Tanzania has updated its Tax Administration Regulation and Monetary Policy due to Covid-19. Some of the updates include reduced interest rates and an increase in mobile money transaction limits.
THE TAX ADMINISTRATION (REMISSION OF INTEREST AND PENALTIES) REGULATION, 2020
In accordance with Section 70 of the Tax Administration Act, 2015 a taxpayer can apply for remission of interest and penalty imposed by Tanzania Revenue Authority should there exist a good cause for the same. However, section 70(1) of Tax Administration Act, 2015 requires remission power to be exercised by the Commissioner General of Tanzania Revenue Authority in accordance with the Regulations/Order issued by the Minister of Finance and Planning. Until recently, this Regulation is missing. The same have now been enacted and published on 08th May 2020 via Government Notice 351.
These Regulations shall apply to any person who has been assessed with interest or penalty under the Tax Administration Act, 2015 or any other tax law who wants such assessed interest and/or penalty to be cancelled (or waived/forgiven).
Persons eligible for remission:
The following pre-conditions must exist for any taxpayer to be eligible for remission of interest or penalty:
- The tax liability arising from issued assessments should have been originally disclosed voluntarily by the taxpayer.
- The taxpayer should have had no pending tax disputes relating to the tax assessment for which remission is being sought.
- The taxpayer should be of good standing and should have declared all previous outstanding tax liabilities, if any.
- The taxpayer should have the willingness and ability to pay the entire principal tax once the decision for remission has been granted in taxpayer’s favour.
- The taxpayer must have complied with all procedural matters in accordance with the Regulations to get the remission.
The Commissioner General may:
- Fully grant the application
- Partly grant the application; OR
- Reject the entire application and give reasons thereof.
The decision by the Commissioner General on any application for remission of interest and penalties shall be final and not subject to any administrative review or appeal.
“Financial hardship” shall not constitute good cause for remission of interest and penalties unless there is solid and undisputed evidence that such financial hardship:
- Existed when the principal tax liability was originally due and payable.
- Was the main reason why the taxpayer failed to discharge the principal tax liability on the original due date.
- Was informed in writing to Tanzania Revenue Authority when the relevant principal tax was originally due; and
- Will continue to exist for an unforeseeable time (more than one year) in future.
Categories of taxes excluded from remission:
- Penalties and interest arising from an Order of Compounding an Offence under the Tax Administration Act or another tax law.
- Penalties and interest arising out of EFD related offences.
- Penalties and interest arising out of fraudulent evasion of tax.
- Penalties and interest arising out of tax audit (desk audit, investigative audit and/or comprehensive audit).
- Penalties and interest arising from failure to pay following taxes because these were not originally collected by taxpayer from its customers such as VAT, Excise Duty, Airport Service Charge and Port Service Charge.
- Penalties and interest arising from failure to remit Withholding Tax as Withholding Tax agent.
- Penalty for failure to file tax returns.
- Penalty for failure to maintain documents.
In light of the current pandemic of COVID-19, this Regulation can be used to:
- Voluntarily inform TRA of the current financial hardship due to slowdown in business due to COVID-19.
- Voluntarily inform TRA about all principal taxes that a taxpayer has not paid now – which are due now and because these have not been paid now, interest and penalties shall kick in.
- Upon successful grant of such remission, agree on a practical and reasonable payment plan to pay such principal taxes.
Hence this Regulation can be used to avoid interest and penalties associated with non-payment of taxes which are due at present and NOT previously assessed taxes which do not fall under the prescribed definition of financial hardship.
MONETARY POLICY STATEMENT FROM BANK OF TANZANIA.
In accordance with Section 12(5) of the Bank of Tanzania Act, 2006 a Monetary Policy Committee (MPC) shall determine on the application of the monetary policy set out by the Board and shall submit to the Board any major issues affecting the monetary policy to take its stand. MPC of Bank of Tanzania on 12th May 2020 has released press statement on various policy measures to cushion the economy from adverse effects of COVID-19, after a thorough assessment of the impact on various sectors. The policy measures approved include:
|Monetary Policy||Old Rate (%)||Revised Rate (%)||Effective Date|
|Statutory Minimum Reserve||7||6||8th June 2020|
|Discount Rate||7||5||12th May 2020|
|Treasury Bills||10||5||12th May 2020|
|Treasury Bond||40||20||12th May 2020|
Daily transactions limit to Mobile Money Operators has been increased so that to encourage the usage of digital payment platform such as online banking and point of sale system to customers. This has been detailed below;
|Mobile Money Operator||Old Daily Transaction Limit||Revised Daily Transaction Limit|
The Bank of Tanzania wishes to inform the general public that the country has adequate foreign exchange reserves for importation of goods and services. All transactions in the country between residents should be conducted in Shillings.
Click HERE to read the Press Statement from the Bank of Tanzania (BOT).
For further details, please do not hesitate to contact us at:
Nexia SJ Tanzania,
1st Floor, Oyster Plaza, Haile Selassie Road
P.O. Box 12729, Dar Es Salaam, Tanzania.
Telephone Numbers: +255 22 2926252/53, +255 713 444 254 & +255 756 444 25