- The organisation’s first corporate plan focused on institutional and capacity building of TRA and the second on integration of domestic operations for effective service delivery.
Dar es Salaam. In a bid to ensure the government attains financial independence, the Tanzania Revenue Authority (TRA) has set new tax revenue targets with the ultimate goal of collecting nearly Sh19 trillion a year by 2017/18.
The targets will be realised by implementing its fourth five-year corporate plan, whose execution starts in the forthcoming financial year and focuses on boosting domestic revenue collection.
“In the next five years, TRA aims at increasing the revenue yield to 19.9 per cent (of GDP),” notes the authority in the Fourth Corporate Plan covering 2013/14 – 2017/2018.
“This will be achieved by improving efficiency in tax administration and widening the tax net in order to collect more revenue especially from specialised sectors of mining, oil and gas, telecommunication, tourism, construction, real estate, financial sector, high net worth individuals and incomes from the informal sector.”
TRA expects to increase tax revenue collections from Sh9.5 trillion in 2013/14 to Sh18.8 trillion in 2017/18, which will be more than double the targeted collection for the current financial year.
Commissioner General Harry Kitillya says the purpose of enhancing domestic resources is to ensure the government becomes more self-reliant and drastically cuts donor dependence in financing its budgets.
“In terms of revenue collection, attention shall be on enhancing domestic revenue collection bearing in mind that with the regional groupings, contribution from international trade taxes will keep on declining hence we expect contribution from domestic taxes to increase from the current 62 per cent to 70 per cent by June 2018,” notes Mr Kitillya in the corporate plan document.
“Additionally, overall revenue collections will have to increase significantly in order to reduce donor dependency as most of the development partner countries are experiencing financial crises in their countries which reduce their contribution to budgets of developing countries.”
The tax revenue targets for financial years 2014/15, 2015/16 and 2016/17 are Sh11.2 trillion, Sh13.3 trillion and Sh15.8 trillion respectively.
The organisation’s first corporate plan focused on institutional and capacity building of TRA and the second on integration of domestic operations for effective service delivery.
Whereas the third focused on automation of operations, the fourth corporate plan will seek effective utilisation of ICT to offer convenient services to taxpayers while improving compliance.
Mr Kitillya said that during the implementation of the third corporate plan, revenue collections were set to increase from Sh4.05 trillion in 2008/09 to Sh8.03 trillion at the end of the current financial year next month.
Another major achievement has been implementation of 93 out of the 98 major reform initiatives that saw the authority managing to achieve several goals, including broadening the tax base.
“TRA is determined to become an efficient, customer-focused and people-centred organisation comparable to its counterparts in the emerging economies,” reads the corporate plan in part.
“This transformation will be achieved through further entrenchment of best practices in performance management, service delivery and use of technology to improve tax administration process,” it adds.
In order to meet the new revenue targets, the agency says, it will simplify the way it collects taxes and do it in a more transparent manner as well as ensure that taxpayers have easy access to services that are offered promptly.
That will not only increase compliance but also lead to more revenue for the government to provide adequate and quality social services.
Measures to achieve that will include expanding the use of electronic tax register (ETR) machines effective mid-this month targeting businesses with a monthly turnover of Sh14 million to Sh40 million.
According to the TRA deputy commissioner for Domestic Revenue, Ms Generose Bateyunga, these businesses simply estimated their taxes previously.
The director for Education and Taxpayer Services, Mr Richard Kayombo, said recently that the rollout of phase two of ETRs has been prompted by difficulties in monitoring sales from manual receipts.
He said dishonest people used the shortcomings in the old system to under-declare sales and issue no receipts.