Tanzania taxman reveals strategy to address taxpayers’ concerns

Dar es Salaam. Tanzania Revenue Authority (TRA) Commissioner General Yusuph Mwenda on Thursday revealed his plan to widen the tax base and strike a balance between maintaining the revenue collection tempo and addressing taxpayers’ complaints.

Mr Mwenda, who was appointed earlier this month to succeed Mr Alphayo Kidata, came into office at a time of rising revenue collections amid complaints from taxpayers.

TRA collected Sh27.64 trillion during the 2023/24 financial year, which represented 97.67 percent of the Sh28.3 trillion target for the period.

The authority also set a new monthly collection record of Sh3.05 trillion in December 2023.

However this stellar performance has come amid a cacophony of complaints by taxpayers.

Things came to a head when traders in Tanzania’s busiest business district of Kariakoo in Dar es Salaam and a number of other areas in the country shut their shops last month, demanding that the government address their grievances as a matter of urgency.

The traders, among other demands, wanted service and government levies scrapped and that all taxes be under a single collection basket.

They were also unhappy with fines imposed for various transgressions and demanded that they be slashed to the level of penalties for traffic offences.

Additionally, they demanded that TRA stop impounding their goods and accept financial statements prepared by registered accounting professionals.

Ambassadors from ten countries – the UK, US, Netherlands, Ireland, France, Belgium, Canada, Korea, Sweden and Germany – wrote to Foreign Affairs and East African Cooperation minister January Makamba and they too pointed an accusing finger at TRA.

In their letter dated June 26, 2024, the envoys said despite an increase in the value of registered businesses from $3 billion in 2022 to $5.5 billion in 2023, investors were having problems with TRA.

According to the envoys, foreign companies have been receiving unsupported notices from TRA demanding payments backdated to up to 15 years ago.

They also accused TRA of slapping on foreign firms astronomical tax bills that are not supported by Tanzanian laws and threatening investors and the country’s partners when companies protest or file appeals. Bank accounts and company assets have also been seized without prior notice or legal recourse, according to the diplomats.

Addressing members of the business community in Dar es Salaam on Thursday, Mr Mwenda said he will ponder challenges businesspeople are grappling with and jointly work out lasting solutions.

“The ultimate goal is to facilitate ease of doing business in the country," he said.

Mr Mwenda promised that TRA will strengthen partnerships with businesspeople in the country by holding quarterly meetings with them that will enable the authority get timely feedback on any challenges.

“There are good businesspeople and others who evade taxes. There must be fairness in the way we handle them.  Also, we must work together to widen the tax base because there are currently only two million taxpayers on TRA’s database,” he said.

Mr Mwenda added that a higher degree of compliance would make it possible to convince the government to reduce value added tax from 18 percent to 16 percent as demanded by traders.

“But if I don't have the data to justify it, I will be asked how the gap will be filled. So, those who evade taxes must stop forthwith and to fulfil all their tax obligations.”

Mr Mwenda added that TRA will strengthen its customer care unit as part of efforts to promote business and increase revenue collections.

“We will also strengthen professionalism. We have competent staff, but we will do even better.”

Speaking on behalf of the business community, Tanzania Private Sector Foundation (TPSF) chairperson Angelina Ngalula asked TRA to look into the issue of tax administration, which is driving some into evading taxes.

“What’s bothering us is tax administration and some TRA employees who overstep their authority. The law is not a problem...it is clear. You can estimate tax for five years, but this persuades others to find ways of evading tax. We’re asking the government look into this matter more closely,” she said.

Ms Ngalula pointed out that to widen the tax base, the government must come up with a five-year strategic plan instead of waiting a few months before the Budget is presented, which results in tax increases in the same areas every year.

She urged TRA to improve its systems to current world standards, saying that many other countries, for instance, have moved away from requiring people to move around with receipts.