A REMARKS ON SELECTED TAX POLICY AND
ADMINISTRATION INTERVENTIONS AT THE CEO
ROUNDTABLE (CEOrt)
Hyatt Regency Dar es Salaam.
Harry M. Kitillya
November 2013
1
TRA
TANZANIA REVENUE AUTHORITY
SCOPE
1.0 TRA 4TH CORPORATE PLAN
2.0
TRA CP4 COMPLIANCE MANAGEMENT SCHEME
3.0
COLLABORATION WITH PRIVATE SECTOR
4.0 ENGAGING THE SMALL ENTERPRISES
5.0 COUNTER-PRODUCTIVENESS OF NEW TAXES
6.0 CHALLENGES AND OPPORTUNITIES AS
TANZANIA MOVES INTO GAS ECONOMY
7.0 ADDITIONAL MATTERS RELEVANT TO THE PRIVATE SECTOR
8.0 CONCLUSION

TRA
TANZANIA REVENUE AUTHORITY
2.0 TRA 4th Corporate Plan

TRA has matured from a tax administration that
provides tax type services for revenue collection to
an efficient organization that delivers one stop shop
services for all types of taxes

The TRA operations are guided by
Fiver-Year
Corporate Plans and we are now implementing the
fourth Plan 2013/14-2017/18 (CP4).
TRA
TANZANIA REVENUE AUTHORITY
2.0 Fourth Corporate Plan Overview
The CP4 is built on achievements gained in
CP3 and the desire to address challenges for
continual improvement
The strategic focus of the Fourth
Corporate Plan is summarised in its
Vision, Mission and Core Values.
TRA
TANZANIA REVENUE AUTHORITY
2.0 Fourth Corporate Plan Overview cont’d
Mission, Vision, Core Values
 Vision:
“To Increase revenue to GDP ratio to 19.9% by 2018”
 Improve efficiency
 Widen the tax net: (informal sector, specialized sectors – mining, oil, gas
telecom, tourism, construction, real estate, financial sector)
 Mission Statement:
“We make it easy to pay tax and make lives better”
 Ensure simplified and transparent processes
 Easy access to services
 Increased compliance hence Increased revenue collection
 Core Values:
 Accountability – organisation that values and promotes accountability
 Integrity – fair and honest in dealings with stakeholders
 Professionalism – apply law fairly and consistently using our knowledge
TRA
TANZANIA REVENUE AUTHORITY
2.0 Fourth Corporate Plan Overview cont’d
Strategic Themes: common direction to achieve objectives
 Convenience:
 Deliver cost efficient, consistent and reliable taxpayer services
 Streamlining of processes; automation; self service options
* Req: A culture and practice of efficiency, transparency & accountability
 Compliance:
 Taxpayer segmentation for optimal resource allocation based on risk
 Comprehensive taxpayer compliance strategy; service & education
pgms
* Req: A culture of high quality service delivery
 Continual Improvement:
 TRA is a dynamic organisation, always changing for the better
 New ideas, innovation, sharing of information to improve
performance
* Req: A culture that is receptive to change
TRA
TANZANIA REVENUE AUTHORITY
2.0 Fourth Corporate Plan Overview cont’d
Strategic Objectives
Perspective
Financial
1.
2.
Customer
1.
Process
1.
2.
3.
4.
Strategic Objectives
Improve operational efficiency
Increase domestic revenue contribution
To be a prompt, technology enabled proactive partner
Simplify registration, assessment and payment to increase self-service.
Promote prompt clearance to improve trade facilitation
Enable administrative and policy improvement
Drive effectiveness in collection and accounting, audit and
investigation, objections
5. Promote segment focused education and service to drive voluntary
compliance
Learning & 1. Improve strategic Human resource capacity
Innovation
2. Develop culture that drives performance, innovation, collaboration and
leadership
3. Increase ICT outreach and availability
4. Enhance good governance capability
.
TRA
TANZANIA REVENUE AUTHORITY
2.1 BALANCED PERSPECTIVES – Cause & Effect
TRA CP4
Financial
“If we succeed, how will we
look to our stakeholders?”
EFFECT
Customer
“To achieve our vision, how
must we look to our taxpayers?”
Process
“To satisfy our taxpayers, at
which processes must we
excel?”
Learning & Innovation
“To achieve our vision, how
must TRA learn & improve?”
TRA
TANZANIA REVENUE AUTHORITY
CAUSE
TRA FOURTH CORPORATE PLAN STRATEGIC MAP
.
.
MILLENIUM
DEVELOPMENT
GOALS
NATIONAL VISION 2025
MKUKUTA II
MKUZA II
FIVE YEAR
DEVELOPMENT
PLAN
KILIMO KWANZA
VISION: TO INCREASE REVENUE TO GDP RATIO 19.9% BY 2018
MISSION: WE MAKE IT EASY TO PAY TAX AND MAKE LIVES BETTER
THEME: CONVENIENCE, COMPLIANCE AND CONTINUAL IMPROVEMENT
FINANCIAL
PERSPECTIVE
1. Improve
operational
efficiency
2. Increase
domestic
revenue contribution
TRA
CUSTOMER
PERSPECTIVE
To be a prompt,
technology enabled
proactive partner.
INTERNAL PROCESS PERSPECTIVE
1. Simplify registration, assessment and
payment to increase self-service.
2. Promote prompt clearance to improve trade
facilitation
3. Enable administrative and policy
improvement
4. Drive effectiveness in collection and
accounting, audit and investigation,
objections
5. Promote segment focused education and
service to drive voluntary compliance.
LEARNING & INNOVATION
PERSPECTIVE
1.
2.
3.
4.
Improve strategic Human
resource capacity
Develop culture that drives
performance, innovation,
collaboration and leadership
Increase ICT outreach and
availability
Enhance good governance
capability
REVENUE AUTHORITY
CORE VALUES: ACCOUNTABILITY,TANZANIA
INTEGRITY
AND PROFESSIONALISM
9
2.2 Developing Compliance Programme…
Taxpayer Behavior
Strategy Response
Decided not to
Comply
Trying
to
Comply
Willing
to
Compl
y
Areas of
Complianc
e
Registration
Filing
TRA
Levels of Compliance
Do not
Comply
Use
Enforcemen
t Strategy
Deter by
Detection
Help to
Compl
y
Make
it easy
Declaration
Payment
The Strategy
Level 1: Willing to Comply
CP4 Theme: Convenience
Differentiated Service Offering
Automation and Self Service Environment
Move from Gate Keeper to Risk Manager
Level 2: Trying to Comply
CP4 Theme: Compliance
Taxpayer Education
Reduce Administrative Burden
Understand the taxpayer business and advise
Level 3: Do not Comply
CP4 Theme: Continue Improvement
360 View: Holistic view leading to early detection
Empower our people with tools to perform at
their peak
Use of 3rd party data to uncover non compliance
Routine Audits
Level 4: Decided not to Comply
Referral to Tax investigation
Use of the strongest arm of the law
Referral to other law enforcement
TANZANIA REVENUE AUTHORITY
3.0 Collaboration with Private Sector
Provision of quality service and building
workable partnership with the taxpayers has
been an ultimate goal of TRA’s major reforms
TRA
TANZANIA REVENUE AUTHORITY
3.0 Collaboration with Private Sector cont’d
Interventions taken to institute a tax administration that
collects Government revenue efficiently and effectively
includes,
Introduction of One-Stop Centers and self-assessment
system
Introduction of electronic lodgments of customs entries
and tax returns;
Electronic payments of taxes through ASYBANK and
mobile phones;
Introduction of Taxpayer Service Centers in Dar es
Salaam Tax Regions;
 Implementation of Customs Post clearance Audit; Trade
facilitation
reduction of clearance time on imports;
Establishment of One Stop Border Posts
TRA
TANZANIA REVENUE AUTHORITY
3.0 Collaboration with Private Sector cont’d
TRA has developed a Taxpayers’ Charter,
 TRA also undertakes Taxpayers’ Perception
Survey and Stakeholders’ Forum,
 A call center is now fully operational

The commitment of TRA to ensure inclusiveness
is articulated in its fourth five-year Corporate
Plan
TRA
TANZANIA REVENUE AUTHORITY
4.0 Engaging the Small Enterprises
 Small businesses are not major source of revenue
for governments.
 MSEs in Tanzania account 61 percent of the
taxpayer population and generates less than 2
percent of total domestic taxes.
 Small
business taxation is instrumental to
facilitating MSEs’ participation in the formal
economy
 Presumptive taxation is the most appropriate
method of tax administration for specific small
business due to inability to comply with complicated
tax statutes
TRA
TANZANIA REVENUE AUTHORITY
4.0 Engaging the Small Enterprises cont’d
In Tanzania, the presumptive income tax
was first introduced on July 1, 2000 as
means to pull the informal sector in the tax
net.
Firstly, to reach out to those not reachable
through the
formal Personal Income Tax (PIT)
Secondly, to institute in-built attributes to
motivate
operators under the Presumptive Scheme to graduate into
the preferred tax
TRA
system.
TANZANIA REVENUE AUTHORITY
4.0 Engaging the Small Enterprises cont’d
TRA is implementing the Block Management
System, (BMS).
Tax Officers, from compliance and enforcement
sections have been allocated to
To registering all traders within the blocks,
To collect all types of taxes and manage tax debts
To provide taxpayer services

Focus in CP4 on Formalization of the Informal
Sector



benefit from the enhanced identification of persons that the
National IDs will embed.
Strengthen Block Management System
Continual improvement in presumptive taxation scheme
TRA
TANZANIA REVENUE AUTHORITY
5.0 Counter-Productiveness of New Taxes
The Tanzania Revenue Authority Act, Cap 299
established the TRA as a central board to
assess, collect and account for all Central
Government revenue and administer and give
effect to the laws relating to such revenue.

The main mandate of the Tanzania Revenue Authority
is not tax
policy
formulation,
but
tax
policy
implementation.

TRA is an advisor of the Ministry of Finance on fiscal
policy through the Tanzania Revenue Authority’s
Board.
TRA
TANZANIA REVENUE AUTHORITY
5.0 Counter-Productiveness of New Taxes cont’d



TRA’s advice on tax policy is implemented through
consultative processes and passes through the Task Force
on tax policy reform, whose representation includes the
private sector.
The rationale behind the introduction of three most
contested reforms, namely withholding tax on services,
excise duty on telecommunication SIM Card and Excise
Duty on money transfer was in essence to increase
Government revenue to finance the provision of social
services.
Two of the reforms are in the courts of law and it probably a
wise idea for me not to continue putting opinions on it.
TRA
TANZANIA REVENUE AUTHORITY
6.0 Challenges and Opportunities as Tanzania
moves into Gas Economy


The discovered reserves of gas are likely to place
Tanzanian economy to higher levels of
development than it is now.
The country need it
for power generation and
revenue to bridge the budget gap

Currently Tanzania does not have specific tax
regime for oil and gas rather it uses existing
tax laws to tax the oil and gas industry
TRA
TANZANIA REVENUE AUTHORITY
6.0 Challenges and Opportunities as Tanzania
moves into Gas Economy cont’d
Since Oil and gas is a relatively new venture,
Tanzania is faced with a number of challenges
including.
Putting in place a modern regulatory and taxation
framework for the industry to be sustainable.

Currently the industry is dominated by foreign
experienced companies with high level technology and
long-standing experience in the industry including tax
planning
Overcoming these challenges will have a significant
bearing for Tanzanians to realize the benefits of their
natural resources for their development.
TRA
TANZANIA REVENUE AUTHORITY
Additional Matters Those Are Topical and
Relevant to the Private Sector
This is such a grey area and the list may be
endless. I would like to mentions just one or
two issues of interest


We are rewriting the VAT Law with the
intentions to align it with international best
practice.
The Government also expects to enact the
Tax Administration Act, which harmonizes in
one book all the administrative codes and
procedures
TRA
TANZANIA REVENUE AUTHORITY
CONCLUSION
As for the Tanzania Revenue Authority, I
wish, on my own behalf and on TRA’s behalf,
to assure you that we are committed to
creating a workable partnership with the
private sector in revenue administration, and
your
inputs
towards
achieving
this
commitment together are most welcome and
most valued.
TRA
TANZANIA REVENUE AUTHORITY
Thank you once again for giving me
an opportunity to speak at this
roundtable dialogue.
TRA
TANZANIA REVENUE AUTHORITY