TAX UPDATE: TANZANIA REVENUE AUTHORITY (TRA) STARTS RECEIVING APPLICATIONS FOR TAX AMNESTY.
- Tax Amnesty waives 100% of interests and penalties on overdue taxes
- Applications to be lodged to the Commissioner General (TRA)on or before 30th November, 2018
- Application(s) must be made by a taxpayer or a legally appointed representative
- Amnesty is granted to the eligible taxpayers and on eligible taxes
The Minister for Finance and Planning (Hon. Philip I. Mpango) has recently issued Tax Administration (Remission of Interest and Penalty) Order, 2018 (“The Order”). The Order mandates the Commissioner General of the Tax Revenue Authority (“the Commissioner”) to waive up to 100% (previously only 50%) of penalties and interest on overdue taxes.
The Order is in line with the amendments made on Section 70 of the Tax Administration Act, 2015. The said amendment was made by the Finance Act, 2018. Our tax and investment department at Breakthrough Attorneys has prepared this publication for purposes of informing the general public and interested stakeholders i.e. taxpayers on matters of application and issuance of tax amnesty.
2.0 Time for lodging applications for amnesty (Orders2 and 9)
An application for tax amnesty must be lodged to the Commissioner General (TRA) on or before the 30th day of November, 2018. The said Order came into effect on 1st day of July, 2018 and will expire on 31st December, 2018.
3.0 Eligible taxes for amnesty (Orders 3,4 and 7)
The tax amnesty includes all taxes, levies and duties administered by the Tanzania Revenue Authority (TRA). The following taxes are exempted under the Order:
- Customs and excise duties. These are governed by the East Africa Customs Management Act. 2004.
- Other Revenues that TRA is mandated by law to collect on behalf of Local Government, Agencies and other Government departments i.e. Gaming taxes, Property Tax, Advertising fees, etc.
4.0 Eligible Persons for tax amnesty (Order 8)
Taxpayers eligible for tax amnesty include the following:
- Those who have submitted their returns to the TRA for which taxes are either in whole or partially unpaid.
- Those who have not submitted their returns to the TRA for the respective taxes.
- Businesses that have been operating without finalization of registration with TRA i.e. those that have not acquired Tax Identification Numbers (TIN) or Value Added Tax Registration Numbers (VRN) as per the laws governing Taxpayer Registration.
- Taxpayers that have lodged their objections to the Commissioner General but have not reached the Tax Appeals Board.
- Those that have lodged their objections with the Tax appeals Board but not decided yet.
- Those with confirmation(s) in writing to pay the principal Tax amount within the Financial year 2018/2019 latest 30th June, 2019 excluding penalties and interest.
5.0 Excluded Taxpayers (Order 4)
The following taxpayers are not eligible to apply for tax amnesty:
- Those who may otherwise be an eligible taxpayers but who have already paid the eligible tax;
- Those whose tax affairs are being audited or investigated by the Commissioner in respect of an eligible tax for the period under audit or investigation;
- Those who have been convicted of fraud by a Court in respect of an eligible tax;
- Those who have been convicted of a transnational organized crime, including money laundering, human trafficking, poaching, economic sabotage, drug trafficking or involvement in terrorism;
- Those whose assessment is a result of an EFD or other offence which has been compounded; or
- Those whose assessment emanates from an offence involving willful or fraudulently omission or commission under a tax law;
6.0 Application for Tax Amnesty (Order 9)
For a taxpayer to qualify for this amnesty he must submit a duly completed application form titled numberITX207.01.E which is found under the schedule of the Order.
In addition, the applicant must attach the following;
- Complete details showing the tax liability and a confirmation that he is willing to pay the principal tax
- Commitment that he/she will pay the tax arrears stated excluding interest and penalties within the Financial year 2018/19 latest 30th June 2019.
- For debts under objection the Taxpayer must confirm that the assessed taxes are correct as well as the fact that he/she will not proceed with the objection submitted prior to the application for the amnesty.
7.0 Execution of the Settlement Agreement between a Taxpayer and the TRA (Order 11)
It should be observed that the amnesty will apply for only those taxpayers who have met all the necessary conditions of application. That includes signing of an agreement that stipulates the total taxes in debt as well as the interest and penalties to be waived taking into account that the principal taxes have to be paid latest 30th June, 2019.
8.0 Rescission of the Settlement Agreement (Order 12)
In the event the taxpayer granted with remission defaults the terms of the settlement agreement, the Commissioner General has powers to rescind the settlement agreement and proceed to demand the eligible tax as if no remission was granted.
The amnesty provides relief to taxpayers with overdue tax liabilities by waiving 100% interests and penalties. This strategic move is aimed at motivating tax payers to settle their liabilities voluntarily and in installments within the financial year 2018/2019. All taxpayers qualifying for the grant of the amnesty are encouraged to make use of this rare opportunity.
Breakthrough Attorneys keeps the taxpayers, the general public and other interested stakeholders updated.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.