Tanzania’s budget financing now at 70 percent

Dar es Salaam. Tanzania can now finance its budget by around 70 percent following transformative tax reform including enhancing fairness and efficiency, instilling voluntary compliance, promoting pro-growth tax systems and addressing some of the global and regional contemporary tax issues.

The overarching objective is to exploit every tax opportunity bearing in mind progressive revenue measures to ensure stability in the market, predictability and support to private sector growth and nurture entrepreneurship spirit.

Vice President Dr Philip Mpango said this during the opening of the 8th African Tax Research Network (ATRN) congress with the theme: Contemporary taxation issues in Africa, which brought delegates from more than 13 countries

He said Tanzania has enhanced fairness, compliance, efficiency and simplification of tax systems, and has in place a Tax Modernisation Roadmap which encompasses among other, scaling up tax education; amendment of legislations including the Tax Revenue Appeals Act (CAP 408) to accommodate alternative dispute resolution mechanism and hence reduce bureaucracy in addressing tax appeals; and leveraging digital technology to cope with increasing uptake in use of ICT systems and internet services.

“Systems developed so far include Tanzania Customs Integrated System (TANCIS), Electronic Fiscal Devices (EFDs) to monitor sales, ease record keeping for businesses, make tax assessments realistic and fair while at the same time enabling tax refunds for the VAT to be done within the prescribed period, Revenue Gateway System (RGS) and the Government Electronic Payment Gateway (GePG) to ease tax payment, Electronic Tax Stamps (ETS) to monitor and account for production and importation of excisable goods, Electronic Filing (e-filling) for our major income and consumption taxes, and the online registration for the Tax Identification Number (TIN),” he said.

According to him, in resolving the complexity of taxing the informal sector which accounts for nearly 70 per cent of the economy, they have implemented the Presumptive Taxation Regime, with tax brackets that commensurate with business size,  zero (0) tax rate for micro traders and additional tax brackets as traders grow.

“We have further devised means of identifying informal sector businesses in their localities by among others, building affordable business premises and modern markets to entice formalization and ease traceability and monitoring,” he said.

Further, Tanzania has strengthened regional and international cooperation frameworks on tax matters including the avoidance of double taxation. So far, Tanzania has already concluded and signed agreements with 10 countries on the Avoidance of Double Taxation and Prevention of Tax Evasion.

Meanwhile, Mr Logan Wort, the executive Secretary of the African Tax Administration Forum (ATAF) said due to low revenue collections, most African countries still finance their budget through foreign aid and loans and in 2021, the average debt-to-GDP ratio for ATO countries was 58.58 percent.

 “Africa’s real GDP is projected to grow by 4 percent in 2023, lower than nearly 4.8 percent in 2021 and above 3.7percent in 2022,” he said.