5 June 2014

Tanzania: Massive Tax Drive Underway

Dodoma — ENHANCEMENT of revenue collection, enforcement of measures to instill financial discipline and tax evasion control top the Ministry of Finance's implementation list during 2014/15, the National Assembly was told.

Moving her 2014/15 budget estimates, Finance Minister Saada Mkuya Salum said through the Tanzania Revenue Authority (TRA), the ministry has come up with sweeping measures against the alarming tax evasion via pirate ports and 'panya' routes at the country's borders.

"The ministry, through TRA, is embarking on strategies to check revenue loss through pirate ports and panya routes," said the minister in her first budget speech in the House, adding that the flexible anti-smuggling team is already conducting intensive investigations to uncover all the illegal ports and routes.

She said the ministry has established close working relations with police, immigration and national intelligence departments to intensify patrol against smugglers. Public awareness programmes targeting traders and coastal zone residents on the adverse impacts of smuggling is another strategy the ministry is using, the deputy minister reported.

The minister, however, conceded challenges against attainment of TRA revenue collection target in the 2013/14 fiscal year, reporting that in the next financial year, the revenue collection agency will augment the use of electronic fiscal devices, establish Tanzania Customs Integrated System and create an international tax unit with the view of boosting collections.

"The international tax unit will help the government to spot and plug all loopholes through which multinational companies with investments in the country evade taxes," Ms Salum observed in her 73-page budget estimates seeking the approval of 5.8 trillion/-.

Ms Mkuya noted that as of April 2014, tax revenues stood at 7.8tri/-, which is about 75 per cent of the annual target of collecting 10.4tri/-, with the value added tax, corporate tax and income tax (pay as you earn) contributing over 80 per cent of all collections.

She attributed the low collections to under- collections in withholding taxes due to dropped revenues in oil and gas exploration works, abolished SIM card levy and minimal collections from money transfers.

The minister said with the strict implementation of the country's financial policy, the national economy grew at an average rate of seven per cent in 2013 against the previous year's 6.9 per cent while inflation dropped to 7.9 per cent from 16 per cent over the same period.

She mentioned communications financial services and construction as the sectors that had the highest growth of 22.8, 12.2 and 8.6 per cent, respectively.

The banking sector, said the minister, grew between March 2013 and March 2014, with the number of commercial banks and financial institutions increasing from 51 with 585 branches to 53 with 625 branches countrywide.

The banking assets on the other hand increased from 17.9trn to 21trn/- while the average capital base soared to 18.8 against the statutory requirement of 10 per cent.

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