Dodoma. The embattled Swiss firm, which won the tender to rollout electronic tax stamps in the country, got a rare backing in Parliament yesterday when a Member of Parliament (MP) asked for patience from fellow lawmakers.
Mr Hussein Bashe (Nzega Urban - CCM) said instead of attacking the firm over what it has done elsewhere, the lawmakers should give the company some time so they can, at a later day, analyze it effectiveness in improving revenue collections.
“If it is being accused of corruption elsewhere, that is the mistake of that particular country…If our people received corruption from SCIPA, that’s our problem. In six months, the Finance Ministry should bring us information on how effective has the company been in increasing tax revenue collections,” he said.
Tabling Tanzania’s 32.5 trillion budget for the financial year 2018/19 in Parliament on Thursday, June 14, the Finance and Planning Minister, Dr Philip Mipango said the electronic tax stamps will be introduced starting September 1, 2018.
He said the new tax stamp system will enable the Government to use a modern technology to obtain production data on timely basis (real time) from the manufacturers. The move is also intended to curb revenue leakages and make it possible to determine in advance the amount of taxes to be paid namely Excise Duty, Value Added Tax (VAT) and Income Taxes.
But MPs say with only an investment $21,533,827 (about Sh48.5 million), the Swiss firm (SCIPA) will be leaping billions out of the country.
‘If the volume of litres of beer, drinking water and soft drinks as well as the number of cigarettes is put into consideration, this firm will be collecting a total of Sh66.69 billion each year from consumers of water, cigarettes, soft drinks and beer as electronic stamp duty….This amount is too much for a company that has invested just Sh48.5 million only,” she said.
And, debating Dr Mpango’s Sh32.5 trillion budget proposals in the House yesterday, Mr Mussa Azzan Zungu (Ilala - CCM), said the government by giving the tender to the Swiss firm, the country was surrendering its tax collection sovereignty to a foreign company.
“Since the server will remain the property for the Swiss firm, we will simply be surrendering our tax regime to a foreign company for a period of five year,” he said, proposing that the task be undertaken by the government through its own agencies.
He said the government may not have conducted proper due diligence in the tendering process, alleging that the Swiss firm has a case in Morocco and that the price it offered to Tanzania is ten times more than the usual ones.
In Kenya, he said, the company has been the subject of a probe by the Parliamentary team.
Mr Bashe said yesterday corruption concerns were basically the making of individual countries and had nothing to do with weaknesses of the company.
Mr Bashe also backed the government’s proposal to introduce tax amnesty on interest and penalties.
Dr Mpango proposed on Thursday, June 14, to amend the Tax Administration Act, CAP 438 in order to introduce tax amnesty on interest and penalties for six months starting from 1st July 2018 up to 31st December 2018.
He said the measure is expected to improve tax compliance by 10 per cent and hence enable the Government to collect the outstanding principal amount.
MPs have until Tuesday, June 26, 2018 to debate the budget proposals when they will either give it a thumb up or thumbs down.