Dissertation (MA International Relations)This study was intended to assess the effectiveness of Fiscal Incentives on the FDI promotion in Zanzibar, using a descriptive survey design. A total 60 respondents were selected from ZRB, TRA and ZIPA. Information was collected from the respondents using focus group discussion, structured interview and documentary review and analysed by SPSS and MS-Excel. The results indicate that fiscal incentives play a great role in FDI promotion and attraction in Zanzibar. The roles of corporate tax, tax holiday and investment allowance were evidence to the promotion and attraction of FDI in the study area. On other side, the impact of fiscal incentives to (FDI) is highly agreed that FDI greatly affected the economic development of the host country since FDI provides employment opportunities, it also transfers technology to Zanzibar and Tanzania in general. FDI develops and expand the business and international trade as well as improve government revenue of Zanzibar. The study recommended that the government should make an initiative to engage experts in reviewing its economic policies regulatory regime to improve the laws on their quality and efficiency. The Tanzania investment Act should be reviewed especially on the incentives packages. There should be one major document which should be designed upon specialized consideration of factors affecting FDI taxation and come out with tax rates for all sectors. Lastly on the matter of the policy change of foreign direct investment (FDI) toward economic development of the host country, frequent policy review and amendment is needed so as to make FDI more productive to the economic development of the host country. The issues of labour regulations and time limit have been explained in this area.