Tanzania: Minister Pledges Friendly Tax Policies

FINANCE and Planning Minister Mwigulu Nchemba has reiterated the commitment by the government to put in place conducive tax administration policies to enhance compliance in payment of taxes and eventually boost revenues to the Treasury coffers.

Dr Nchemba made the assurance in Dar es Salaam, yesterday when officiating at the national tax dialogue which was held at the Julius Nyerere International Convention Centre (JNICC) under a theme, “Policy reforms for people’s development.”

“There is a very close link between favourable tax policies on one hand and growth of businesses and development of the country on the other,” he told the delegates at the meeting, which drew participants from across the business community in the country.

He added; “President Samia Suluhu Hassan has on several occasions directed us to continue improving our tax policies by incorporating views from stakeholders through these tax dialogues.”

The Minister stressed on the need to harness collections of revenues and at the same time nurture businesses to grow so as to enable the government to collect more taxes.

He as well pointed to the importance of widening the tax base to reduce the burden, which is borne by existing few registered taxpayers.

Dr Nchemba elaborated that through a number of reforms undertaken by the sixth phase government, revenue collections by the Tanzania Revenue Authority (TRA) have increased from an average of 1.2tri/- per month to 2.77tri/- collected in December, last year.

The collection exceeded the 2.60tri/- target set by the tax collector, and is equivalent to 10.3 per cent growth compared to 2.51tri/- in the corresponding period last year.

“The increased tax collection is a result of improved tax administration policies being undertaken by the government,” he observed.

The Minister told participants at the dialogue that there is a close connection between revenue collections and national development.

“If all Tanzanians were aware of this fact, then everyone would have complied and paid requisite taxes. However, there are some businesspersons who intentionally sway their customers against paying taxes by selling their products at lower prices without issuing receipts,” he noted with concerns.

On the other hand, Dr Nchemba highlighted the importance of a thriving private sector in the economy towards creation of jobs and increased revenues to the government.

“Over one million fresh graduates enter the labour market each year, all these graduates cannot be absorbed by the government. There is thus a need for a strong private sector to create jobs for these new graduates,” he noted.

Earlier, Deputy Permanent Secretary in the Ministry of Finance and Planning (Economic Management and Policies), Mr Lawrence Mafuru, noted that even with economic hardships experienced in other parts of the world, Tanzania has areas where it can take advantage of in boosting its economy.

Mr Mafuru noted that given its strategic geographical location, Tanzania can benefit from transport and logistics sectors to improve trade with its neighbours.

“The other sector where Tanzania has an advantage of increasing revenues is tourism sector, it should be noted that before the Covid-19 pandemic the sector earned the country 2 US billion dollars in forex,” he observed.

The Deputy PS said the government focuses on strategic sectors which will attract Foreign Direct Investments (FDIs) such as natural gas, coal and gold.

A representative of TRA, Mr Emmanuel Herzon, said reforms in tax administration policies have increased the number of registered taxpayers from 2.2 million during 2015/2016 to 4.4 million taxpayers during fiscal year 2021/2022.

At the same occasion, the Executive Director of Research on Poverty Alleviation (REPOA), Dr Donald Mmari, said tax policies should be used as an instrument to support economic growth.

Dr Mmari further suggested that the tax policies should protect local industries against unfair competition from imports which are highly subsidized in their countries of origin.

Commenting, Tanzania Association of Accountants president, Godvictor Lyimo said the first tax dialogue on policy reforms with the theme “Policy Reforms for people’s Development was necessary and timely, adding: “It has been a great success and attracted a significant number of people bringing in new thinking in shaping the country’s policy framework.

“Business leaders have aired their views on how best the Ministry of Finance should shape the policies to maximise tax collections at the same time attracting Foreign Direct Investments.

With the demonstrated success, the Minister in the President’s Office – Ministry of Finance Zanzibar, Dr Saada Mkuya has committed to have a similar dialogue at Zanzibar on the 21st of January 2023 to leverage in the private sector inputs prior to the budget process.

“Kudos to our President Dr Samia Suluhu Hassan for championing collaboration between Government and Private Sector in enhancing voluntary tax compliance which has seen the TRA setting a new record high of tax collections since independence in December 2022.

We should expect more positive reforms that will propel the country’s economy on the positive trend amid the challenging global economy which is currently realizing recession.

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