TANZANIA REVENUE AUTHORITY TAX ADMINISTRATION REFORMS IN TANZANIA

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TANZANIA REVENUE AUTHORITY TAX ADMINISTRATION REFORMS IN TANZANIA – EXPERIENCE AND CHALLENGES Presented by

TANZANIA REVENUE AUTHORITY TAX ADMINISTRATION REFORMS IN TANZANIA – EXPERIENCE AND CHALLENGES Presented by Mary N. Maganga Planning and Modernisation Programme Manager To the Workshop on Capacity Building for Domestic Revenue Enhancement In Mozambique, Tanzania and Zambia March 30 -31, 2011 TRA TANZANIA REVENUE AUTHORITY

SCOPE 1. 0 2. 0 3. 0 4. 0 5. 0 TRA Introduction Tax

SCOPE 1. 0 2. 0 3. 0 4. 0 5. 0 TRA Introduction Tax Administration Reforms in Tanzania Challenges Strategies for improving Resource Mobilisation Conclusion TANZANIA REVENUE AUTHORITY

1. 0 INTRODUCTION TRA is implementing the 3 rd Corporate Plan 2008/09 – 2012/13

1. 0 INTRODUCTION TRA is implementing the 3 rd Corporate Plan 2008/09 – 2012/13 Vision: “A Modern Tax Administration by 2013” Mission: “To be an effective and efficient tax administration which promotes voluntary tax compliance by providing high quality customer services with fairness and integrity through competent and motivated staff ” TRA implements its strategic Plan through strategic goals and initiatives are in line with the OECD Principles of a Good Tax Administration TRA TANZANIA REVENUE AUTHORITY

2. 0 Tax Administration Reforms. . . 2. 1 Revenue Collections have increased in

2. 0 Tax Administration Reforms. . . 2. 1 Revenue Collections have increased in absolute terms from an equivalent of US$ 1, 575 million in 2004/05 to US$ 3, 742 million in 2009/10 Revenue to GDP ratio has increased from 11. 8% in 2004/05 to 15. 7% in 2009/10 TRA TANZANIA REVENUE AUTHORITY

Revenue to GDP Ratio in Tanzania 2001/02 -2009/10 TRA TANZANIA REVENUE AUTHORITY

Revenue to GDP Ratio in Tanzania 2001/02 -2009/10 TRA TANZANIA REVENUE AUTHORITY

2. 0 Tax Administration Reforms. . . 2. 2 Integration of TRA operations Large

2. 0 Tax Administration Reforms. . . 2. 2 Integration of TRA operations Large Taxpayers in October 2001 ü Handles 400 taxpayers ü Contributes 70% of domestic Revenue collections VAT and Income Tax Department to form the Domestic Revenue Department in 2005 ü Handles small and medium taxpayers ü Contributes 30% of domestic revenue TRA TANZANIA REVENUE AUTHORITY

2. 0 Tax Administration Reforms. . . 2. 3 Review of PAYE Structure –

2. 0 Tax Administration Reforms. . . 2. 3 Review of PAYE Structure – Un-taxable income by July 2010 is US$ 98 per month 2. 4 Payment of Taxes through Banks – 97% of total revenue collection is settled under interbank arrangements; implementation of TISS 2. 5 Use of ICT systems for Tax Operations ITAX (includes TIN and e-filing) ASYCUDA++ Computerised Motor Vehicle Registration System Computerised Drivers License System TRA TANZANIA REVENUE AUTHORITY

2. 0 Tax Administration Reforms. . . 2. 6 Risk Based Operations Enterprise wide

2. 0 Tax Administration Reforms. . . 2. 6 Risk Based Operations Enterprise wide Risk Management System Risk Analyses Studies in trade, Manufacturing, construction, telecomm and financial sectors TRA Data Warehouse Import /Export Commodity Database Electronic Fiscal Devices TRA TANZANIA REVENUE AUTHORITY

2. 0 Tax Administration Reforms… 2. 7 Taxpayer Service and Education Stakeholders Forum and

2. 0 Tax Administration Reforms… 2. 7 Taxpayer Service and Education Stakeholders Forum and Taxpayers’ Day Taxpayers’ Charter Taxpayer Centres 2. 8 Governance and Integrity Internal Affairs Unit Whistle Blowing; Code of Ethics Declaration of Assets by staff 2. 9 Monitoring of the Corporate Plan through TRAMED TRA TANZANIA REVENUE AUTHORITY

3. 0 CHALLENGES Broadening the Tax Base Changing of Staff mindset and Staff Integrity

3. 0 CHALLENGES Broadening the Tax Base Changing of Staff mindset and Staff Integrity Power availability and Stability National Identity Card (NIDA) – absence of bio data Physical Location of Business Entities ICT infrastructure Over reliance on International Trade Taxes (43% -TZ; KE – 38%; Rwanda – 35%; Uganda – 49%) Auditing of Specialised Sectors e. g. Natural Resources Addressing Tax Incentives and Exemptions (TZ-2%; Kenya-1%; Uganda-1%) TRA TANZANIA REVENUE AUTHORITY

4. 0 STRATEGIES Enhancing Audit Capacity in specialised sectors Enhancing communication and exchange of

4. 0 STRATEGIES Enhancing Audit Capacity in specialised sectors Enhancing communication and exchange of information within TRA and with external agents (data mining, data analysis and investigation techniques) Improving classification & valuation of Customs Data Strategies to minimise tax evasion through increasing compliance checks in real estate and multinationals, telecommunication Development of revenue mobilisation strategy in Tanzania Taxation of the informal sector TRA TANZANIA REVENUE AUTHORITY

5. 0 CONCLUSION TRA is committed to improve domestic resource mobilisation to enable the

5. 0 CONCLUSION TRA is committed to improve domestic resource mobilisation to enable the Government fulfil its social obligations TRA is determined to make Tanzania self sufficient in terms of budgetary requirements and reduce Development Partner Assistance TRA looks forward to continued cooperation with the Norwegian Government in implementing its strategies THANK YOU FOR YOUR ATTENTION. TRA TANZANIA REVENUE AUTHORITY