Tax is an important financial payment made by a person or body of people in the bearing of the spending of public power. Taxes are significant for individuals and the nation at large. The purpose of this study was to find out the effect of the tax rate on taxpayers' voluntary compliance in Tanzania. In addressing this objective, both qualitative and quantitative research approaches were used. A cross-sectional survey research design technique was used. The study employed document review, and survey in collecting both primary data and secondary data. Besides, systematic, unsystematic random sampling and purposive sampling were used as sampling procedures in this study. The study involved a sample size of 99 respondents who are SMEs' taxpayers. The findings of the study showed that there is a negative effect of the tax rate on taxpayers' voluntary compliance. Again, the study indicates that the presence of good tax rates improves taxpayers' voluntary compliance and the tax rates influence taxpayers' voluntary compliance. Lastly, there is statistical significance between tax rates and voluntary taxpayers' compliance in Tanzania. The study recommends that the estimation calculation base should be reset in tax rate and the critical involvement or participation during formulating of tax laws and regulation is very important to improve corporate governance, especially between government and people. Consequently, tax rate and taxpayers' voluntary compliance have a negative relationship. The contribution of this study is to examine the effects of the tax rate on voluntary tax compliance as an economic variable, but most of the studies already done on the effect of the tax rate on tax compliance are based on an institutional variable, the practical implication of the result indicated that the tax rate associated with tax is very high that affect the non-tax compliance, while the social implication of the study is that high tax rate causes the government to lose revenue and hence diminishes the efforts of providing social services to the citizens.