MANAGING TAX: Know your rights as a taxpayer

Professor Duncan Bentley, a renowned writer on of taxpayer rights, once asserted that “taxpayers who are aware of their rights, who expect, and in fact receive, fair and efficient treatment, are more willing to comply with taxation”. Equally important is that the laws should provide an opportunity for those rights to be easily realisable.

In Tanzania, Articles 16 to 24 of the Constitution contain basic rights and duties, including the right to equality, to privacy and personal security and the right to own property. The tax laws in Tanzania do not have specific protections for taxpayer rights.

To benefit from the protection of the law, a taxpayer must find a provision in the general laws which he is able to apply to the specific breach.

But the tax laws, by extension, do have provisions which reiterate basic rights as protected under in the Constitution. Tanzania Revenue Authority (TRA) has adopted a Taxpayer’s Charter (now in its 7th Edition) which sets out the rights and obligations of the taxpayer. It also sets out the duties and service standards of the TRA in dealing with taxpayers. In the Charter, TRA promises to observe and respect taxpayer rights discussed here below.

1. Impartial treatment

The taxpayer has a right to an impartial application of the tax laws when fulfilling his tax obligation, so as to enable the taxpayer to pay the correct amount of tax, no more no less.

However, in contesting tax decisions, the taxpayer needs to show how the tax law has not been applied correctly in his circumstances. He cannot just rely on the argument that the same tax law has not been applied to others or it has been applied differently.

2. Privacy and confidentiality

The taxpayer has a right to privacy and confidentiality for private and business information supplied to TRA unless the law allows the exposure of such privacy or confidentiality. Despite this being a legal right, the tax laws, do not provide a financial remedy in case TRA infringes this right. The extensive powers the tax laws give TRA for inspections, audits or information gathering tend to undermine the privacy of taxpayers.

3. Presumption of honesty

The taxpayer has a right to be presumed honest unless evidence to the contrary exists. The qualification, in a way, makes TRA’s stance on this right to depart from the “presumption of innocence” principle under both the common law and the Constitution.

4. Objection of tax assessment

A taxpayer has a right to object to an assessment or any other decision made by TRA to the extent to which that right is restricted by the law. The requirements to pay a deposit before an objection to a tax assessment can be admitted limits full realisation of this right.

5. Tax incentives and exemption under the tax laws

Taxpayers have the right to plan their tax affairs to obtain incentives and exemption allowed under the tax laws.

TRA shall apply the tax laws in a consistent manner to all taxpayers. However, the anti-avoidance provisions in tax laws make the realization of this right very difficult.

Despite being a very good document, the Charter is not a legally binding instrument. The taxpayer or TRA must ultimately invoke the relevant laws in acting on or seeking to prevent action, which is inconsistent with the Charter. This, significantly, limits its usefulness.