28 November 2012

Tanzania: TRA Warns Public Over Duty Free Shops

THE Tanzania Revenue Authority (TRA) has warned civilians against buying goods from duty-free shops meant for members of armed forces.

"The government had good intentions when providing duty-free services for members of the Tanzania People's Defence Forces as a privilege to them," said Mr Patrick Kassera the TRA commissioner.

Mr Kassera added that, the stores located at army bases should not be treated as tax-free, shopping malls for ordinary civilians because in doing so they are robbing the state from its rightful sources of revenue.

The TRA Special Duty Director, Mr Mugisha Kamugisha, admitted that of late a number of Tanzanians have been benefitting from the duty-free privileges meant for TPDF officers, through shopping at the army base stores using names and identification cards of their friends, relatives and other acquaintances who serve in the armed forces.

Local traders and business persons have also been using the same opportunity in purchasing tax-free goods in bulk from the army stores, taking to stock them in their civilian shops and making huge profits in the process.

TRA targets to collect 8.2 trillion/- this year, a projection which is being challenged by limited number of tax payers, currently totaling to around 1 million and 16,000 business entities registered to collect Value Added Tax.

The Tanzania Revenue Authority employs just 3 600 staff, countrywide and 68 per cent of these are tax auditors which means it is rather difficult for TRA to make thorough follow up on potential tax payers.

Arusha is currently hosting the Value Added Tax Administrators in Africa (VADA) forum in which the revenue administrators from 15 countries on the continent are exchanging experiences and learning from each other on how best to implement the relatively new broad-based VAT administration.

According to the Tanzania Revenue Authority (TRA) which is organizing the forum, this year's theme for the VADA is "Improving Revenue Mobilization for accelerated national development and the role of VAT in the 21st Century".

Value Added Tax, according to the TRA commissioner, accounts for 38 per cent of the 600bn/- revenue collected by the authority on monthly basis. Tax collectors from fifteen African countries including Uganda, Kenya, Tanzania, Rwanda, Botswana, Ethiopia, Ghana, Cote d'Ivoire, Lesotho, Malawi, Nigeria, Sierra Leone, Togo, Zambia and Zimbabwe are attending the two-day annual tax conference.

The Deputy Commissioner for Domestic Revenue, Ms Christine Shekide, said other than exchanging experiences and coming up with new ways of encouraging voluntary tax compliance among citizens, the participating countries are not intending to harmonize their VAT rates.

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