Some Banks and Telecommunication Companies Risk Losing Their Licences If They Will Not Have Subscribed to the Electronic Tax Collection System By January 31. Finance and Planning minister Philip Mpango issued the ultimatum yesterday during a meeting with the heads of at least 20 financial institutions.
He said the government last year enacted tax administration laws and regulations that required all banks and telecommunication companies to have joined the electronic tax collection system by December 31, 2017, but only 27 banks had so far done so.
"I have already met with at least 20 banks to establish why they have not joined the system as required by law and discovered that the majority of the banks fear that the system will expose them to cybercrime," said Dr Mpango.
He added that some banks also felt that the time given was too short and that they needed to have emergency funds for implementation.
For example, Citi Bank, which operates in at least 100 countries, could not implement the directive because it had to consult with its headquarters.
However, Dr Mpango directed TRA Commissioner General, Charles Kichere to take legal action against "defiant" banks, including fining them.
He commended banks that joined the system within the initial deadline. They include Exim Bank, NMB Bank, Postal Bank, Amana Bank, CRDB Bank, Hina Commercial Bank, Stanbic and Akiba Commercial Banks.
Banks that were in the final stages of completing the process include I&M, DCB, DTB, Mkombozi Bank, Maendeleo Bank and Wakati Bank, while those that had not made any progress included Bank of Africa, Yetu Microfinance Bank, Barclays Bank and Mwanga Rural Community Bank.
In another development, Dr Mpango said non-performing loans stood at 12 per cent of all loans issued last year, but added that things were looking up in the banking sub-sector.
He urged banks to ensure their survival by lending to the right people and institutions.
Dr Mpango spoke a few days after the Bank of Tanzania closed five banks for failing to meet the capital threshold of Sh2 billion in contravention of the Banking and Financial Institutions Act, 2006 and its regulations. They affected banks are Covenant Bank for Women (Tanzania) Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kagera Farmers Cooperative Bank Limited and Meru Community Bank Limited.