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Embassies in Tanzania Raise Alarm on Unfair Tax Enforcement Practices Faced by Foreign Investors; Tanzanian Government Acknowledges Issues and Begins Dialogue

Tanzania Tax Authority Dispute with Foreign Investors

A joint letter signed on June 26, 2024, by prominent ambassadors to Tanzania, has brought to light significant concerns regarding tax administration practices affecting foreign investors.

The letter, addressed to Hon. January Makamba, Minister of Foreign Affairs and East African Cooperation, outlines challenges faced by investors due to the practices of the Tanzania Revenue Authority (TRA).

The signatories include ambassadors from the United States, United Kingdom, Netherlands, France, Belgium, Canada, Ireland, Sweden, Germany, and Korea.

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The ambassadors expressed deep concern over retrospective tax demands and account freezes imposed by the TRA, despite compliance with auditing standards and agreements with the Tanzania Investment Centre (TIC).

They highlighted instances of asset seizures without adequate legal recourse, impacting investor confidence and operational stability.

“Many businesses have faced bank agency notices that freeze accounts, halt operations, and negatively impact employee salaries and supplier cash flow. Companies have signed tax concession agreements with the Tanzania Investment Centre and line ministries, only to be advised that the TRA will neither recognize nor honor the agreements because they have not been gazetted in Dodoma,” the letter reads. It further states, “Investors also report that TRA agents levy extraordinary tax bills not supported by Tanzanian law, threaten investors and Tanzanian partners when companies protest or appeal these practices, and freeze or seize bank accounts and company assets without notification nor timely legal recourse.”

In a prompt response, the Tanzanian Minister of Foreign Affairs and East African Cooperation, Hon. January Makamba, issued a reply letter dated June 27, 2024, acknowledging the concerns and committing to a constructive dialogue.

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Minister Makamba requested detailed reports from affected investors to facilitate a productive discussion aimed at resolving these issues swiftly.

The Minister also reaffirmed Tanzania’s commitment to maintaining a transparent and investor-friendly environment, essential for sustaining economic growth and attracting international investment.

For ongoing updates on this developing situation, TanzaniaInvest will continue to monitor and report on outcomes from the planned discussions between diplomatic missions and Tanzanian officials.

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