatory oversight as property owners, ensuring they comply with registration, tax obligations, and other local regulations.

By including Hosting Platforms in the legal framework, San Francisco ensures that these entities, which play a significant role in the short-term rental market, are held accountable for ensuring that property owners comply with the same rules. This creates a more transparent, regulated system where both property owners and the platforms they use are responsible for adhering to the city’s short-term rental laws.

5.0. CONCLUSION AND RECOMMENDATION

In conclusion, the rise of short-term rentals in Tanzania presents both opportunities and challenges for the tourism sector. While these alternative accommodation options offer greater flexibility and affordability to tourists and business travellers alike, they also highlight significant gaps in the country’s regulatory framework. Tanzania’s legal system, particularly through the Tourism Act of 2008, lacks clear provisions for regulating short-term rentals, especially those used by business travellers. This creates uncertainty for property owners and enforcement agencies, leading to challenges in ensuring proper taxation, registration, and compliance with tourism standards.

To ensure the sustainable growth of the short-term rental market and promote a more organized tourism sector in Tanzania, it is recommended that the government clearly define and implement specific registration requirements for all types of accommodation, including short-term rentals such as Airbnb, homestays, and serviced apartments. Tanzania should enact a separate law that only deals with short-term rentals, thus providing clarity for property owners and ensuring that the industry remains accountable. A clear and comprehensive regulatory framework will not only foster fair competition but also enhance the safety and security of guests, which is crucial in maintaining the integrity of Tanzania’s tourism sector.

While the law is still as it stands, the Ministry of Tourism has emphasized that the current framework covers all accommodation facilities, including short-term rentals like Airbnb, serviced apartments, and homestay. Therefore, operators in these sectors should register their properties. Failure to do so may have negative consequences, as visitors are often reluctant to book non-registered accommodations due to security concerns.

Additionally, as the government conducts an inventory of available lodging options to facilitate tourists and visitors arriving in Tanzania, only registered facilities are likely to be considered. It is, therefore, in the best interest of short-term rental operators to comply with the registration requirements to remain competitive and accessible to potential guests, ensuring they are included in the official accommodation inventory moving forward.

AUTHORS

Benedict Ishabakaki, Executive Partner

Kasimu Mussa Ititi, Associate

Anna Oscar Kitindi, Associate Trainee