Bilal urges TRA to address tax evasion and avoidance

Dar es Salaam. Lack of a friendly tax payment environment in the country is one of the reasons, which makes many traders evade and avoid paying tax, a situation that has negative impacts on widening the tax base.

• Unfriendly relations between Tanzania Revenue Authority (TRA) officials and taxpayers has seen traders continuously evade paying tax and thus occasioning the government losses of millions of shillings in tax collection.

Speaking in Dar es Salaam recently on the 7th Taxpayers’ Day, the Vice President, Dr Mohamed Gharib Bilal, said recent challenges in tax payment needed to be addressed through having adequate public education and creating a friendly environment that encourages voluntary tax payment and compliance.

Tax avoidance and evasion in Tanzania is currently becoming a common phenomenon not only among multinational and local companies, but also among small-scale businesses. The government plans to make amendments on the tax law, but lack of skills and expertise on specialised tax issues remains a big challenge.

“I believe if citizens are well-informed and have a convenient taxpaying environment, without being forced, they will cooperate with TRA officials and pay their tax as required by the law. We have to build a culture of voluntary tax payment among our citizens, and this will also help their businesses grow as well,” said Dr Bilal.

Currently, in Tanzania, it is only people, who are employed in the formal sector, who have been paying tax more than traders because their salaries are easily traceable and they have no way of avoiding or evading tax payment.

“Available statistics show that 44 per cent of the total revenue collected in the country comes from people employed in the formal sector, while all other businesses account only for 56 per cent of which it is only 1.7 million traders,” Dr Bilal pointed out. Taxpayers’ Day in Tanzania was introduced in 2006 and is celebrated every year in which public education on the importance of paying tax to the government is provided and best taxpayers are recognised.

This year, Tanzania Breweries Limited (TBL), Tanzania Cigarette Company (TCC) and Vodacom Tanzania scooped the top three best taxpayers’ awards in the country in the first, second and third place respectively. On the other hand, TRA has been undergoing various reforms and improvements to widen the tax base and improve revenue collection for supporting various development programmes.

According to TRA commissioner general Harry Kitilya, TRA has been undertaking various strategic plans to increase tax collection, whereby since the introduction of the new strategies, tax collection has improved from Sh4,049.1 billion in 2008/2009 to Sh7,739.3 billion in 2012/2013, being an improvement by 91 per cent, which counts for an improvement of 20 per cent every year.

“TRA’s vision is to increase revenue of GDP ratio by 20 per cent by 2017/2018 under three themes of improving convenience, compliance and continued improvement that changes with time,” said Mr Kitilya.

He explained that TRA was focusing on effective utilisation of science and technology to increase efficiency and reduce workload TRA officials have when working directly with taxpayers as well as creating a good environment for doing business in the country.

“We anticipate that the present tax collection gap in the country will decline from 3.7 per cent to one per cent by 2017/2018, while the tax collection ratio will decline from 2.7 per cent and 1.6 per cent in the same period,” he noted, stressing that the current TRA target was to collect Sh18.8 trillion in 2017/2018. The commissioner-general admitted that in achieving tax collection targets in the country, it was important to have employees, who adhered to the code of conduct to curb current corruption complaints by taxpayers about corruption among some TRA officials.