Tanzania has set a target of revenue collection of nearly 20 per cent of GDP by 2018.
A national identification project, which is aimed at helping the Tanzania Revenue Authority (TRA) to expand the revenue base and reduce tax leakages and modernisation of taxation system are among measures to be put in place to enhance revenue collection. It is expected that the TRA will collect nearly Tsh19 trillion ($11.875 billion) a year by 2018, up from the current Tsh 10.4 trillion ($6 billion).
A steady increase in revenue collections, from $400 million in 1996 to current $6 billion, has reduced Tanzania’s donor dependency from as high as 54 per cent to less than 10 per cent of the current budget.
Finance Minister Saada Mkuya said reaching a revenue target is a matter of life and death, as the country is serious about reducing its reliance on foreign aid. Ms Mkuya said the TRA has rolled out an electronic fiscal device (EFDs) to enhance domestic tax collection. The system ensures that businessmen keep their transactions records to avoid tax evasion.
As of April 2014, tax collection stood at Tsh7.8 trillion ($4.6 billion) which is about 75 per cent of the annual target of Tsh10.4 trillion ($6.12 million). value added tax, corporate tax and income tax contributed over 80 per cent of all revenue.
“Besides the EFDs, we are now refining our business environment to attract investments that can yield revenue, rather than depending on donor support,” Ms Mkuya said.
She said the government has introduced tax incentives for foreign investors, who, for instance, are allowed to import equipment duty-free.
Tax incentives
Mineral exporters get a reimbursement on all the VAT paid in the country, while companies that operate in an export-processing zone enjoy a 10-year exemption from corporate tax, which currently stands at 30 per cent.
Data from the United Nations Conference on Trade and Development (Unctad) indicates that in 2013 Tanzania registered $12.7 billion in foreign direct investment, eclipsing both Kenya and Uganda, which stood at a low $3.4 billion and $8.8 billion respectively.
Executive director of the Tanzania Investment Centre Juliet Kairuki said the latest figures demonstrate the success of the government’s investment policies and measures to make Tanzania attractive for investments.
TRA Commissioner General Rished Bade said the 19.9 per cent of GDP in tax collection by 2018 is achievable. He said the taxman will cast its net wider to bring informal sector on board.
Small traders and multinational companies shifting profits to tax havens are on the TRA’s hit list for the years ahead.
Mr Bade said the government loses millions of dollars every year to unscrupulous businessmen who alter their financial records to evade taxation.
Mr Bade said the government loses millions of dollars every year to unscrupulous businessmen who alter their financial records to evade taxation.
In 2012, there were reported discrepancies in import duties declared to the Tanzania Revenue Authority by some mining companies.
This means that over-invoicing on fuel imports, on which mining firms were exempted from paying duties in Tanzania, has been denying the country revenues equivalent to 7.4 per cent of GDP.
This means that over-invoicing on fuel imports, on which mining firms were exempted from paying duties in Tanzania, has been denying the country revenues equivalent to 7.4 per cent of GDP.
An international taxation expert Rhiannon McCluskey estimates that on average, $248 millions worth of capital has been moved from Tanzania per year using this process over the past decade.
Mr Bade said the target will be realised by improving efficiency in tax administration and broadening the tax net in order to collect more revenue particularly from lucrative sectors of mining, oil and gas, telecommunications, tourism, construction, real estate, financial services, high net worth individuals and incomes from the informal sector.
The East African
No comments:
Post a Comment