TANZANIA Revenue Authority (TRA) plans to extend the uses of Electronic Fiscal Devices (EFDs) to Value Added Tax (VAT) non registered traders.

A government's letter of intent to the International Monetary Fund (IMF), the extension of EFDs to non VAT traders is one of the steps taken to strengthen tax administration.

"TRA will further strengthen its audit, enforcement and valuation capacities," indicates the letter signed by Bank of Tanzania (BoT) governor and Finance and Economic Affairs Minister, noting that IT systems within TRA will as well be enhanced.

The letter to IMF's Managing Director and seen by the 'Daily News,' however, did not specify the time frame for the official introduction of the devices in the market.

TRA's Acting Director of Taxpayer Services and Education, Allan Kiula,said in Dar es Salaam over the weekend that once the project is ready would be communicated to the public, "We will let you (press) know once everything is ready...be patient because plans are underway."

Strengthening of the tax administration includes implementation of a single window system for customs administration and an e-tax revenue system for domestic revenue administration."It will also improve the management of tax exemptions by scrutinizing applications and conducting risk based audits of beneficiaries," said the letter.

EFDs for non-VAT will be complimented by the National Identification Cards (IDs) that are being introduced in the country starting with Dar es Salaam city. The IDs are geared to help expand tax coverage of the informal sector. "These combined measures are projected to have a revenue yield of 0.3 per cent of GDP," the document to Breton Wood institute said.

Revenue collections are projected to increase by one percentage point of GDP in 2012/13, driven by higher tax collections. The increased yields reflect favourable economic growth, continuing steps to strengthen tax administration and tax policy measures included in the 2012/13 budget.

Tax revenues were buoyant in the first nine months of 2011/12, supported by strong economic growth and administrative measures taken by the TRA. A study named 'Informal Sector Taxation' and conducted by Economic and Social Research Foundation (ESRF) last year shows that despite employing over 70 per cent of the country's workforce, the informal sector remains untaxed.

The study, taking Dar es Salaam region as the sample size, indicates that revenue lost amounts to between 35 to 55 per cent of the potential tax revenues. The areas which are generating handsome turnover but not paying revenue include business proprietors in informal sectors such as housing, transport and consultancies that make fortunes without paying a cent to the government coffers. The informal sector in Tanzania accounts for about 40 per cent of GDP.