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The East African : Sep 8th 2014
40 ELECTRONIC FISCAL DEVICES Will new EFDs help curb tax evasion? Tanzania tax body should be able to elect≥onically monito≥ t≥ansactions By HELLEN NACHILONGO Special Correspondent de change and insurance companies to install automatic electronic fiscal devices in a bid to increase efficiency in tax collection. The EFDs will help curb tax T evasion as sales transactions will be monitored electronically and receipts generated automatically whether or not a client asks for them. According to Tanzania Revenue Authority director of education and taxpayer services Richard Kayombo, the decision to install the automatic EFDs especially at fuel stations was made after manual devices failed. “Last year, we introduced the manual EFDs but they failed because petrol stations had the option of generating receipts for transactions carried out,” said Mr Kayombo. Mr Kayombo said that some pet- rol stations, burea de change and insurance companies were avoiding generating receipts and so their actual turnover was not reflecting in their tax returns. TRA was losing out on revenue because companies were not registering their transactions using the manual EFDs. However, the automatic EFD’s will issue receipts immediately any transaction occurs, receipts which are reflected back to the authority. “With this new technology, the government will increase tax collection and transparency in business data,” said Mr Kayombo. Mr Kayombo said TRA has fo- cused on petrol stations, burea de change and insurance companies because they have the largest operations in the country. He said the automatic EFDs are specially made to register all trans- PAST FAILURES Petrol stations are among the targeted companies of the EFDs. Picture: File TRA principal officer Hamis Lu- actions made and the government is optimistic that this will increase revenue collection in the remaining part of the year. Currently, the government collects Tsh400 billion ($250 million) per month in taxes. The Citizen newspaper in May this year reported that Tanzania loses about Tsh3 trillion ($1.87 billion) in tax revenue every year through dishonest import and export transactions. “The problem of tax avoidance and evasion is common in all tax systems but with the introduction of the new automatic EFDs, we expect to improve collections by at least 80 per cent,” said Mr Kayombo. $250m TURN FROM PAGE 37 but Uganda and Burundi are still facing big challenges in protecting foreign investors. They need policies formulated to encourage investments,” he said. Even though Tanzania’s inflation rates returned to single digit this year, its fiscal indicators remain relatively high. Tanzania’s institutions, the report says, have been deteriorating over the past several years, although government regulation is not seen as overly burdensome. According to last year’s report by the United Nations Conference on Trade and Development, Tanzania and Uganda attract the highest level of foreign direct investments (FDI) in East African followed by Kenya, Rwanda and Burundi. penja said the directive for petrol stations to use normal EFDs failed because if a receipt was not issued the transaction would not be recorded. “However, with this device, in- stalled inside the fuel pump, it will not matter whether a motorist demands a receipt or not, the tax is automatically recorded,” said Mr Lupenja. He added that it is an offence to buy anything without demanding a receipt and the buyer is liable to a penalty of Tsh1 million while a trader is fined Tsh3 million. TRA Commissioner-General The amount the government currently collects per month in taxes, while allegedly loses about $1.87 billion Rished Bade recently said that the authority has already held advanced talks with experts from a number of oil firms, insurance companies and burea de change over the matter and the response is good. Directorate of Criminal Investigations Commissioner Isaya Mngu- Manual electronic fiscal devices (EFDs) failed because companies were avoiding generating receipts and so their actual turnover was not reflecting in their tax returns. TRA was losing out on revenue because companies were not registering their transactions using the manual EFDs. TRA has focused on petrol stations, burea de change and insurance companies because they have the largest operations in the country. lu, said his office was working with TRA by conducting crackdowns on business proprietors who are reluctant to install EFDs in their outlets. Mr Mngulu said that in a span of two weeks, his office had closed down 11 shops in the city for breaching the directive. He warned those trying to avoid installing the EFDs that they risk being penalised. Both the Value Added Tax Act, Cap 148 (VAT Act) and Income Tax Act, Cap 332 (ITA) provide for EFDs. he Tnzania Revenue Authority has directed fuel stations, burea The EastAfrican BUSINESS SEPTEMBER 6-12,2014 $1.7m ≥eleased fo≥ Da≥ u≥ban ≥ail study By ROSEMARY MIRONDO Special Correspondent TANZANIA has released Tsh2.92 billion ($1.7 million) for a feasibility study on the construction of a new urban railway network in Dar es Salaam, with the aim of easing traffic congestion. The current commuter railway line, which started its operations in 2012, operates a 20km track from Ubungo Maziwa to the city centre that transports at least 30,000 people each day. Permanent Secretary in the Ministry of Transport Shabaan Mwinjaka said that the feasibility study will, among other things, look at possible locations for the railway line. “We expect the railway network to reduce congestion and facilitate smooth movement around the city,” said Mr Mwinjaka. The feasibility study is expected to start this year and last up to March 2015. Future plans According to Mr Mwinjaka, the government plans to increase the railway infrastructure from the current 20km to at least 50km. The new railway lines target dif- ferent parts of the city like Kibaha via Mbezi and Luguruni, Pugu through Julius Nyerere International Airport, Chamazi passing through Mbagala, Bagamoyo via Bunju and Tegeta including Mwakanga via Kurasini Malindi to Mivinjeni. Mr Mwinjaka said the Ministry of Transport in collaboration with Tanzania Railways Ltd is also currently in talks with various investors with the aim of establishing a subsidiary company that will provide railway transport services in urban areas in the country. The proposed railway line is ex- pected to be managed through a public-private partnership. Rwanda ≥anked most competitive economy in East Af≥ica Uganda’s FDI jumped 92.51 per cent to $1.721 billion from $894 million in 2011, and Tanzania attracted $1.706 billion in 2012, a 38.81 per cent increase from the previous year’s $1.229 billion. Kenya’s FDIs dropped by 27.04 per cent to $259 million from $355 million. Rwanda witnessed a rise in FDIs by 50.94 per cent to $160 million last year from $106 million, while Burundi, which attracted $1 million, a 66.67 per cent decrease from $3 million in 2011. In total, the EAC countries received a combined $3.9 billion in FDIs last year, a 48.71 per cent rise from the $2.6 billion registered in 2011. To investors, the greatest concern in Tanzania has been corruption, opaque policymaking, underdeveloped infrastructure, poor roads and ports and an unreliable electricity supply. Tanzania has one of the world’s lowest enrollment rates at secondary and university levels, and within East Africa, its goods market remains inefficient, characterised by low domestic and foreign competition. According to Price Waterhouse Coopers, the recent natural gas discoveries and regional integration, supported by an extension of transport infrastructure projects, are expected to make Tanzania one of the fastestgrowing economies in the world. “Tanzania’s infrastructure performs fairly well compared with its African peers, but the quality is still poor and has a negative impact on the economy’s productive capacity. However, in the past few years, infrastructure in Tanzania has witnessed impressive investment; transport and utilities infrastructure projects worth $19 billion are in the pipeline,” PwC said. Uganda and Burundi however continue to perform dismally. Uganda’s poor ranking at position 129 has been attributed to corruption, government bureaucracy, high prices, poor quality of education, infrastructural challenges, low access to financing, inflation, harsh tax regulations and the impact of malaria and HIV/Aids on business. It is expected that Uganda’s recent oil find, which will earn the country more than $2 billion a year in oil revenues when production starts, will accelerate its infrastructure development. The government is building a $4.6 billion oil refinery in Kabale-Buseruka, which is set to be commissioned in 2015. The country is also part of the multibillion dollar standard gauge railway project.
Sep 1st 2014
Sep 15th 2014