European Business Group and Tanzania Revenue Authority Address Tax Challenges for Businesses

The European Business Group in Tanzania, in collaboration with the Tanzania Revenue Authority (TRA), hosted the 2nd International Taxation Workshop on 28th November 2023 in Dar es Salaam.

Supported by the Embassy of the Kingdom of the Netherlands in Tanzania, the event represented a platform to discuss taxation challenges and opportunities in the evolving business landscape, focusing particularly on issues affecting European businesses and investments in Tanzania.

The workshop was opened by the Dutch Ambassador to Tanzania, Wiebe de Boer, who underscored the collaborative efforts of the Embassy, European Business Group, and TRA.

He emphasized the significance of dialogue in addressing taxation issues and the necessity for fair tax policies to alleviate compliance burdens.

Joseph Lyimo, Tax Partner at PwC Tanzania, provided an extensive analysis based on the Tanzania Business Environment Survey. His presentation brought to light several critical taxation challenges facing the private sector in Tanzania:

1. Frequent and Unpredictable Tax Law Changes: Lyimo emphasized the uncertainty caused by frequent changes in tax laws, which leads to confusion about compliance among taxpayers. He cited examples where amendments were implemented suddenly, without prior notice.
2. Complexity Due to Multiple Taxes and Levies: He highlighted the overwhelming number of taxes and levies, especially in sectors like tourism. This multiplicity of taxes significantly increases the overall tax burden for businesses.
3. Difficulties with the Online VAT System: Lyimo pointed out specific issues with the new online VAT system, such as its inability to make or recognize adjustments, complicating accurate VAT reporting and payment.
4. Delays in Tax Refunds: He noted the prolonged durations for tax refunds, which exceed the stipulated time frames, and suggested the possibility of offsetting refunds against other tax liabilities.
5. Need for Clearer Practice Notes: The presentation underscored the lack of clarity in practice notes, which is essential for businesses accustomed to more sophisticated tax systems.
6. Transfer Pricing Regulations: Lyimo also discussed the complexities and heavy penalties associated with transfer pricing adjustments.
7. Concerns over Audit Processes: Issues regarding the objectivity and methodology of tax audits were raised, pointing to the need for more transparent and fair audit practices.
8. Dispute Resolution and Accumulating Interest: The discouragement faced by businesses in pursuing their rights due to accumulating interest during tax dispute resolutions was also a topic of discussion.

For his part, Ephraim Tumedike from the TRA’s Large Taxpayment Department acknowledged the issues raised and discussed TRA’s efforts to align Tanzanian tax laws with international standards.

He mentioned the ongoing initiatives to improve VAT and tax refund systems, reflecting TRA’s commitment to resolving challenges in the self-assessment system and tax dispute resolution.

The event also reflected on the successes of the previous year’s workshop and provided a comprehensive overview of the ongoing challenges and future taxation issues impacting the private sector.

This aligns with the European Business Group TZ’s advocacy for tax policy changes for the fiscal year 2023/24, emphasizing the need for ongoing collaboration between the government and private sector stakeholders.

The workshop concluded with a Business Clinic by the TRA, offering one-on-one sessions for businesses to address specific challenges, thereby providing a practical platform for direct engagement between European businesses and Tanzanian tax authorities.