Tax evasion crackdown targets Zanzibar businesses

Unguja. The failure to issue electronic receipts has been identified as a tactic used by Zanzibar business owners to avoid fulfilling their tax obligations.

A special team, led by the Minister for Finance and Planning, Dr Saada Mkuya, and the Zanzibar Revenue Authority (ZRA), uncovered this issue during an operation on March 5, 2025.

The operation, which targeted various shops in the Mlandege area, revealed that, apart from the legal obligation to issue receipts and display clear product prices, some business owners have not complied.

This, they claimed, was part of a strategy to conceal their failure to issue receipts.

Dr Mkuya said after the operation that despite previous efforts to educate businesses, the next step would be to enforce the law against violators.

“We continue providing education, but the next step will be enforcing the tax laws, as many shops were found in violation during the operation,” she said.

She emphasised that the government would uphold tax laws, warning that both businesses refusing to issue receipts and customers failing to demand them would face consequences.

Under tax laws, particularly the value-added tax (VAT) regulations, businesses are required to display the prices of goods for sale.

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"A business that refuses to issue an electronic receipt can face a fine of up to Sh2 million. Customers who fail to demand receipts after purchasing goods will be fined Sh30,000 per item," Dr Mkuya explained.

She noted that failing to display prices creates opportunities for fraud.

"Customers who demand electronic receipts are often charged differently from those who do not. Those who don’t request receipts are always charged lower prices, which is unacceptable business conduct,” remarked Dr Mkuya.

She stressed that the government would take action, as it had become common for businesses to hide behind the excuse of paying taxes while failing to display prices.

ZRA Commissioner General Said Kiondo Athumani reinforced that the authority’s inspections would continue across business areas to instil the importance of providing and demanding receipts after transactions.

"When citizens demand receipts, they ensure taxes are paid. Otherwise, only business owners benefit," said Mr Kiondo.

"To ensure your tax contribution reaches the government, request receipts after purchasing commodities or services. This will enable transactions to be properly recorded, and the corresponding tax deposited into the government coffers. Don’t let your money disappear into business owners' pockets,” he added.

He urged business owners to cooperate with ZRA in the tax collection process and fulfil their responsibilities before legal actions are taken.

"Work with us to contribute to Zanzibar’s development," he urged.

For business owners found failing to issue receipts for four consecutive days, Mr Kiondo stated that legal actions, including penalties and interest, would be enforced.

"Don’t wait for legal action; act responsibly and help build Zanzibar together," he emphasised.

An employee at one of the shops, who requested anonymity, revealed that they had been instructed by the business owner, currently abroad, not to issue receipts.

One business owner, Mr Khamis Khamis, admitted to not issuing receipts due to network issues but claimed to be unaware of the law requiring price displays.

However, Dr Mkuya dismissed the excuse, emphasising that it had been a long-standing issue and that many had used it as a cover for their actions.

The operation revealed that electronic machines had not been used since March 1, 2025, with only one receipt for goods worth Sh52,000.