Respicius Mwijage
Member
- Dec 18, 2023
- 15
- 4
“A CALL FOR REFORM”
1.0 Introduction
Time is of the essence, especially in the realm of tax disputes where financial stability and regulatory compliance hang in the balance. In Tanzania, the issue of inadequate time consciousness in determining tax disputes has become a cause for concern, impacting businesses, investors, and the overall economic climate. This article explores the challenges associated with the current time frame for resolving tax disputes in Tanzania and advocates for a more efficient and timely resolution process.
1.1 The Current Landscape
Tanzania, like many countries, faces challenges in expeditiously resolving tax disputes. The existing legal and administrative framework provides a foundation for dispute resolution, primarily through the Tax Revenue Appeals Act, CAP 408 R.E 2019, and the Tax Administration Act, CAP 438 R.E 2019. These laws outline the procedures for appealing and objecting tax assessments, but the time frames for resolution often leave much to be desired.
One of the main issues contributing to inadequate time consciousness is unreasonable time limit in determining tax objections and the backlog of tax appeal cases within the tax dispute resolution system. The period set for determining tax objections within six months and the overload of appeals have led to delays in hearings, decisions, and overall case resolutions. This backlog not only hampers the business operations of the disputing parties but also creates an environment of uncertainty and unpredictability.
The time limit provided under the provisions of the law in dealing with tax objections and appeals are one sided compelling only the taxpayer to comply with it and the underlined consequences while leaving the tax authority (TRA), the Tax Revenue Appeals Board, the Tax Revenue Appeals Tribunal and the Court of Appeal trading in unlimited time limit in dealing with taxpayers’ disputes.
The following are clear examples;
A taxpayer when aggrieved with an assessment or any decision by the Commissioner General is required to lodge an objection within 30 days in accordance with section 51 (1) which provides, “A person who is aggrieved by a tax decision made by the Commissioner General may object the decision by filing an objection to the Commissioner General within thirty days from the date of service of the tax decision.”
Under the same provision, the Commissioner General is not given any specific time limit in dealing with the taxpayers’ objections, simply, the provision indicates that the taxpayer will be served with a proposal in the course of determining the objection. The taxpayer after receiving the proposal, is provided a period of only 30 days to file a submission to that proposal. This is in accordance with section 52(4) which states that “The objector shall, within thirty days from the receipt of the notice pursuant to subsection (3), make submission in writing to the Commissioner General on his agreement or disagreement with the amended assessment or the refusal.”
The law funny enough, allows the Commissioner General to determine the taxpayers’ objections within 6 months! However, despite that duration the Commissioner General is not compelled to determine the objection, instead after the expiration of 6 months without the determination of objection, the taxpayer is compelled to lodge an appeal to the tax revenue appeals board under the notion that non-determination of the objection is merely deemed to be an objection decision of the entire objection.
This is in accordance with section 52 (10) and (11) of the Tax Administration Act as amended by section 72 of the Finance Act No. 8 of 2020 which provides, in subsection
“(10) The Commissioner General shall determine an objection to a tax decision within six months from the date of admission of the notice of objection and in subsection (11) Where the Commissioner General fails to determine the objection within the time prescribed under subsection (10), the tax assessment or tax decision shall be treated as confirmed and the objector shall have the right to appeal to the Board in accordance with the Tax Revenue Appeals Act.”
However, in glancing to the above provision defeats the purpose of the Tax Revenue Appeals Board in adjudicating appeals from objection decision, if the objection is deemed to have been determined as the provisions suggests because there will be no decision by the Commissioner General. The Board will be determining an objection against an assessment which defeats the purposes of establishing the Tax Revenue Appeals Board as an appellate body.
Another interesting scenario regarding the time limits are clearly found in the Tax Revenue Appeals Act. The provisions simply a duty of observing the time limit and consequences of not complying to is only on the part of the taxpayer. A taxpayer if aggrieved with the objection decision is compelled to lodge a notice of intention to appeal within 30 days and lodge a statement of appeal within 45 days from the date of service of the decision appealed against. This is in compliance with section 16(1) and (3) of the Tax Revenue Appeals Act, CAP 408, R.E 2019, which provides as follows,
“(1) Any person who is aggrieved by an objection decision of the Commissioner General made under the Tax Administration Act may appeal to the Board.
(3) The Board shall not entertain an appeal pursuant to this section unless-
(a) a notice of appeal is served upon the Commissioner General within thirty days following the date on which a notice of final determination of assessment of tax or any other decision by the Commissioner General in accordance with subsection (1) is served on the appellant; and
(b) the appeal is lodged with the Board within forty-five days following the date on which the notice of final determination of assessment of tax or any other decision by the Commissioner General in accordance with subsection (1) is served on the appellant.”
Very interestingly, the law doesn’t provide clear provisions setting the time limit within which the Tax Revenue Appeals Board to determine the filed appeals. The truth in the field an appeal can stay undetermined in the Board for more than 6 months and above.
The issue of time limit is also at the Tribunal level. The aggrieved party with a decision of the Board is mandated to appeal to the Tax Revenue Appeals Tribunal. The aggrieved party is required to file a notice of appeal within 15 days from the date of the Board’s decision and an appeal to be filed within 30 days from the date of receiving the judgement, decree and proceedings. This is clearly provided under section 16 (4) of the Tax Revenue Appeals Act which provides, “A party who is aggrieved by the decision of the Board may appeal against that decision to the Tribunal within thirty days from the date of service of the decision and proceedings of the Board and shall serve to the opposite party the notice of intention to appeal within fifteen days from the date of the decision”
However, despite the setting of the time limit for filing a notice of appeal and the statement of appeal, the law does not provide the time limit within which the Tribunal can make a decision of any application or an appeal before it. The truth of the matter an application or an appeal can stay pending undetermined for more than 6 months.
The last nail to the coffin regarding time limit is evidenced at the Court of Appeal of Tanzania which the apex court in determining tax disputes in the United Republic of Tanzania. The aggrieved person by the decision of the Tax Revenue Appeals Tribunal is afforded a final chance to appeal at the Court of Appeal. The notice of intention to appeal is filed within 30 days and the memorandum of appeal is filed within 60 days. Funny enough there is no time limit within which the court of appeal can determine the filed tax appeal. The reality on the ground a tax appeal in the court of appeal can stay undetermined for more than 12 months and above.
In the duration of 6 months, the Commissioner General without determining objection would be in a right procedure if the law would have been coached that, if the objection is not determined within that time within that period, the objected assessment would be concluded and finalized in the light of the objection. This would be in line with the clear provisions of section 229 (1), (2), (4) and (5) of the East African Community Customs Management Act, 2004 (R.E 2009) which provides;
“(1) A person directly affected by the decision or omission of the Commissioner or any other officer on matters relating to Customs shall within thirty days of the date of the decision or omission lodge an application for review of that decision or omission.
(2) The application referred to under subsection (1) shall be lodged with the Commissioner in writing stating the grounds upon which it is lodged.
(4) The Commissioner shall, within a period not exceeding thirty days of the receipt of the application under subsection (2) and any further information the Commissioner may require from person lodging the application, communicate his or her decision in writing to the person lodging the application, communicate his or her decision in writing to the person lodging the application stating reasons for the decision.
(5) Where the Commissioner has not communicated his or her decision to the person lodging the application for review within the time specified in subsection (4) the Commissioner shall be deemed to have made a decision to allow the application.”
The current landscape without fear or contradictions, the tax disputes are not timely determined in particular by the taxing authority, appeal quasi-judicial bodies and the Court of Appeal. As a result, this is detrimental to the taxpayers and the government for failure to collect its lawful revenue within time. The most consequence of this trend is dwindling the tax administration.
2.0 Impact on Businesses
The protracted nature of tax dispute resolutions can have severe consequences for businesses operating in Tanzania. Prolonged uncertainty over tax liabilities affects financial planning, investment decisions, and overall business strategies. Moreover, the lengthy dispute resolution process can strain the relationship between tax authorities and taxpayers, eroding trust and fostering an adversarial atmosphere.
Investors, both domestic and foreign, may be deterred by the unpredictable and time-consuming nature of tax dispute resolutions. In an era where economic competitiveness is vital, Tanzania cannot afford to discourage potential investors due to concerns about the efficiency of its tax dispute resolution mechanisms.
3.0 Recommendations for Reform
To address the issue of inadequate time consciousness in determining tax disputes in Tanzania, several key reforms are recommended:
3.1 Streamlining the Adjudication Process
- Implement measures to streamline the adjudication process, ensuring that cases are handled efficiently without unnecessary delays.
- Allocate additional resources to the tax dispute resolution bodies to reduce the backlog of cases.
- Increasing the number of personnel in adjudication process in particular in the Tax Revenue Appeals Board and Tribunal.
Promote and facilitate alternative dispute resolution mechanisms, such as mediation and arbitration, to expedite the resolution of tax disputes.
3.3 Enhanced Training and Capacity Building
Invest in training and capacity building for tax administrators, legal professionals, and dispute resolution officers to improve their skills and efficiency in handling tax disputes.
3.4 Transparent Communication
Foster transparent communication between tax authorities and taxpayers throughout the dispute resolution process, keeping all parties informed about the status of their cases.
3.5 Legislative Reforms
Consider legislative amendments to establish clear and realistic time frames for different stages of the dispute resolution process from objection proceedings to final determination in all appeal levels from Tax Revenue Appeals Board to the Court of Appeals, ensuring a balance between thorough examination and timely resolution.
4.0 Conclusion
Inadequate time consciousness in determining tax disputes is a significant challenge that Tanzania must address to foster a conducive business environment and attract investment. Timely and efficient dispute resolution mechanisms are crucial for maintaining a fair and transparent tax system that supports economic growth. By implementing the recommended reforms, Tanzania can position itself as a jurisdiction that values time-conscious tax dispute resolution, benefiting both businesses and the overall economic landscape.
The author (Respicius E. Mwijage) is a Tax lawyer with experience in Tax Dispute Resolution.
E-mail: remwijage at yahoo.com
Mob: +255 688 526 718